The Nigerian Electricity Regulatory Commission (NERC) in a swift response to the ailing power sector especially generation of power has issued notice of revocation of operating licences of 27 power generation companies over failure to meet the terms of their contract. The notice to the defaulting companies is to elapse within 30 days.
This action was a follow up to the discovery through an audit exercise that the affected firms could not meet the terms and conditions for their licences.
The audit carried out showed among other things that 63 generation and distribution companies were rated as category one and would remain in operation as they have no issue with the commission.
Forty other firms in categories one to four will also need to justify their continued ownership of their licences or get it withdrawn within the next 30 days to 12 months.
In category two are those licensees that have ceased operations. The firms include CET Power Projects being promoted by West African Portland Cement Company, Ewekoro, Ogun State and Contour Global Solutions owned by Nigeria Bottling Company of Apapa, Lagos State.
The commission said it will immediately “start the process of cancellation of these licences in line with Clause 17 of the Electric Power Sector Reform Act of 2005” which listed five conditions for cancellation of licences.
Thirteen other power generation firms in category three that are “not in operations but have substantially satisfied their milestones” include Ethiope Energy; Supertek Nigeria; Mabon Energy; Bresson AS; Hudson Power; Knox J & L; Tower Power, Abeokuta; Zuma Energy Nigeria transferred to Itobe Coal 1, 2, 3 and 4 firms.
Others in this category are MBH Power; Delta Electric Power; Wedotebary Nigeria; Century Power Generation and Supertek Electric.
Those in this category will “be required to satisfy their outstanding milestones and start construction within the next 12 months, failing which the commission will commence the process for withdrawal of their licences in line with Clause 18 of the NERC Application for Licences (Generation, Transmission, System Operations, Distribution and Trading) Regulations, 2009.”
In the fourth category are five power generation firms that “are not in operations and have not substantially satisfied their milestones.” They have 30 days to convince the commission on why the withdrawal of their licences should not be effected. In this category are ICS Power; Anita Energy; Ibafo Power Station; Minaj Holdings and Gateway Electricity.
There are other 20 electricity generation firms in category five that are “not in operation and are not submitting quarterly reports to the commission.” They would be required to, within 30 days, provide justification for their licences or get it revoked.
The commission in its notice said, “Licensee listed in category two are hereby notified of the intention of the commission to commence the process for the cancellation of their licences on the grounds that the licensees have ceased operations.”
Those in categories four and five were “notified of the intention of the commission to commence the process for the withdrawal of their licences on the grounds that these companies have failed to commission their licenced generating power station within three years from the date of their licences.”
Licensees in category two would only be notified of the commission’s intention to cancel their licences, while those in categories four and five have 30 days moratorium to convince the commission against the withdrawal of their licences. Firms in category three have 12 months moratorium to start construction.
Clause 18 of the NERC Application for licencees (Generation, Transmission, System Operations, Distribution and Trading) Regulations 2009 stipulates six conditions for withdrawal of a licence, which include “misrepresentation or non-disclosure of material fact.”
Other conditions are “willful or unreasonable contravention provisions of the Electric Power Sector Reform Act 2005 and other regulations governing the industry; failure to comply with milestones; contravention of licensing conditions; insolvency or bankruptcy and failure to commission licenced generation station within three years.”
Most of the affected firms may be sanctioned for their failure to meet their milestones or commission their power plants within three years of being licenced.
