FG allays fears of Discos over investment in solar, other initiatives

The Federal Government has allayed the fears of the Electricity Distribution Companies (DisCos) over the promotion of the deployment of more solar power through mini-grids and other Federal Government initiatives aimed at improving service in the Power Sector.

Minister of Power Works and Housing, Babatunde Fashola, alleys the fears of the Discos while presiding at the 20th Monthly Meeting of Power Sector Operators in Owerri, Imo State.\

He said that the Sector had made noteworthy progress since the 19th Meeting held in Lagos and collectively the challenges that lay ahead in the roadmap to incremental, stable and uninterrupted power would be engaged.

Discos had written a letter to the Federal Government  expressing  their  fears  over  the   various  initiatives   the  government had  taken  in  recent time which  they  think   could   drastically affect  their  bottom lines.

The initiatives over which the DisCos wrote a letter to the Government dated 27thSeptember 2017 and titled, “Federal Government of Nigeria’s Initiatives in the  Electricity Sector and the Impact on Electricity Distribution Company Activities”, include the provision of meters to consumers through licensing of meter suppliers and provision of more power to consumers through licensing of eligible customers.

Other initiatives are the provision of Independent dedicated Power to Universities, promotion of the deployment of more solar power through mini-grids and expansion of the Distribution Network of the DisCos so that they can take additional 2,000 MW of power now available for supply.

Fashola, who noted the concern of the DisCos about the impact of the initiatives on their businesses, however, pointed out that the initiatives were targeted at improving service to the people. He, however, commended them for the decision to channel their complaints to the Nigerian Electricity Regulatory Commission (NERC) by a jointly signed letter, a decision he described as “a welcome departure from the previous order”, which should to be encouraged.

“It is my understanding that you fear that you will lose some income or some customers if Government proceeds; and on the question of meters, you seek to have technical compatibility with what the licencee will operate. In respect of possible investment in Distribution equipment you seek that Government should route the investment through the DisCos. Understandably you are concerned about investment recovery and in your views, the solution is a tariff review”, the Minister noted.

He, however, pointed out that while their concerns about business viability, financial stability and cost recovery were well understood and indeed supported by the Electric Power Sector Perform Act of 2005 (EPSRA) which Government would respect, Government’s focus was also strong on the issue of service to the people, adding, “There must be a balance somewhere in the middle”.

Fashola said as far as the promotion of solar and other sources of independent power was concerned, they were not only supported by the ESPRA, but were “consistent with our Paris Climate Change Agreement Obligations and with emerging global practice”.

Pointing out that Government was yet to take position on the best way forward on the issue of channelling investment into Distribution assets through the DisCos, the Minister declared, “DisCos have nothing to fear about solar. It is a space in which they are entitled to play but in which they cannot exclude others from playing”.

He added, “The ESPRA did not contemplate a monopoly for any licensee, unless it is expressly stated in the license”, pointing out, however, that Government was clear that a solution must be found quickly to the inability of DisCos to take about 2000 MW of power that would imminently increase as the sector got more incremental power.

Fashola, who maintained that the concerns contained in the letter under reference could and would be managed through consultations by NERC “ to help to build consensus about how best to serve customers, instead of festering gulfs of Disagreement”, added, however, that as a 40 per cent shareholder of the DisCos (on behalf of the Federal, State, Local Governments and Workers), “Government has a self-benefitting interest in the wellbeing and efficiency of the DisCos”.

The Minister noted that while the letter and concerns of the DisCos focussed first on their business, the Government initiatives focussed more on service, adding, “Consensus should give us both the service and the business”.

Reviewing the progress made in the sector in the last one month, Fashola informed the meeting that in the last month the sector has recovered 100Megawatts from the damaged Afam IV Power Plant, which he recalled, had been inoperative since January 2015.

The Minister also reported that the Transmission Company of Nigeria (TCN) has energized the Jebba-Kainji 2nd 330KV line and the 2nd Ajaokuta-Abuja 330KV line both of which were inoperative since 2015 while in the last one month, “specifically on Wednesday 4th October 2017”, the Federal Executive Council has approved the verified sum of Federal Government MDA debts of N25.9Billion, and its payment by setting it off against the debts owed by the DisCos to the Nigerian Bulk Electricity Trader (NBET).

The Minister, who promised to communicate soon to the Meeting how the amount has been applied to reduce debts owed by DisCos to NBET, informed also that promising progress was being made in recovering debts due from international Customers adding that the Meeting would also “be notified of how much has been received when the appropriate accounts confirm that they have received value for the credits we have been notified of”.

Also recalling the progress report of the last meeting, Fashola listed the successful connection of power to Magboro, Ibafo and neighbouring communities in Ogun State, the metering of 196 out of 244 customers on Ajijedidun, Adamolekun and Abiola Alao Streets in Ijeshatedo in Lagos, particularly and the progress made to restore power to 16 out of 36 communities in Ondo North (Akoko Communities) and the challenges in Okitipupa.

The Minister gave kudos to the Judiciary for its various interventions and support towards the development of the Power Sector, particularly commending it for its judicial support to stop corruption, enforce the law and promote liquidity in the sector as well as the recent practice directions issued by the Chief Justice of Nigeria for the full enforcement of Arbitration clauses in power contracts.

Noting that the practice direction would take such Arbitration cases out of the tedium of regular trial and place them in the hands of commercially sensitive adjudicators, Fashola also welcomed with delight the conviction and sentencing to three years’ imprisonment by the Federal High Court, Abakaliki, Ebonyi State, of one Okechukwu Anoke for tampering with electricity fittings.

Also welcomed with delight by the Minister was the intervention in the Court of Appeal in the case involving the tariff review, which the Trial Court had earlier set aside declaring the tariff setting process illegal, but which, according to him, the Appeal Court has reversed and ordered that the case be tried afresh.

Emphasizing the critical role of the judiciary and law enforcement in the power sector, Fashola pointed out that the efficacy of the practice directions issued by the CJN for the strict enforcement of Arbitration clauses did not rest with the Judicial officers alone adding the Nigerian Bar Association has a pivotal role to play in ensuring that Arbitration clauses were enforced.

“This is because it is often the Lawyers, not the clients that file and initiate processes that invoke the jurisdiction of the Court”, the Minister said, adding, “It seems to me that there might be something that potentially crosses the line of ethics which should arouse the interest of the Bar Association if one of its members fails to avail a client of his rights under an Arbitration agreement”.

Olusola  Bello