In a June 13 LinkedIn post, Olajumoke Delano, a Nigerian power sector expert, addressed the ongoing debate between Distribution Companies (Discos) and electricity consumers regarding the ownership of transformers and other electrical equipment and assets purchased by consumers.
This raises a critical question: does ownership belong to the customer who purchased the transformers or assets or to the Disco that distributes electrical energy through it?
The Electricity Act 2023 (EA) and the Investment in Electricity Networks Regulation 2012 provide clear guidance. They stipulate that non-licensees, like electricity consumers, can invest in electricity networks, including purchasing transformers and related equipment.
Provisions Under the Electricity Act 2023
The EA outlines that any willing and capable electricity consumer can contribute to the funding, acquisition, installation, and maintenance of electricity distribution transformers or other related equipment to ensure a stable electricity supply under the following conditions:
Disco’s Inability to Provide Equipment: The Disco cannot supply the necessary transformers or equipment within a reasonable time.
Prior Written Request: The consumer must submit a prior written request to the Disco, including:
The consumer’s name, address, nature of business, the amount to be contributed and the distribution transformer specifications to be procured and installed, the location for the transformer, the funding details, and the expected number of customers to benefit from the improved power supply. There is a need for a meeting or consultation to discuss and agree on the request.
Recovery of Investment – If the consumer wishes to recover their investment, they must enter into a written agreement with the Disco. This agreement should detail the terms and conditions of the investment, the amount invested, the duration for recovery, and other pertinent details. Without such an agreement, the consumer’s investment will be considered a donation to the Disco, and the equipment will be incorporated into the Disco’s regulatory asset base.
Consumer Control Over Usage – It is important to note that consumers do not have the right to control their equipment usage unless they have invested in a dedicated transformer.
Note that while electricity consumers can invest in the power infrastructure, the ownership and control of such investments depend on the specific arrangements made with the Discos. Consumers should ensure they have clear, written agreements to safeguard their investments and clarify the terms of ownership and control.
This understanding is crucial for consumers and Discos to maintain a cooperative and efficient relationship in the Nigerian power sector.