Public Notices

Media Contacts

Name: Usman Abba Arabi
Email: usman.abbaarabi@nerc.gov.ng

Phone: 09- 462.1408

Name: Samuel Ekeh
Email: samuel.ekeh@nerc.gov.ng 
Phone: 09- 462.1408

Notice in the Matter of a Petition for the review of the 2016 - 2018 Minor Review of MYTO and Minimum Remittance Order for the Year 2019

TAKE NOTICE that pursuant to section 74 of the Electric Power Sector Reform Act (“EPSRA”) and the terms and conditions of electricity distribution licences issued to the distribution licensees (“DisCos”) by Nigerian Electricity Regulatory Commission (herein referred to as “NERC” or the “Commission”), the Commission issued a Notice of Intention to Cancel Licences dated 5th of November 2019 to the DisCos listed below for the breach of their respective distribution licences and the 2016 – 2018 Minor Review of the Multi Year Tariff Order (“MYTO”) and Minimum Remittance Order for the Year 2019 (hereinafter called the “Order”)

i.    Abuja Electricity Distribution Company Plc. (“AEDC”)
ii.    Benin Electricity Distribution Company Plc (“BEDC”)
iii.    Enugu Electricity Distribution Company Plc (“EEDC”)
iv.    Ikeja Electric Plc (“IE”)
v.    Kaduna Electricity Distribution Company Plc (“KAEDCO)
vi.    Kano Electricity Distribution Company Plc (“KEDCO”)
vii.    Port Harcourt Electricity Distribution Company Plc (“PHEDC”)
viii.    Yola Electricity Distribution Company Plc (“YEDC”)

The aforementioned DisCos were required to SHOW CAUSE in writing within 60 days from receipt of the Cancellation Notice as to why their licences should not be cancelled in accordance with section 74 of EPSRA.

2. All the eleven (11) licensed DisCos with the exception of YEDC filed petitions challenging the Minor Review and Minimum Remittance Order pursuant to section 50 of EPSRA and the NERC (Business Rules of the Commission) Regulations 2006 (the “Business Rules”).

3. The petitions against the Minor Review and Minimum Remittance Order which were scheduled to be heard at public hearings in accordance with the Commission’s Business Rules were subsequently withdrawn by the respective DisCos. Letters of withdrawal were filed at the Commission.

4. In a subsequent Notice in the matter of a petition for the review of the 2016 – 2018 Minor Review of the Multi Year Tariff Order and Minimum Remittance Order for the Year 2019 (“Updated Notice”) issued on the 5th of November 2019, the Commission noted that the issues raised in the various petitions against the Minor Review and Minimum Remittance Order are totally distinct from the infractions which gave rise to the issuance of the Cancellation Notice to the 8 DisCos on 8 October 2019.

5. In its Updated Notice of 5 November, the Commission stated that the Cancellation Notice remains extant and the 8 DisCos were still required to SHOW CAUSE in writing within 60 days from the date of receipt thereof, and no later than 7th December 2019, as to why their licences should not be cancelled in accordance with section 74 of EPSRA. This was reiterated in an email dated 20 November 2019.

6. In addition to addressing the particulars of non-compliance  contained in the Commission's Notice of Intention to Cancel Distribution Licences dated 8 October 2019, the Updated Notice of 5th November also directed the 8 DisCos to address the issues of "optimal utilisation of resources" and "efficient operation" imposed by sections 32 and 76 of EPSRA respectively as well as the principles of "prudence" and "used and useful" as further justification of optimal utilisation of resources for efficient operations in the following areas:

a.    Customer enumeration progress to date
b.    General procurement practices
c.    Related party transactions
d.    Directors' fees and expenses
e.    Technical partners from takeover to date
f.    Material and contingent liabilities
g.    Utilisation of intervention funds received from the FGN under NEMSF
h.    Efforts to date to address customer complaints and improvement of overall willingness to pay for service
i.    Efforts to date at addressing overall quality of service
j.    Analysis of capital and recurrent expenditure
k.    Metering and billing of maximum demand customers
l.    Metering and billing of MDAs
m.    Payments for technical and management fees
n.    Purchase and utilisation of foreign exchange
o.    Remittances on market obligations from date of takeover to date.

