Discos May Cede Networks To Third-party Power Distributors – ThisDay
Worried by the inability of the 11 distribution companies to distribute power to many consumers, the Nigerian Electricity Regulatory Commission (NERC) has said it is considering a new regulation to allow third-party investors take up and maintain parts of the vast electricity distribution networks currently owned by the Discos. The regulatory agency said the proposed regulation was necessitated by the lack of capacity of the Discos to deliver electricity to many consumers. Under the regulation, Discos would be encouraged to cede parts of their networks to third-party investors on the basis of three likely business scenarios.
A consultation paper on the regulation, which was put out yesterday by NERC on its website, and titled: ‘Distribution Franchising in Nigeria,’ explained that by sub-franchising, the Discos would authorize a third-party to provide electricity distribution utility services on its behalf in a particular area within the Disco’s area of supply. NERC added that the franchising arrangement can either be initiated by Discos or customer groups, including communities within a specified geographical boundary that may approach a Disco to allow it take up parts or all of its functions. In the consultation paper, NERC equally clarified that specific roles for a demarcated area or function within the total licensed coverage of distribution can be franchised out by a Disco to a third party.
The regulatory agency, however, maintained that the main elements of such franchising arrangement may include the Disco supplying electricity to the franchisee metered at some injection point at a pre-determined price as per the franchise agreement and the franchisee supplying electricity to consumers of the Disco in an allocated area with tariff approved by NERC.