NERC threatens to revoke licences of Independent power producers

Channels Television  
Updated September 26, 2012

The Nigerian Electricity Regulatory Commission (NERC) has threatened to revoke the licences of Independent Power Producer found to have breached conditions of contract to sanitize the sector.

The erratic power supply in the country has for many decades become Nigeria’s greatest handicap. Huge fund set-aside over the years to address the situation has apparently not yielded positive results, but the NERC have now come up with a renewed drive.

The commission hopes to address the gaps created seven years ago when licences were issued to about 40 independent power producers overtime without any results so far with the potential to generate electricity of 20,000 megawatts.

The Chairman of the NERC, Sam Amadi, who made the threat at a forum on the bulk procurement regulation in Abuja, said the commission has designed new sets of guidelines to avoid confiscation of already generated plans.

According to Mr Amadi, all the proposals were unsolicited and the resulting cost to the Nigerian power system and the consumer could be huge and unacceptable if the disorderly approach continues.

“We have set up some guidelines that clearly state how each of the actors, the bulk traders, system operators, market operators, the generating companies, the Discos will now be able to interface in procuring power,” Mr Amadi said.

He further said: “What this act does is that it dispenses the old form. In the past people just come to us and say we want to put 500 megawatts of power plant in Ajeokuta or in Imo State; they negotiate with different actors but that has proved ineffective.

“We have today about 40 to 50 licensees with a capacity to generate 20, 000 megawatts, we don’t have it, and it’s on paper.”

The NERC Chairman said that the new guidelines will change the game plan, saying any operator found wanting or breaching the rules will be shown the way out.

“If an operator is serially in breach of his covenants, we can revoke his licence through due process and dispose of those assets,” he said.

Only recently, another major step was taken in the battle towards stable electricity in the country as successful bidders for the unbundled Power Holding Company of Nigeria (PHCN) generation firms were named, but Mr Amadi said the solution goes beyond successful biddings.

“We are not just concerning about the bidding but also on the quality and technical capacity of whoever wins because they are going to come and face the regulatory rigour in this market,” he said.

The big question now is, will these new developments in the sector finally resolve the protracted power problem of the country?