New PHCN Owners Takeover Nov 1


Teddy Oscar, Abuja

New owners of the successor generation
and distribution companies of the privatised Power Holding Company of Nigeria (PHCN) have been assured that they will now take over operations of their respective assets on November 1, 2013.

The Deputy Director, Electric Power Department of the Bureau for Public Enterprises (BPE), Mr. Amaechi Aloke, dropped the hint in Abuja at a public
hearing and 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 the Nigerian Electricity Regulatory Commission (NERC) on Thursday.

Aloke, who assured the anxious 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) 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 amongst them according to their requirements.

Meanwhile, NERC has hinted that the new investors in the power assets will not be allowed to dictate the rules that govern the nation’s electricity sector, despite their huge investments.

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.

“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,” he added.

Robert Yates, who spoke on behalf of the distribution companies, argued that
fixed variable should be fixed at 70 and return on capital 60 percent.

He noted that they need more than NERC is suggesting to cater for salaries, interest to
banks and other cash outgoings.

In his view,  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.



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