The Nigerian Electricity Regulatory Commission (NERC) has approved a five-year Performance Improvement Plan (PIP) and Capital Expenditure (Capex) benchmark for Distribution Companies (Discos), expected to run from July 1, 2021, to June 30, 2026.
The commission, in an order copied the 11 Discos, stated that the review of the capital expenditure allowances were to align with PIPs of the Discos and form the basis to prioritise the implementation of the proposed initiatives.
According to NERC, the Discos are expected to commit to the growth parameters, which include the reduction of Aggregate Technical, Commercial and Collection (ATC&C) losses, reliability, and availability of services, billing, and payment processes as well as metering.
The order signed by NERC Chairman, Mr. Sanusi Garba, and Commissioner, Legal, Licensing and Compliance, Mr. Dafe Akpeneye, stated that given capacity growth, the Discos will require investments in the network to adequately plan for the increased demand over the next five years.
NERC added that before arriving at the figures, there had been engagements, which were necessary to instill accountability between the Discos and their customers on their services and justification for associated costs and resulting tariffs.
It added that the meetings were meant to minimise disputes by engendering understanding and trust between the power distributors and their customers and provide an opportunity to engage with customers on the service improvement investment programme.
For instance, NERC directed the Abuja Electricity Distribution Company (AEDC) to reduce ATC&C losses from the current level of 45 per cent to 19 per cent over the next five years, achieve 100 per cent metering of customers by installing 698,606 meters over the next three years as well as improve customer safety and reduce inadvertent accidents.
It also approved the AEDC’s request to increase the number of new customers from the current level of 1.214 million to 3.450 million over the five-year period, plus the go-ahead to embark on network expansion, rehabilitation, and network upgrade projects.
In line with the business rules of the commission, NERC said the proposal by the Discos were reviewed using the principles of completeness and consistency of the description of each component of the PIP and compliance of each component with the guidelines for preparation of PIPs.
“The commission, having considered AEDC’s PIP and extraordinary tariff review application in line with the provision of EPSRA and relevant regulations, approved the PIP and CAPEX programme over five years as provided,” the NERC stated.
For the Enugu Electricity Distribution Company (EEDC), NERC approved a growth projection of its customer base from 1.1 million to 1.8 million in the next five years, reduction of ATC&C losses from the current 51 per cent to 29 per cent and grow energy delivered from 2,269GWh to 5,725 GWh.
NERC also gave the go-ahead for the EEDC to spend an annual approved Capex of N13.4 billion, while that of Kano electricity was put at N12.6 billion per annum.
For Yola electricity, NERC approved N5.45 billion annual capital expenditure and instructed the company to reduce ATC&C losses from 66 per cent to 37 per cent in the next five years.
Similarly, for Jos Disco, the regulatory commission approved N7.8 billion yearly Capex and urged the company to curb ATC &C losses from 61 per cent to 23 during the period.
NERC said the Discos were at liberty to frontload their Capex programmes to attain accelerated service improvements, adding that frontloading of Capex programme in any year shall not exceed annual Capex for the following year in line with the framework for continuous update of the PIPs.
It stated that annual Capex provisions that are unutilised or imprudently expended shall be clawed back during minor reviews of tariffs in line with the requirements of Section 7 of the regulations on the procedure for electricity tariff reviews in the industry.
“The approved PIP and Capex programme shall take effect on the 1st day of July 2021 and shall remain effective until the 30th day of June 2026,” NERC said
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