Power outages: FG orders NERC to revoke non-performing DISCOs’ licences

The Nigerian Electricity Regulatory Commission (NERC) has been given a marching order by the Federal Government to revoke the licences of non-performing electricity distribution companies (DISCOs).

Data from the National System Operator, a division of the Transmission Company of Nigeria (TCN) showed that the country’s companies and households are being adversely affected by the low supply of electricity.

This occurs concurrently with a 21% power generation declined year-on-year to 3,475MW in March 2024 from 4,404MW in the corresponding period of 2023, due to what they called low investment and inadequate gas supply among other problems.

But, on month-on-month to 3,475 megawatts, MW in March 2024, from 4,043MW in February 2024, thus causing many Electricity Distribution Companies, DISCOs, to embark on loading.

The DisCos were accused by the government of not doing enough to enhance supply even while electricity was available on the national grid.

The distribution component of the energy supply value chain continues to be the weakest link, according to Minister of Power Adebayo Adelabu, who made this known at a meeting with the heads of the agencies in Abuja.

Adelabu emphasized that NERC needs to come up with innovative ideas to persuade the DISCOs to increase supply, such as harsh penalties for utilities that don’t choose their allotments and the complete cancellation of licences.

He maintained that the DISCOs’ franchise areas were excessively broad and said the government would work towards a reorganisation that would result in smaller DISCOs with businesses limited to a single state each.

“Distribution is our weakest point and it is the closest to the consumers. If we don’t get distribution right, to Nigerians, we’re not doing anything. So, efforts need to be put on this. In fact, we must intensify our efforts in ensuring that we address all issues relating to distribution.

“It is true that the distribution companies are in the hands of the private sector. We don’t have direct control. But we need to compel them for performance.

“They must perform. If they do not perform, all our effort in generation, in transmission is zero. I’ve also had a meeting with the Chairman of NERC on how we’re going to address these performance issues of the electricity distribution companies across the nation.

“Why we have new policies in our power sector policy framework, which we’re going to finalize to address long-term issues in distribution, we must proffer short-term solutions to the lingering crisis.

“Before we get to that, we’re talking about the issue of the capitalization of the discourse, for them to inject funds, to improve infrastructure.

“We are talking about issues of restructuring the DISCOs along state lines, to make them manageable in size. Also, issuing new franchises to smaller DisCos to take over areas not being served by the existing ones or that have been underserved by the existing ones.

“I have said it before now that non performance of DISCOs in terms of epileptic power supply qualifies as a basis for revocation of license. Any DISCO that is found wanting will be severely dealt with because their actions or inactions directly affect the performance of the sector,” Adelabu stressed.

The minister pointed out that willful refusal by any DISCO to take up available power “is a qualified basis for the revocation of licenses too”, adding that the distribution companies must be ready to pick up 90-99 percent of load allocated to them.

Describing the ongoing electricity rationing across the country as unacceptable, the minister disclosed that the government plans to improve power generation from the present 4,000MW to 6,000MW in the next six months.

According to Adelabu, this will be achieved by paying off substantial debts owed to power generation companies (GENCOs) and gas suppliers.

He declared: “So what we are looking at is to have an agreement to ramp up to a minimum of 6,000 megawatts within the next three to six months. I know that the highest we ever generated was 5,700, about three years ago. That was specifically November, 2021.

“And this 5,700 was also distributed. If we could achieve 5,700 at that time, I believe we still have infrastructure to generate between 6,000 and 6,500. In terms of the generating companies, I have no doubt in my mind that the existing capacity can give us 6,500 once there is stability in supply of gas.

“I have been to a number of the generating companies and I confirmed that they have this installed capacity. And a large percentage of this installed capacity is operational, but they are not available because of low or shortage in gas supply.

“Once there is gas supply, we want to ramp up generation to a minimum 6,000MW”.

On electricity subsidy, Adelabu said the federal government would continue to pay electricity subsidies in the short-term and gradually phase it out in the next three years and return the sector to a commercially driven tariff.