Power firms for sale, consumers to pay higher tariffs from July

The Federal Government through the Bureau of Public Enterprises (BPE) has called on prospective investors to express interest in purchasing 100 per cent shareholding in any of the five electricity generation companies constructed under the National Integrated Power Project (NIPP) listed for sale.

It said this in a document signed by BPE’s Director-General, Mr Alex Okoh, which said that it was in continuation of the ongoing reforms of the electricity supply industry and consistent with the Nigerian Electric Power Policy and Electric Power Sector Reform (EPSR) Act, 2005.

It also said that the Board of Directors of Niger Delta Power Holding Company (NDPHC) and the National Council on Privatisation had approved the sale of the five companies through a competitive bidding process.

It however, did not say how much was expected to be realised from the sales.

The companies constructed under the NIPP are located in Kogi, Edo, Cross River, Ondo and Ogun.

It listed the five in-service generation plants to be Geregu Generation Company Ltd with gross installed capacity at ISO condition of 506 Megawatts (MW) and Benin (Ihovbor) Generation Company Ltd with 507 MW.

Others are Calabar Generation Ltd with 634MW, Omotosho Generation Ltd with 513MW and Olorunsogo Generation Company Ltd with 754MW.

According to the document, prospective investors are expected to submit separate Expressions of Interest (EoI) for each generation company.

“Each bidder must be an experienced power generation company that owns and/or operates utility size power plants.

“In case of a consortium, at least one of the consortium members must be an experienced power generation company (the “Technical Partner”).

“The technical partner shall be responsible for providing operation, maintenance and management services under a long term agreement.”

The News Agency of Nigeria (NAN) reports that the BPE had during its 2021 budget defence at the National Assembly, disclosed plans by the Federal Government to sell some generation companies.

NAN also reports that BPE was created through the Public Enterprises (Privatisation and Commercialisation) Act 1999, to diversify the economy and strengthen the private sector as Nigeria’s engine of growth and economic driver.

Meanwhile, the Nigeria Electricity Regulatory Commission (NERC) has approved new Extraordinary Tariff Review applications, Performance Improvement Plan (PIP) and Capital Expenditure (CAPEX) for distribution companies (DisCos) effective from 1st July 2021.

They shall be effective till 30th June, 2026. The Minister of Power, Engr. Sale Mamman, at the weekend allayed consumers’ fear there will be no significant tariff increase.

In a statement in Abuja, the Minister said: “Instead of significant hike in electricity tariff, Nigerians should expect increase efficiency in the sector to reduce tariffs while managing headwinds from foreign exchange and inflation.”

The clarification came amidst reports of possible major increase in the price of electricity that has dominated the public space.

Mamman explained the order issued by NERC on the 26th of April 2021 titled “Notice of Minor and Extraordinary Review of Tariffs for Electricity Transmission and Distribution Companies” was a routine procedure.

He said the review planned by NERC is in accordance with Section 76 of the Electric Power Sector Reform Act of 2005.

But in the NERC orders issued to the different DisCos on Sunday, they were about applications for extraordinary tariff review, Performance Improvement Plans and capital expenditure for the next five years, beginning from 1st July this year.

In the case of Ikeja Electricity Distribution Plc (IKEDC), the NERC said: “This regulatory instrument may be cited as NERC Order on PIP and Extraordinary Tariff Review Application for Ikeja Electricity Distribution Plc (IKEDC)”.

NERC broke the news in its Order/NERC/274/2021 that The Nation obtained.

According to the document, IKEDC just like the other DisCos, applied for the Commission in November 2019 for a review of the provisions for CAPEX in its Multi-Year Tariff Order (MYTO) tariffs to support the implementation of its PIP over the next five years.

The order explained: “Under the Power Sector Recovery Program (PSRP), it is envisaged that the commission would implement a robust tariff review process aiming at improving performance in the Nigerian Electricity Supply Industry (NESI).

“This process involved a review of CAPEX allowances in MYTO model compliance with PIPs of the DisCos.

“The approved PIP and Extraordinary Tariff Application shall form the basis for IKEDC to prioritise the implementation of the proposed CAPEX initiatives.

“The approved PIPs shall also form the basis for defining Key Performance Index for IKEDC for the next five years by the Commission with an emphasis on improvement in energy throughout and improving service delivery to customers”.

IKEDC proposed to undertake numerous interventions to improve service delivery to customers.

Over the next five years the proposed interventions will allow the company to increase the total energy supplied across IKEDC from the 2019 levels of 4,469Gwh/year to 5,263GWh/year by December 2022.

The energy distributor planned to increase average duration of supply to customers in each tariff band over the same period.

It said it shall increase platinum cluster from an average of 17 hours per day to a minimum of 20 hours per day.

The IKEDC also planned to reduce the average duration of interruptions from 12 hours to 8 hours per month by December 2022.

The Abuja Electricity Distribution Company (AEDC) proposed to undertake numerous interventions to improve service delivery to the customers.

Over the next five years, the proposed interventions will allow AEDC to achieve substantial improvement in service delivery but not limited to the following:

“Reduce ATC & C losses from the current level of 45 per cent to 19 per cent over 5 years.

“Achieve 100 per cent metering of customers by installing 698,606 meters over 3years + Improve customer safety and reduce inadvertent accidents

“Increase number of new customers from the current level of 1,214,259 to 3,450,695 over 5 years”.

The Yola Electricity Distribution Company (YEDC) proposed to increase total energy supply across its network from 2019 levels of 1,161,359MWh/year to 1,226,710Mwh/ year by December 2022.