BPE declines discos’ request for notice of force majeure, says new power policy directives in order

The Bureau of Public Enterprises (BPE), which midwifed the privatization of Nigeria’s power assets, has declined a request by the electricity distribution companies (DISCOs) for a notice of force majeure.

Alex Okoh, the director general of the Bureau of Public Enterprises (BPE), has said that there is no basis for the issuance of notice to declare force majeure by the electricity distribution companies (Discos) following the policy directive on eligible customers and the eligible customer regulations by the Nigerian Electricity Regulatory Commission (NERC).

The new policy directive by Babatunde Raji Fashola, Nigeria’s minister of power, works and housing and NERC specifically declared four categories of eligible customers in the Nigerian Electricity Supply Industry (NESI) to access power directly from the generating companies, thereby sidetracking the discos.

In a letter to the Discos, he challenged the assertion by the Discos that there has been a change in law and political force majeure event pursuant to certain clauses in the performance Agreement the core investors of the Discos signed with the BPE. As such, he rejected the notice to declare force majeure by the Discos.

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The Discos had claimed that the policy directive on eligible customers and the eligible customer regulations have resulted in a change of law, which prevents them from fulfilling their obligations under the performance agreement.

But Okoh countered that pursuant to the Electric Power Sector Reform Act 2005, it is obvious that the minister of power, works and housing is empowered to issue the policy directive specifying the class or classes of end-use customers that shall constitute eligible customers. In the same vein, NERC is similarly empowered to issue eligible customer regulations.

“As you are aware, this is the same Act which midwifed the process whereby the power assets were privatized to the core investors. Given that the Declaration and the Regulations were lawfully and validly issued by the Minister and NERC, and that there has been no change in the law giving rise to a political force majeure event, we are unable to see the basis for the issuance of the notice,” he said.

Okoh added that the BPE, as the contracting party on behalf of the Nigerian government to the agreements, which governed the privatisation of the power assets to the core investors, rejects the notice to declare force majeure.