7. The Updated Notice further contained the Commission’s directive to the 8 DisCos to submit the following information under oath as described in paragraph 22 of the Notice and guided by the provisions of section 93 of EPSRA as restated in paragraph 23 of the updated Notice:

a)    Monthly balances in its revenue accounts from date of takeover to date.
b)    Contracts with all revenue collection agents.
c)    Monthly remittances by all collection agents from date of appointment to date along with fees paid by the DisCo to the collection agents.
d)    Details of bilateral contracts and willing buyer/willing seller arrangements along with monthly revenue made from these arrangements.

8. The Commission resolved to consider all responses received in public hearings in accordance with section 24 of the Business Rules which provides that “the Commission may hold a public hearing on any matter which it is empowered under the Act and which the Commission determines to be of significant interest to the general Public”. It however also notified the DisCos in its email of 20 November 2019, that the compliance by a DisCo with the minor remittance directives of the Order shall be considered by the Commission as “good faith” in which case a public hearing shall no longer be necessary but rather, a meeting between the DisCo and the Commission shall be scheduled to address the issues raised in the Cancellation Notice and Updated Notice.

9. The period provided to the DisCos within which to show cause in writing as to why their licences should not be cancelled in accordance with section 74 of the EPSRA ended on Saturday 7 December, 2019 but was legally extended to Monday 9 December 2019 by virtue of the provisions of the Interpretation Act.

10. All 8 DisCos met the deadline for the submission of written responses showing cause against the Cancellation Notice. These responses have been filed at the Commission.

11. The remittance to NBET by the DisCos to date indicates that:

a.    6 out of the 8 DisCos (AEDC, BEDC, IE, KEDCO, YEDC and KAEDCO) met the expected minimum remittance thresholds for the 3 months of July to September 2019.

b.    2 out of the 8 DisCos (EEDC and PHEDC) did not meet the expected minimum remittance thresholds for any of the 3 months of July to September 2019.

12. The Commission reiterates that the failure of DisCos to comply with expected minimum remittance threshold in the Order exposes NESI to systemic risk that threatens the sustainability of other parts of the value chain and the ability to improve services to customers.

13. In compliance with section 41 of EPSRA and section 17 of the Business Rules therefore, a public hearing shall be held at the Commission’s Hearing Room on the 4th Floor of the NERC Headquarters Building, Plot 1387, Cadastral Zone A00, CBD Abuja on 19 December 2019 at 10:00am. The Hearing shall consider the issues raised in the Commission’s Notice of intention to Cancel Licences dated 8 October 2019, the Updated Notice dated 5 November 2019 and the written submissions made by non-compliant DisCos in accordance with the schedule below:

DisCo Time
EEDC 9am - 12pm
PHEDC 2pm - 5pm

 

14. The Managing Director/CEO of the DisCo shall participate in the Hearing in person and shall be responsible for making the presentation on behalf of the DisCo and responding to questions raised by the Hearing Panel.

15. The Commission recognizes the “good faith” demonstrated by the 6 other DisCos listed in the Cancellation Notice and Updated Notice but have subsequently complied or substantially complied with the approved minimum remittance threshold in the Order for July to September 2019.

16. A meeting shall therefore hold between the Commission and the DisCos (AEDC, BEDC, IE, KAEDCO, KEDCO and YEDC) at 10:00 am on 20 December 2019 at the Commission’s Offices. At this meeting, all the issues raised in the Commission’s Notice of intention to Cancel Licences dated 8 October 2019, the Updated Notice dated 5 November 2019 and the written submissions by the DisCos shall be addressed.

Dated this 12th day of December 2019

Dafe C. Akpeneye
Commissioner

 

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