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Friday, October 11, 2013

New Investors In Nigeria's Privatised PHCN Take Over Operations November 1

Abraham - October 11, 2013

Nigeria's Bureau of Public Enterprises (BPE) has said the new owners of successor generation and distribution companies of the privatised Power Holding Company of Nigeria (PHCN) will take over operations of their respective assets on 1st November 2013.

 

Speaking at a public hearing/workshop to enlighten the new owners on  regulatory issues regarding the draft interim market rules for the management of the electricity industry before the eventual declaration of a Transitional Electricity Market (TEM) by the Nigerian Electricity Regulatory Commission (NERC) in Abuja, the Deputy Director, Electric Power Department of BPE, Mr. Amaechi Aloke, told the investors that the handover date remained sacrosanct.

 

According to Mr. Aloke, the Nigerian government is committed to hand over the assets to them on the said date, adding that before the handover, most of the verified workers of the defunct power utility would have been paid their severance benefits.

 

He also reminded the investors that the National Council on Privatisation (NCP), chaired by Vice-President Namadi Sambo, has maintained its stance that the workers must be given a six-month lay-off grace, after which the new owner could sack and recruit from among them, based on their requirements.
Meanwhile, NERC has warned the new investors that it will not allow them to dictate the rules governing the electricity industry of the country irrespective of their huge investments in the generation and distribution companies.

 

Chairman of the commission, Dr. Sam Amadi, said, “In making rules we need to listen to all stakeholders, operators, experts and those that will be impacted by the rules. We will not make rules without the inputs from those to be affected by the rules. We will write the rules; not the operators or Disco Roundtable but NERC will write the rules."

 

Dr. Amadi said that the forum would provide an opportunity for the new operators to understand the various regulations and benchmarks which NERC employs in its regulation of the market and give their inputs before the final rules become an order.

 

"We believe that the operators and consumers do not have irreconcilable interests. Our job is to converge their interests into a single commitment to provide to every Nigerian home and business access to adequate, reliable and safe electricity."

 

Speaking earlier during the presentation of the draft interim market rules that would guide the industry between 1st November 2013 handover date to the investors and 28 February 2014 when the TEM is expected to fully begin,  NERC’s Deputy General Manager, Market Competition and Rates, Abdulkadir Shetimma, said the rules were necessary considering the fact that the Power Purchase Agreements (PPAs) and vesting contracts could not be enforced before TEM.

 

Disagreeing with Mr. Shetimma, Mr. Robert Yates who spoke on behalf of the distribution companies argued that fixed variable should be fixed at 70 and return on capital 60 per cent, adding that they need more than NERC is suggesting to cater for salaries, interest to banks and other cash outgoings.

 


He said the arrangement suggested by NERC would result in their breaching of the covenants they had had with their bankers, adding that they should be allowed to keep cash covering allowable revenue before paying the rest to the Market Operator (MO) in addition to starting loss reduction timeline from November 1, 2013, which is the agreed deal they signed with BPE as against March 1, 2014, suggested by NERC.

 

They equally called for a more practical analysis on disco cash flow, adding that NERC was championing consumers cause rather than supporting everyone in the new interim rules.

 

--Saharareporters

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