Operating licences issued to the new owners of the privatised Power Holding Company of Nigeria, PHCN companies, and other operators in the power sector is valid only for 10 years, the Federal Government has said.
The licences may thereafter be extended for a maximum of five years.
The Nigeria Electricity Regulatory Commission, NERC, in a notice pasted on its website, titled, “Public notice on the interpretation of sections 71 (10) and 72 (1) of the Electric Power Sector Reform (EPSR) Act 2005, regarding the tenure of its licences,” said upon application, the license can be renewed for an additional 10 years.
According to the NERC, Section 71(10) provides that: “A licence shall be valid for a period of up to, but not exceeding ten years, provided that the Commission may extend the period of a licence taking into account the nature of the undertaking or business, for an additional period not exceeding five years at a time it determines that it is in the public interest to do so”
the Chairman/Chief Executive Officer, NERC, Dr. Sam Amadi, who signed the notice, said the clarification became necessary following the need to mitigate the risks associated with short licence tenure.
The move is also meant to provide financiers as well as other contracting entities the comfort they require to accommodate the long-term gestation of most electricity industry projects
He said: “This notice serves as clarification of the position of NERC on these provisions to assure stakeholders in the electricity industry and other interested parties that upon application and subject, only to compliance with the Terms and Conditions of the Licence.
“The combined effect of sections 71(10) and 72(1) guarantees the Licensee a cumulative licence tenure of twenty five (25) years made up of the initial ten (10) year grant, a five (5) year extension and another ten (10) years upon renewal.”
Information from Michael Eboh, Vanguard was used in this report.