Power Firms to Lose Licenses for Non-Performance

Sam Amadi


The National Electricity Regulatory Commission is to revoke licenses given to power generation companies which fail to meet terms specified in them

By Anayo Ezugwu  |  Jun 29, 2015 @ 01:00 GMT  |

THE National Electricity Regulatory Commission, NERC, will revoke the licence of idle power generation companies in the country. The NERC on Monday, June 16, started the process of revoking the licences of power generation companies who failed to meet the terms and milestones specified in their licences.

Sam Amadi, chairman, NERC, while presenting licenses to four generation companies in Abuja, disclosed plans to add 774 Megawatts of electricity to the national grid. Amadi also assured investors in the sector that regulation would not stifle their profit motive as they had the power to charge tariffs that could help them recover costs efficiently and make profits from their investments.

He advised every licensee in the industry to get cost-effective tariff, adding that the electricity tariff framework had been deregulated. According to the NERC boss, had all the licensees utilised their licences, Nigeria would have by now been boasting of up to 30 Gigahertz of electricity, adding that in near term, licences that were not performing would be revoked.

“Going forward, we are going to tighten the screws in terms of licensing in Nigeria. We have no choice but to revoke some licences. That is the only way that we can send the right signal to people across the world to come and invest in Nigeria. For somebody with a piece of paper that is not performing, it remains a piece of paper. We have no choice but to make sure that potential investors deliver what they are supposed to deliver.

“Every licence has key performance indicators that are included in the terms of the licence. And it is also expected that within the first six months to three years, each licensee is expected to reach certain thresholds. We started issuing generation licences in 2006. Most of them, up till now, have not gone beyond the issuance of the licences.

“In the past, there were complaints about problem with securing an off-taker. Now, we have issued a licence to an off-taker who will purchase power from them. We have also licensed embedded generators and distribution companies are encouraged to buy power from the embedded generators.

“So, if these challenges no longer exist and you are not doing anything with the licence, there is no reason why we should have you on our website giving the impression that we have licensed somebody when the power is not there. We may have been accommodative in the past; we will follow the due process in revoking the licences.

The new generation companies listed on the website of NERC include Pan Africa Solar Limited, Nigeria Solar Capital Partners Limited, Proton Energy Limited and Turbine Drives Limited. To this end, the country earned $250,000 (about N50 million) from payments made by the companies before the issuance of the licences.

Specifically, Pan Africa Solar paid a licensing fee of $30,000 (about N6 million); Nigerian Solar Capital, $40,000 (about N8 million); Proton Energy, $60,000 (about N12 million), while Turbine Drives paid $120,000 (about N24 million). The companies obtained the licence after satisfying NERC’s requirements for the award of the on-grid licence and making the necessary payments.

Pan Africa was licensed to generate 24 megawatts of electricity through a solar-powered Independent Power Plant, IPP, at Kankia, Katsina State, while Nigeria Solar was granted an on-grid electricity generation licence in respect of a 100 megawatts solar-powered IPP at Ganjuwa, Bauchi State. In addition, Proton’s licence was in respect of a 150 megawatts gas-fired IPP at Ogorode, Sapele, Delta State, while Turbine Drives’ was in respect of a 500 megawatts gas-fired on-grid electricity IPP at Ajaokuta, Kogi State.

Since the commission started issuing licences to power generation companies in 2006, about 124 companies have benefitted from the process but only a few have fulfilled the conditions specified in their licences.