Fashola: NERC Free to Cancel Discos’ Licences, Force Re-capitalisation

By Chineme Okafor in Abuja

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, on Monday affirmed that the Nigerian Electricity Regulatory Commission (NERC) has enough regulatory options to use against any of the 11 electricity distribution companies (Discos) that fail to meet up with the federal government’s recent order to them to improve on their services to Nigerians or exit the market.

Fashola said in a Channels Television programme – Sunrise Daily – monitored by THISDAY in Abuja that the NERC was statutorily allowed to amend or revoke the licences of the Discos, as well as force them to recapitalise their funding base to be able to do their jobs.

He explained that any of the options NERC chose to use to get the Discos to be responsive were within its statutory powers and conditions of the agreements the Discos signed with the government during the 2013 power sector privatisation.

The minister however noted that revocation of licences of the Discos should be a last resort for the regulator in this case, adding that with these options, NERC could not be helpless in its enforcement of the Discos’ obligations to the market.

While responding to a question on what he wanted the NERC to do with his order to it last week, Fashola said: “There are many things that NERC can do and one of the obligations and contracts between the BPE and the Discos are that certain number of meters will be supplied under contract – that’s a contractual obligation, and if the contractual obligation inures in my favour, I should be able to go and enforce it.

“There are also statutory and regulatory obligations which are conditions for the grant of the licence by NERC to the Discos. Under the terms of their licence, there are things they are supposed to do, and within the law, there are things that NERC as a regulator can and should do if a licensee is not fulfilling the terms of that licence.”

He added: “So, nobody in this system is helpless, whether the BPE or NERC. BPE is a contracting party, not the ministry of power, NERC is a regulatory authority, not the minister of power. For example, Sections 73 and 74 provide the NERC with very clear power to amend the licence, to withdraw or revoke the licence for non-compliance. That is NERC’s job to exercise its powers when it feels that certain things are not done.”

He further explained: “But the exercise to withdraw a licence is something that must be done very reluctantly and only as a last resort in the ultimate public interest. There are other things that they can do, insist that they must recapitalise for example, and fund the supply of meter and distribution equipment to take power to the people.

“The purpose of the briefing is to tell everybody to go and do your job. I don’t have issues with the Discos, I want them to take responsibility for their customers who call me all the time.”

The minister also spoke on the controversy raised by President Muhammadu Buhari’s claims in June that the National Assembly had cut down some of the financial votes to key projects in the country in the 2018 budget, and which could impact the government’s execution of the projects.

He said he could work with whatever was given to him in the budget with the expectation that an excellent budget implementation could earn him more financial votes in subsequent budgets.

According to him, “Budget disagreement are not unique to Nigeria, they are part of the areas of conversation between the executive and parliaments in many parts of the world. What they have done in some cases where they have been more successful is that they have to find compromise and consensus and as you see over the last three years, I feel that we are getting better.

“If you cut a budget of any department, what will really happen is that the plans will be affected significantly or minimally depending on the cut. If you cut your housekeeping budget, some things will give obviously and therefore, you will become more inventive and creative and you will have to find ways to get done what can be done within the budget.

“I think also, that whatever you give me, I will run with it and demonstrate what I can do and hope that in the next budget cycle you will be persuaded to give me more.”

He also said the repair of the Third Mainland Bridge would not take seven months as was previously reported, but that initial maintenance works would be done for three days, after which further repairs would be done based on the outcome of an assessment studies on the bridge.