Licence cancellation: FG gives Discos December 7 deadline

In an updated document on the notice of hearing on the petitions by Discos on the minor review and minimum remittance order dated November 5, 2019, and obtained from the commission in Abuja, the power sector regulator also outlined additional expectations from the Discos.

The commission had issued a cancellation notice to eight power distribution companies in October this year and mandated them to respond within 60 days, otherwise their licences would be cancelled.

It named the eight firms as Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt and Yola Discos.

The Discos, according to the NERC, breached the terms and conditions of their respective distribution licences based on the provisions of the Electric Power Sector Reform Act and the 2016 – 2018 Minor Review of Multi-Year Tariff Order and Minimum Remittance Order for the Year.

“The cancellation notice remains extant and the eight Discos are still required to show cause in writing within 60 days from the date of receipt thereof as to why their licences should not be cancelled in accordance with section 74 of EPSRA,” the commission stated.

It noted that the eight recipients of the cancellation notice who filed petitions against the Minor Review and Minimum Remittance Order had acknowledged that their petitions did not constitute their written response to the cancellation notice.

The regulator added, “The deadline for the submission of written response showing cause against the cancellation notice by the eight Discos is December 7, 2019.”

On other demands from the Discos, the commission said it expected the eight power firms to address the issue of “optimal utilisation of resources” and “efficient operation” imposed by sections 32 and 76 of EPSRA, respectively, in their written responses to the cancellation notice.

The commission also stated that it expected the eight Discos to address the principles of “prudence” and “used and useful” as further justification of optimal utilisation of resources for efficient operations in the areas of general procurement practices, related party transactions, and directors’ fees and expenses.

Others include technical partners from takeover to date, material and contingent liabilities, utilisation of intervention, fund received from the Federal Government, efforts to date to address customer complaints and improvement of overall willingness to pay for services.

The NERC further stated that the Discos must show analysis of capital and recurrent expenditure, metering and billing of maximum demand customers, metering and billing of MDAs, payments for technical and management fees, purchase and utilisation of foreign exchange and remittances on market obligations from date of takeover to date.

Power distributors are the designated revenue collection agents for the entire value chain in the industry, as they interface with end-user customers.

The eight Discos have been unable to meet the minimum remittance thresholds specified in the Minor Review and Minimum Remittance Order.