The force majeure notice recently issued by power distribution companies and their disapproval of the eligible customer regulation of the Nigerian Electricity Regulatory Commission are jeopardising power production in the country.
According to the power producers, the refusal by the Discos to accept the eligible customer regulation and their subsequent force majeure declaration notice are not in the interest of the power sector.
On November 21, The PUNCH had exclusively reported that electricity distribution firms issued a notice to declare force majeure following the declaration by NERC that eligible customers could purchase power directly from the generating companies.
Force majeure are unexpected circumstances that can be used as an excuse to prevent a party from doing something written in a contract.
The force majeure declaration notice by the Discos had prompted a response from electricity producers under the aegis of the Association of Power Generation Companies in Abuja on Tuesday.
The Executive Secretary, APGC, Joy Ogaji, said, “Reacting to the declaration of eligible customers on the 19th of May, 2017, pursuant to section 27 of the Electric Power Sector Reform Act, 2005, as well as the recently issued regulation by NERC to guide its implementation have been a trending news for the right and wrong reasons.
“This calls for clarity and further elucidation of the discourse. The need for clarity was necessitated by the fact that the media is awash by several publications justifying why the declaration was ill-fated for the market and that it will lead to its eventual collapse.
“This has also led to declaration of force majeure by the Discos. The generation companies whose product it is that is being jeopardised can no longer keep quiet while its hair is been shaved, hence this response.”
The power producers argued that the declaration of eligible customers was the first among many steps that needed to be taken if the nascent privatisation in the power sector would succeed.
“The load rejection phenomenon by the Discos has remained a major bottleneck in the operations of the Gencos and seriously threatens the survival of the Nigerian power sector,” Ogaji added.
On arguments by the Discos that the eligible customer declaration is premature and that the market is not ripe for it, she noted that the EPSR Act did not portend that the market should first be competitive, rather the declaration was intended to initiate or commence a competitive market.
“With stranded generation capacity in the electricity market and poor market liquidity, the declaration of eligible customer is the brilliant way to liberate the electricity sector from current monopoly,” Ogaji noted.
The Gencos stated that if there was any one sitting on a force majeure event, it was the legacy generating companies suffering from the lacklustre performance of relevant agencies with accumulating debts and an unrecognised deemed capacity.
“I am persuaded to believe that if the relevant agencies such as the TCN, NERC and the policymakers provide the enabling environment, this policy directive will lead to increased generation capacity as the Gencos would potentially ramp up their generation capacities to provide supply to eligible customers, addressing issues bothering on financial viability of the electricity supply value chain, which is the main and immediate issue confronting Nigerians from enjoying the benefits of the power sector reforms,” Ogaji said.