Revoke licenses of non-performing DISCOs – FG orders NERC

Electricity update: Nigeria’s power supply improves by 4.6% to 84.05GWh

The Federal Government has directed the Nigerian Electricity Regulatory Commission (NERC) to cancel the licenses of non-performing electricity distribution companies (DISCOs).

Power generation fell 21% year on year (YoY) to 3,475MW in March 2024, down from 4,404MW in the same time in 2023.

Many factors have contributed to this, most notably a lack of investment and an insufficient supply of natural gas.

Despite the fact that power is available on the national grid, the government accused the DisCos of doing too little to enhance supplies.

The Minister of Power, Adebayo Adelabu, indicated during a meeting with the heads of the agencies in Abuja that the distribution segment remained the weakest link in the energy supply value chain.

Adelabu stressed that NERC must find creative ways to get the DISCOs to improve supply, including imposing stiff sanctions on utilities that fail to pick up their allocations and outright canceling licenses.

He insisted that the franchise areas covered by the DISCOs were too large, adding the government would pursue a restructuring that would create smaller DISCOs with companies restricted to one state each.

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“Distribution is our weakest point, the closest to the consumers. If we don’t get distribution right, we’re not doing anything to Nigerians. So, efforts need to be put into this. We must intensify our efforts to ensure we address all distribution issues.

“It is true that the distribution companies are in the hands of the private sector. We don’t have direct control. But we need to compel them to perform. They must perform. If they do not perform, all our effort in generation and transmission is zero. I’ve also had a meeting with the Chairman of NERC on how we will address these performance issues of the electricity distribution companies across the nation.

“Why we have new policies in our power sector policy framework, which we’re going to finalize to address long-term issues in distribution, we must proffer short-term solutions to the lingering crisis.

“Before we get to that, we’re talking about the issue of the capitalization of the discourse, for them to inject funds, to improve infrastructure.”

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“We are talking about restructuring the DISCOs along state lines to make them manageable in size. Also, we are issuing new franchises to smaller DisCos to take over areas not being served by the existing ones or that have been underserved by the existing ones.

“I’ve said it before now that non performance of DISCOs in terms of epileptic power supply qualifies as a basis for revocation of license. Any DISCO that is found-wanting will be severely dealt with because their actions or inactions directly affect the performance of the sector”.

The Minister pointed out that any DISCO’s willful refusal to use available power “is a qualified basis for the revocation of licenses too,” adding that the distribution companies must be ready to take on 90-99 percent of the load allocated to them.

He described the ongoing electricity rationing across the country as unacceptable and disclosed that the government plans to increase power generation from the present 4,000MW to 6,000MW in the next six months.
He said this would be achieved by paying off substantial debts owed to power generation companies and gas suppliers.

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“So we are looking at an agreement to ramp up to a minimum of 6,000 megawatts within the next three to six months. About three years ago, I know that the highest we ever generated was 5,700. That was specifically in November 2021.

“And this 5,700 was also distributed. If we could achieve 5,700 at that time, I believe we still have the infrastructure to generate between 6,000 and 6,500. In terms of the generating companies, I do not doubt that the existing capacity can give us 6,500 once there is stability in the gas supply.

“I’ve visited a number of the generating companies, and I confirmed that they have this installed capacity. A large percentage of this installed capacity is operational, but it is not available because of a low or shortage in gas supply. Once there is gas supply, we want to ramp up generation to a minimum of 6,000MW.”

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