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Power: NERC Places Running Caveat on Discos’ Collection of Fixed Charges

Starting from today, consumers of electricity services in the country’s privatised electricity market will have the chance to hold back payment of fixed electricity charges to distribution companies as contained in their bills depending on the fulfilment of certain conditions, the Nigerian Electricity Regulatory Commission (NERC) has said.
 
This came as the federal government yesterday said it was targeting about $1.5 billion private sector investment to help drive the post-privatisation development of the power sector.
NERC also disclosed that it had signed into law a new operational order on the administration of fixed charges as elements of bills paid to distribution companies by eligible electricity consumers across the country.
 
As part of the order which was read out to the journalists by the Chairman of NERC, Dr. Sam Amadi, in Abuja yesterday, consumers of electricity services who had experienced 15 days of continuous and cumulative interruption in supply of electricity to their homes or offices within a month, are now entitled to withhold payment of the fixed charge component of their bill to the affected distribution company within the period.
 
The implementation of the new order is expected to commence immediately it is served to the distribution companies.
 
NERC however, stated that certain conditions must be established for the affected consumers to be entitled to such fund withhold.
 
Part of the conditions that must be met include; valid evidence that interruptions in power supply to affected consumers were not occasioned by larger industry disturbances such as drop in national power generation capacity, vandalism of strategic national power supply assets like transmission lines and such extant general challenges that are peculiar with the Nigerian Electricity Supply Industry (NESI).
 
But instances of willing cut in power supply as a result of transformer and distribution assets breakdown and a subsequent refusal of distribution networks to fix same will be counted as conditions upon which consumers can base their claims if it contributed in power supply interruptions for up to 15 days.
 
Amadi, who was flanked by NERC’s commissioners for market, rates and competition, Eyo Ekpo; licencing and legal, Steven Adzinge, and government and consumer affairs, Dr. Abba Ibrahim, said the new order was intended to get operators of the various distribution networks to become responsive to their responsibilities following complaints of poor service delivery.
 
He expressed optimism that the possibility of distribution companies losing the fixed charge component of its electricity bills to consumers at any given month due to their negligence would push them to ensure proactive delivery of services to their customers.
 
“NERC will continue to defend the fixed charge component of the electricity bill because we believe that it is in line with the right of the people to have sustainable supply of electricity which is what the fixed charge is meant to improve.
 
Because we are the regulator, we have to protect consumers and investors. The fixed charge is an element of an electricity customers’ electricity bill that is charged on a monthly basis. It is intended to allow for the recovery of costs associated with the fixed or permanent investments required to generate, transmit and distribute electricity,” Amadi said.
 
He further explained that: “What makes up the fixed charge include fixed investments like poles, cables and transformers which the distribution companies provide; cost of maintenance of the fixed investments and the capacity charge paid to generating companies for as long as they are available to generate power.
“Fixed charge is a universal practice and not peculiar to Nigeria. It is borne by electricity consumers at all times, once they are connected to supply but it is not tied to consumption.
 
These fixed investments need to be made, paid for and maintained because consumers need to have the required infrastructure to enable them enjoy electricity either on demand or when it is available.”
 
On the implementation of the new order, Ibrahim noted that consumers are encouraged to withhold such payments based on their calculations and demand for same from the distribution companies.
 
While stating that NERC will monitor the implementation of the order across board, he added that instances of default should be reported to electricity forum offices that have been established by the commission across the distribution zones for enforcement of actions.
 
Meanwhile, the federal government has asked members of the power committee of the National Conference and Dialogue to rather than castigate its ongoing reforms in the power sector, proffer solutions to extant challenges militating against the smooth operations of the sector.
 
The Minister of Power, Prof. Chinedu Nebo, and his junior colleague, Mohammed Wakil, stated at their presentations to the committee that Nigeria’s privatisation of its power sector was necessitated by the huge volume of funding required for the sector and the need to speed up efforts for power supply to meet up with per capita supply that is comparable to other nations of the world.
 
Nebo specifically stated that so far, local and foreign investors are eager to participate in the sector because they know that Nigeria is in a leading position in terms of return on investment index, just as Wakil insisted that the menace of power infrastructure vandalism remained a huge challenge to the sectors.
 
Meanwhile, Wakil told the National Conference Committee on Energy  that government was working on the review of the power reform policy and the use of solar power.
 
He explained that the nation needed about $1.5 billion investment in power generation and transmission, adding that the such funding can only come from private investment.
 
According to them, vandalism of power infrastructure and the attitude of local communities was another major problem facing power generation and distribution. 
 
A former Minister of Power and high-ranking officer of the defunct Power Holding Company of Nigeria (PHCN), Mr. Bello Suleiman, blamed the near-collapse of the utility outfit on a faulty contractual agreement reached between the federal government and United States-based power supply company, Enron, in 1998.
 
Suleiman, who is a delegate to the conference and a member committee of energy, told THISDAY in an interview in Abuja that as a result of the financial burden incurred in servicing a private IPP, the Enron power deal, PHCN became broke.
 
However, Wakil, who was accompanied by the Permanent Secretary in the ministry, Mr. Godknows Igali, told the committee that the World Bank was interested in supporting the post privatisation process and that the president had approved a shadow cabinet for Manitoba hydro.
 
Also, the Minister of Solid Minerals, Mohammed Sada who appeared before the committee, spoke on plans by government to use of solid minerals for power generation.
 
He said a company had expressed interest on the Orji River plant and that there was a proposal for the resuscitation of the thirty megawatt plant.
 
He said all the coal blocks in Enugu had been reserved for power generation. The minister reaffirmed that the coal corporation had been privatised.
 
The committee wants the ministry to take an aggressive lead in using coal for power generation.
 

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