The Nigerian Electricity Regulatory Commission (NERC) has met with the Bureau of Public Enterprises (BPE) to establish modalities for a seamless handover of the privatised electricity generation and distribution companies carved out from the unbundling of Power Holding Company of Nigeria (PHCN).
The Chairman of NERC, Dr. Sam Amadi and Director of BPE, Mr. Benjamin Dikki, led teams from their respective organisations to discuss issues relating to the competence of the core PHCN investors as well as the viability of their business plans for their acquired assets.
A statement by the Assistant General Manager, Media of NERC, Maryam Abubakar, yesterday in Abuja, stated that some of the issues discussed at the meeting included application of the fit and proper guidelines for persons desirous of doing business in the Nigerian Electricity Supply Industry (NESI), business plans of the core investors and framework for monitoring and enforcement of transaction agreements.
Other issues, which equally dominated proceedings at the meeting were the formalisation of contracts pertaining to transmission, Power Purchase Agreements (PPAs), vesting contracts and Gas Supply Agreements (GSAs).
In accordance with the provisions in the NERC’s fit and proper guidelines, participants in NESI were expected to satisfy certain levels of technical and financial obligations to guarantee their participatory capacity.
Such requirements include proof of a comprehensive and realistic long-term investment plan for power assets, sources of funding in terms of share capital contribution from verifiable foreign or local sources and without encumbrances or illegalities.
Also, applicants’ net worth were expected to be sufficient to cover at least 30 per cent of the cost of the proposed power project, while sources of loan capital should be stated with verifiable evidence, which should not exceed 70 per cent of the proposed project. The financing plan of applicants was also expected to be realistic and consistent with expansion/investment plans and return on equity and liquidity should indicate favourable ratios.
The statement quoted Dikki as expressing satisfaction with the level of responsiveness displayed details by NERC on issues relating to the privatisation of PHCN, adding that both agencies have enjoyed a harmonious working relationship.
On his part, Amadi reiterated the importance of making adequate preparations for a successful handover of the PHCN assets to the new owners.
He maintained that NERC would intensify its already laid down procedures for monitoring and enforcement in the sector.
The NERC chairman also stated that the priority of the commission would remain customer metering, without which the industry cannot move on successfully, adding that the new owners of the PHCN distribution companies would be required to adopt the existing metering scheme put in place by the commission or provide a better alternative.
An additional meeting to conclude on outstanding discussions relating to the handover was, however, scheduled for tomorrow; where it was also expected that a review of the fit and proper guidelines and discussions on the mechanism for dealing with liabilities incurred during the post-handover stages will be discussed at the rescheduled meeting.
Information from This Day was used in this report.