PHCN: New Owners to Takeover onNovember 1
owners of successor generation and distribution companies
of the privatised Power Holding Company of Nigeria (PHCN)
would now take over operations of their respective assets
on November 1, this year.
This is just as the Nigerian Electricity Regulatory Commission
(NERC) also told the new investors in the power assets that
it would not allow operators to dictate the rules governing
the electricity industry of the country irrespective of their
huge investments.
The Deputy Director, Electric Power Department of BPE, Mr.
Amaechi Aloke, made this disclosure at a public hearing cum
workshop to update the new owners on regulatory issues
regarding the draft interim market rules for the
management of the electricity industry before the eventual
declaration of a Transitional Electricity Market (TEM) by
NERC in Abuja.
Aloke, who assured the investors of government's
commitment to hand over the assets to them by November
1, stated that before then, most of the verified workers of
the defunct power utility would have been paid their
severance benefits.
He, however, reminded them that the National Council on
Privatisation (NCP), which is chaired by Vice-President
Namadi Sambo, still maintains its stance that the workers
must be given a six-month lay-off grace, following which the
new owners can sack and recruit from among them
according to their requirements.
The Chairman of NERC, Dr. Sam Amadi, who took time to
explain the interim market arrangement, also had to defend
the neutrality of the commission in discharging its statutory
responsibilities in the sector.
The commission was accused of championing the interests of
consumers by the new owners of the privatised power firms
without adequate consideration to their business interests,
but Amadi in his remarks, stated that the commission's
operational mode was in sync with global standard
regulatory practices.
"In making rules, we need to listen to all stakeholders,
operators, experts and those that will be impacted by the
rules. We will not make rules without the inputs from those
to be affected by the rules. We will write the rules; not the
operators or Disco Roundtable but NERC will write the
rules," he said.
Amadi explained that the forum provides an opportunity for
the new operators to understand the various regulations
and benchmarks which NERC employs in its regulation of the
market and give their inputs before the final rules become
an order.
According to him: "We believe that the operators and
consumers do not have irreconcilable interests. Our job is to
converge their interests into a single commitment to provide
to every Nigerian home and business access to adequate,
reliable and safe electricity."
NERC's Deputy General Manager, Market Competition and
Rates, Abdulkadir Shetimma, had earlier stated in a
presentation on the draft interim market rules which would
guide the industry between November 1, 2013, when the
power firms were expected to be handed over to the
investors, and February 28, 2014, when the TEM was
expected to fully commence that the rules were necessary
considering that Power Purchase Agreements (PPAs) and
vesting contracts cannot be enforced before TEM.
The draft rules fixed generation companies energy charge at
100 per cent and capacity charge, 45 per cent, while for
the distribution companies, fixed charge and variable cost is
20 per cent, administration cost 100 per cent of MYTO 2
provision, return on capital 50 per cent and depreciation 10
per cent.
However, Robert Yates who spoke on behalf of the
distribution companies argued that fixed variable should be
fixed at 70 and return on capital 60 per cent, adding that
they need more than NERC is suggesting to cater for
salaries, interest to banks and other cash outgoings.
He also noted that arrangement suggested by NERC would
result in their breaching of covenants with their bankers and
that they should be allowed to keep cash covering allowable
revenue before paying the rest to the Market Operator
(MO) in addition to starting loss reduction timeline from
November 1, 2013, which is the agreed deal they signed
with BPE as against March 1, 2014, suggested by NERC.
They equally called for a more practical analysis on disco
cash flow, adding that NERC was championing consumers
cause rather than supporting everyone in the new interim
rules.
Source:Thisday
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