New
owners of the Electricity Generation Companies (GENCOs) are threatening a legal
action against the Nigeria Electricity Regulatory Commission (NERC).
owners of the Electricity Generation Companies (GENCOs) are threatening a legal
action against the Nigeria Electricity Regulatory Commission (NERC).
They
are not happy over the draft of interim rules and other regulatory issues that,
in their view, seek to reduce the revenue of the companies instead of the
provisions of the Multi-Year Tariff Order (MYTO).
are not happy over the draft of interim rules and other regulatory issues that,
in their view, seek to reduce the revenue of the companies instead of the
provisions of the Multi-Year Tariff Order (MYTO).
The
GENCOs collectively wrote a petition to the commission three days ago to reject
the proposal, stressing that the NERC and the Bureau of Public Enterprises
(BPE) were not keeping to the terms of the sales of the power entities.
GENCOs collectively wrote a petition to the commission three days ago to reject
the proposal, stressing that the NERC and the Bureau of Public Enterprises
(BPE) were not keeping to the terms of the sales of the power entities.
NERC
General Manager (Marketing and Rates) Abdukadir Shetimma revealed the content
of the petition to the stakeholders at the two-day workshop with the purchasers
of the Power Holding Company of Nigeria (PHCN) in Abuja.
General Manager (Marketing and Rates) Abdukadir Shetimma revealed the content
of the petition to the stakeholders at the two-day workshop with the purchasers
of the Power Holding Company of Nigeria (PHCN) in Abuja.
He
said: “Basically, what the comment is saying is that BPE and NERC are reneging
from the terms of sale of the companies; they have paid for the companies you
cannot be given any revenue less than what is in the MYTO. So, give us our
monies in full or we will go to court. Basically, that is the kind of language
or the conclusion or the comments by the GENCOs.”
said: “Basically, what the comment is saying is that BPE and NERC are reneging
from the terms of sale of the companies; they have paid for the companies you
cannot be given any revenue less than what is in the MYTO. So, give us our
monies in full or we will go to court. Basically, that is the kind of language
or the conclusion or the comments by the GENCOs.”
Shetimma
explained that the commission proposed the interim rules in the interim period
since the transitional electricity market had not begun and cannot before the
physical handover of the companies to the purchasers.
explained that the commission proposed the interim rules in the interim period
since the transitional electricity market had not begun and cannot before the
physical handover of the companies to the purchasers.
He
said: “The Transitional Electricity Market (TEM) is a market where there will
be trading by contract, there will be rules and all the rules in the market
will be enforced and all the contracts will be in force. But that will not be
in force because we have not met the conditions precedent to the Electricity
Transition Market.
said: “The Transitional Electricity Market (TEM) is a market where there will
be trading by contract, there will be rules and all the rules in the market
will be enforced and all the contracts will be in force. But that will not be
in force because we have not met the conditions precedent to the Electricity
Transition Market.
“And
more importantly, the losses in the tariff are far from reality. The baseline
losses and the population in the tariff have been questioned and we need to
establish those baseline losses and factor them into the tariff so that there
will be sufficient revenue in the entire value chain. We have to have a set of
rules to guide the industry within this period when the losses will be
validated, the tariff will be adjusted and the remaining few issues will be
concluded. “
more importantly, the losses in the tariff are far from reality. The baseline
losses and the population in the tariff have been questioned and we need to
establish those baseline losses and factor them into the tariff so that there
will be sufficient revenue in the entire value chain. We have to have a set of
rules to guide the industry within this period when the losses will be
validated, the tariff will be adjusted and the remaining few issues will be
concluded. “
NERC,
according to him, has proposed to commence the interim period on November 1 and
end it on February 28.
according to him, has proposed to commence the interim period on November 1 and
end it on February 28.
He
added that after all the conditions, which include the settlement of PHCN
workers’ benefits, the Federal Government could declare the Electricity
Transition Market on March 1, 2014.
added that after all the conditions, which include the settlement of PHCN
workers’ benefits, the Federal Government could declare the Electricity
Transition Market on March 1, 2014.
His
words: “We believe that the interim period is going to start from the first of
November, and we expect that that day will coincide with the physical handover
to the purchasers. And we expect it to end on February 28. And we will work for
them to commence on March 1 or earlier than that.”
words: “We believe that the interim period is going to start from the first of
November, and we expect that that day will coincide with the physical handover
to the purchasers. And we expect it to end on February 28. And we will work for
them to commence on March 1 or earlier than that.”
On how
the sector would earn its revenue within the period, Abdulkadir said the
revenue would be from the DISCOs’ monthly N20billion collections, the MYTO,
which is N19.5 billion in the 2013 budget.
the sector would earn its revenue within the period, Abdulkadir said the
revenue would be from the DISCOs’ monthly N20billion collections, the MYTO,
which is N19.5 billion in the 2013 budget.
The
General Manager, however, noted that from the amount set out in the MYTO 2,
each DISCO will earn 100 per cent for salaries, fixed and valuable costs of
20per cent, return on capital 50 per cent and depreciation 10 per cent.
General Manager, however, noted that from the amount set out in the MYTO 2,
each DISCO will earn 100 per cent for salaries, fixed and valuable costs of
20per cent, return on capital 50 per cent and depreciation 10 per cent.
The
GENCOs have already made their positions known in a petition on Tuesday.
GENCOs have already made their positions known in a petition on Tuesday.
The
representative of Ughelli Generation Company, Janet Ubowu, who spoke in her
personal capacity, said NERC had exposed them to the risk of underpaying their
banks.
representative of Ughelli Generation Company, Janet Ubowu, who spoke in her
personal capacity, said NERC had exposed them to the risk of underpaying their
banks.
According
to her, the commission is asking the purchasers to be patient should also
understand that their banks lack such understanding.
to her, the commission is asking the purchasers to be patient should also
understand that their banks lack such understanding.
Speaking
on behalf of five distribution companies – Ibadan, Yola, Kano, Jos and Enugu –
Robert Yates said that the companies demanded that the commission grants them
100 per cent salaries, 70 per cent fixed and variable costs, 60 per cent return
on capital and depreciation 10 per cent of the revenue.
on behalf of five distribution companies – Ibadan, Yola, Kano, Jos and Enugu –
Robert Yates said that the companies demanded that the commission grants them
100 per cent salaries, 70 per cent fixed and variable costs, 60 per cent return
on capital and depreciation 10 per cent of the revenue.
Besides,
Smaila Zubello of Eko DISCO said: “We want NERC to understand that investors
have commercial instincts. We cannot do things differently in breach of our
bankers deal.”
Smaila Zubello of Eko DISCO said: “We want NERC to understand that investors
have commercial instincts. We cannot do things differently in breach of our
bankers deal.”
On the
PHCN workers’ fate, the representative of BPE, Mr. Amaechi Aloke, noted that
the Federal Government would have paid off 38,000 staff out of the 45,000 who
were verified by end of the year.
PHCN workers’ fate, the representative of BPE, Mr. Amaechi Aloke, noted that
the Federal Government would have paid off 38,000 staff out of the 45,000 who
were verified by end of the year.
He
added that for 20 years, the BPE has always asked the investors in privatised
entities to retain the workers for six months, stressing that the case of the
PHCN workers cannot be an exemption.
added that for 20 years, the BPE has always asked the investors in privatised
entities to retain the workers for six months, stressing that the case of the
PHCN workers cannot be an exemption.
Source:
The Nation
The Nation
