The Minister of Power, Adebayo Adelabu, has vowed to probe the recent five-year license extension granted to the country’s 11 Distribution Companies, DisCos. Adelabu made this statement during an interactive session with journalists on Wednesday, expressing the government’s concerns regarding the extension.
Nigeria’s electricity sector privatization agreement, which began in November 2013, had a 10-year moratorium plan that expired on 31st October this year. The initial contract allowed for an additional five years, with an option for a further ten years of renewal, subject to a review of the DisCos’ performance by the government.
However, the Nigerian Electricity Regulatory Commission (NERC) recently announced the five-year renewal for the companies during the Nigerian Electricity Supply Industry (NESI) conference. This decision aimed to alleviate investors’ concerns about potential financial losses in a sector that requires long-term investment.
In response to this development, Adelabu emphasized the necessity to prioritize performance over the extension of the license, citing the importance of the performance bond signed with the private sector operators.
“The vice-chairman of NERC informed me that the commission had extended the licenses by another five years before their tenure. We are currently reviewing the legality and contractual validity of this action, and I have instructed an investigation into the license extension to ensure compliance.”
Adelabu further highlighted the significance of the performance bond over the tenure of the license. He stressed the flexibility of revoking the license at any time if the operators fail to meet the conditions stipulated in the performance bond, emphasizing the government’s commitment to upholding the terms of the agreement.
It is noteworthy that the Federal Government had previously criticized power sector operators for their underperformance, a decade after the privatization initiative was implemented.
