Li­cence with­drawal: NERC eval­u­ates re­ports of 24 in­ac­tive power firms

Daily Trust - - BUSINESS - By Si­mon Echewo­fun Sun­day

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.

Dr. Sam Amadi, NERC Chair­man

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