Licence withdrawal: NERC evaluates reports of 24 inactive power firms
As fears of cancelling and withdrawing non-performing electricity licences thicken, some 24 firms marked for licence withdrawal have submitted their progress reports within the 30 days deadline issued by the Nigerian Electricity Regulatory Commission (NERC), Daily Trust has learnt.
The Commission had, in 2014, lamented that it had issued over 80 licences since its inception in 2005. However, said some licensed Independent Power Plants (IPPs) which ought to have taken off within three years, are yet to.
An audit of the generation licences was initiated classifying them into “Licensees in Operation, Licensees that Ceased Operations and Licensees not in Operation.” It also reviewed the quarterly reports the firms submitted in 2014. For plants yet in operation, the sole power market regulator had sought progressive updates on milestones to be achieved before the eventual completion of the plant.
The set targets include obtaining a Title Deed to site, and executing a Power Purchase Agreement (PPA) which is a contract document issued by the Nigerian Bulk Electricity Trading Plc (NBET) to guarantee the sales and purchase of generated electricity.
The firms must also have an approved Environmental Impact Assessment (EIA), a Fuel Supply Agreement, initiated an Engineering, Procurement and Construction (EPC) contract, and concluded the plant’s financing agreements.
A July 2015 audit report of the NERC indicated that it has so far issued about 102 electricity licences. While 63 firms are operating well, 13 generation licences are yet to operate, but have been given till July 2016 to commence construction. The Commission said it is in the process of cancelling two licences whose plants have stopped operation.
However, some 24 firms fell short of meeting the milestones and have not submitted quarterly reports. They were given a month to report their status or face licence withdrawal.
Section 74 of the Electric Power Sector Reform (EPSR) Act 2005 and Clause 17 of NERC Application for Licences Regulations of 2010 empower the Commission to withdraw and cancel non-performing licences.
NERC, at its ninth Formal Regulatory Meeting in July, said the 63 licences in full operation in the power value-chain have been notified on possible sanctions should they breach their licence terms.
The two licensees to be cancelled are CET Power Projects (WAPCO Ewekoro) and Contour Global Solutions (Nig) Ltd (NBC - Apapa) which have ceased operations.
The 13 licensees not yet in operation, but adjudged to be satisfying their milestones include a former Minister of Information, Prof. Jerry Gana’s firms - Supertek Nigeria Ltd in Abia state and Supertek Electric Ltd in Kogi state.
Among others are Mabon Energy Ltd fitting in 40 megawatts (mw) at Dadin Kowa Hydropower dam in Gombe state. The licence of Zuma Energy Nigeria Ltd for Itobe-1, Itobe-2, Itobe-3, and Itobe 4 Coal Power Ltd in Kogi state is the largest ongoing project in coal-to-power.
The firm, owned by local investor, Dr. Innocent Ezuma, assured it would start constructing by early 2016 and plans to have a 300mw capacity in the four slots, culminating in 1,200mw coal power.
The NERC, in a written notice to these firms, advised them to satisfy their outstanding milestones and commence construction latest July 2016 as it will commence licence withdrawal for such breach. Twenty four firms came under serious scrutiny from the Commission after its report said they are not yet in operation and have not met significant milestones, neither are they submitting quarterly reports on their activities.
Five of these generation licensees did not satisfy their milestones. ICS Power, Anita Enegry, Ibafo Power Station, MInaj Holdings and Gateway Holdings Limited, mostly planned power plants in the southwest, but have not made significant moves. Hence, they got 30 days to provide justification or risk their licence withdrawal.
The other 19 failed to submit quarterly reports for over a year. They include the duo of Geometric Power and Aba Power Limited headed by former Minister of Power, Prof. Barth Nnaji. Its 141mw Geometric plant was to have given power for distribution by Aba Power in Abia state as a carved out Distribution company.
Although the plant is ready, Daily Trust learnt that litigations and government’s inaction during the last days of former President Goodluck Jonathan to direct the Bureau of Public Enterprise (BPE) to act on the case stalled its operation.
Azura Power West Africa Ltd was also fingered. It did a ground-breaking for its 450mw plant in Edo early this year, while the Kaduna Power Supply Company Ltd is to produce 215mw but has been caught in fuel supply constraints after the construction reached 86 per cent mid 2014.
Speaking on the deadline, which elapsed in August, the Commission’s Chairman, Dr Sam Amadi, told the Daily Trust that the fingered licensees have submitted reports on why their licences should not be withdrawn. Amadi said, “They have responded. Like you know, the query was to show cause why they should not have their licences withdrawn within 30 days.
“They have submitted their response. So what we have done now is to get our team to evaluate their claims about the work they have done so far. After the evaluation, whatever the outcome is, we will then take it to the next step from there,” Amadi said.