The Nigerian Federal Government announced on Monday that power distribution companies that do not meet the required standards in the industry will forfeit half of their operating expenses.

It stressed that the individual performances of the Discos will be reviewed on a case-by-case basis going forward.

It made the announcement through the Nigerian Electricity Regulatory Commission at the First NESI Stakeholders Meeting of 2024 in Lagos.

Almost 12 million registered power users nationwide are served by 11 power distribution companies in Nigeria, according to official statistics.

In November 2013, the companies that generate the electricity for the national grid and the successor Discos went through a privatisation process.

The power generated by the Gencos is transmitted by the Transmission Company of Nigeria to the Discos, who then distribute it to consumers across the country.

However, the sector has been beset by a number of issues, chief among which is the problem of inadequate liquidity, and grievances regarding Discos’ incapacity to provide the industry with sufficient financial remittances to ensure power production.

On Monday, a sequence of posts on the official X handle of the power sector regulator stated that Musiliu Useni, the Vice Chairman of NERC, had urged Discos to improve their performance or face consequences.

According to quotes, he stated, “NERC will consider performance on an individual basis.”

There will not be the same sanctions and actions. Make sure that as DJs, you increase your productivity.”

You will receive your whole operating expenditure (OPEX) if your efficiency is at the anticipated level. Only 50% of your admin OPEX will be awarded to you if you perform poorly.

As the industry regulator for the power sector, NERC has the authority to approve the operating expenses of Discos and other major players, and it has been doing so for a number of years.

Useni informed his audience that the finance ministry was in charge of operationalizing the centralised billing platform for Ministries, Departments, and Agencies.

He said, “A payment system was put in place for critical MDAs, with an agreement for the Ministry of Finance, which would have access to their metre readings, to settle their electricity consumption centrally.”

He went on to say that the industry needs to be managed sustainably in terms of the different operators’ payment obligations.

“We must guarantee that a long-term, sustainable payment system is in place. Market regulations are explicit, but they do not account for tariff gaps or subsidies, according to Useni.

The commission said the purpose of the meeting was to review compliance since the previous meeting, provide strategic direction for the NESI, and provide a forum for licensees to address concerns.The duties of licensees in the NESI will be investigated, stated Chidi Ike, Commissioner, Engineering, Performance, and Monitoring, NERC, during her remarks at the meeting.

“We intend to host a thorough workshop to review licensees’ responsibilities. The legal framework, the grid code, HSE (health, safety, and environment), and all other pertinent topics will be covered in the workshop. If they do not comply, there will be consequences, he said.The building of homes beneath transmission lines concerned him, and he cautioned discos against providing electricity to such buildings.

“You observe large areas of towns covered in transmission lines. Even though they are obviously violating TCN’s Right of Way, discos provide power to them. We are going to concentrate on those areas and make sure that Discos do not profit from any illegal activity,” Ike said.

During his presentation on the Health and Safety Performance of the NESI in 2022 and 2023, John Joseph, Assistant General Manager, Engineering, Performance and Monitoring, NERC, identified the primary cause of accidents.

Unsafe conditions accounted for 38% of accidents in 2023. There are safety precautions that ought to be taken, but are neglected instead, which causes mishaps, the speaker said.

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