- The federal government will not renew licenses of underperforming DisCos and Gencos.
- Operators have failed to achieve their set objectives ten years after privatising the power sector in November 2013.
The Minister of Power, Adebayo Adelabu, says the Federal Government will not renew licensing agreements for underperforming electricity distribution and generation companies in Nigeria. Adelabu disclosed this on Monday at the three-day inaugural Nigerian Electricity Supply Industry (NESI) Market Participants and Stakeholders Roundtable (NMPSR) in Abuja.
According to him, operators have failed to achieve their set objectives ten years after privatising the power sector in November 2013. He said that the federal government will revoke licenses of operators that have not met expectations. Adelabu said, “I mentioned that the licences expire ten years later, and it’s time for renewal. Renewal is not automatic. Any privatised companies that have not lived up to expectations will not have their licence renewed. We have to know whether you have complied with the terms and conditions of the license you have been given.
“Most countries do not privatise their electricity supply value chain from generation to transmission to distribution. But bad enough, we have done this; how can we work around the current status to achieve our priorities and objectives? And I said it’s not a job for one person or a set of stakeholders. We must all come together and play our roles to come out strong and succeed in the industry.
“We’ll look at the technical capacities of the GenCos and the DisCos and the financial capabilities of the DisCos. How much investment have you made since you got this licence? How much improvements have you made to the infrastructure? Which AT&C losses have you reduced based on the agreement when you got the license? These are the very serious conversations we need to have with the private sector operators at the distribution and the generating companies level.”
The article highlights the intention of the Nigerian federal government to not renew licenses for underperforming electricity distribution and generation companies. This decision comes after ten years of privatizing the power sector, during which operators have apparently failed to meet their set objectives.
From an expert perspective, here are some recommendations for the federal government to have a robust and responsive electricity supply industry:
Strict Performance Monitoring and Evaluation: The government should implement a robust system for monitoring and evaluating the performance of electricity operators. This should include regular assessments of technical capacities, financial capabilities, and compliance with license terms and conditions.
Transparent Criteria for License Renewal: The criteria for renewing licenses should be clearly defined and transparent. This will provide operators with a clear understanding of the expectations and standards they need to meet in order to maintain their licenses.
Investment and Infrastructure Upgrades: The government should assess the level of investment made by operators since they obtained their licenses. This includes evaluating improvements to infrastructure and reductions in AT&C (Aggregate Technical and Commercial) losses. Encouraging and incentivizing investments in modern technology and infrastructure will be crucial for a reliable electricity supply.
Stakeholder Engagement and Collaboration: The Minister rightly emphasizes that success in the industry requires collaboration from all stakeholders. This includes government agencies, private sector operators, regulators, and consumers. Engaging all parties in meaningful discussions and decision-making processes can lead to more effective policies and strategies.
Addressing Systemic Challenges: It’s important to address systemic challenges that may be hindering the performance of electricity operators. This could include issues related to policy, regulation, financing, and market structure. A comprehensive review of the sector’s regulatory framework may be necessary to identify and rectify any deficiencies.
Incentives for Performance Improvement: The government should consider implementing a system of incentives for operators who demonstrate exceptional performance. This could be in the form of extended license durations, financial rewards, or other benefits that encourage operators to invest in efficiency and reliability.
Consumer Protection and Feedback Mechanisms: Ensuring that consumers have access to reliable and affordable electricity is crucial. Implementing mechanisms for consumer feedback and addressing concerns promptly can help build trust in the industry.
Long-term Planning and Investment: The government should work on creating a long-term plan for the development of the electricity sector. This should involve forecasting future energy demand, identifying necessary infrastructure upgrades, and attracting investment for sustainable growth.
By implementing these recommendations, the federal government can work towards a more robust and responsive electricity supply industry that meets the needs of the Nigerian population and supports economic development.