Did licences of 5 DisCos expire in October?

Claim: Media reports claimed that the chairman of the Public Account Committee of the House of Representatives, Bamidele Salam, said the licences of five electricity distribution companies (DisCos) expired on October 30. Verdict: The claim is false. The Nigerian Electricity Regulatory Commission (NERC) had in October said the 11 DisCos in the country got a […]

Claim: Media reports claimed that the chairman of the Public Account Committee of the House of Representatives, Bamidele Salam, said the licences of five electricity distribution companies (DisCos) expired on October 30.

Verdict: The claim is false. The Nigerian Electricity Regulatory Commission (NERC) had in October said the 11 DisCos in the country got a five-year renewal of their licences in 2018 to ensure a long-term investment in the sector for investors to recoup their money.

Full text

A news report appeared on different media platforms claiming that the operating licences of five DisCos expired in October 2023.

According to the report, which was sourced from the News Agency of Nigeria (NAN), “The House of Representatives says the operating licences of the five Electricity Distribution Companies (DISCOs) in the country expired in October, urging them to renew the licences for operations.”

Rep Bamidele Salam, the chairman of the Public Account Committee of the House, said this at the resumed investigative hearing on the operations of the DisCos in Abuja on Thursday.

Background

Nigeria privatised its electricity sector in 2013, consequently unbundling the overly government-owned Power Holding Company of Nigeria (PHCN).

The exercise led to the distribution and generation part handed to private investors while the transmission network remained in the hands of the government.

The privitisation, which was done through the Electric Power Sector Reform Act of 2005, had allowed for the licences of the distribution companies to last for 10 years, after which they could seek for another five-year extension.

The act further allowed for another 10 years, making 25 years if the investors perform to the satisfaction of the NERC, the ombudsman in the sector.

It also allowed the NERC to review the performance of the investors in the first years the licences were issued.

November 2013 was when the privitisation was concluded birthing 11 distribution and six generation companies.

The poor performance of the distribution companies despite the federal government pumping billions of naira led to stakeholders to call for the revocation of the licences when they expire in 2023.

Verification

The poor performance of the DisCos had led to their activities reviewed by the federal government when their licences expired in October 2023.

According to a media report, the NERC announced that the DisCos had gotten a five-year extension of their licences.

The report showed that the announcement was made at a stakeholders’ conference celebrating 10 years of post-privitisation of the sector.

It quoted NERC’s general manager, Market Competition and Rates, Shamsudeen Mammud as saying that, “It has been rumoured that the licenses of the DisCos will expire this year, but the truth is that they were given a 10 years. But as they took over, the commission extended their licences by five years.

“The DisCos have 15-year licences. So, their licenses will expire five years from now, which is 2028.”

This pronouncement, according to media reports made the Minister of Power, Adebayo Adebayo, to say he would probe the extension.

The minister also questioned the legal and contractual basis of the extension.

“The vice chairman of the NERC told me that before their tenure the commission had extended the licences by another five years. The correctness of that, legally and contractually, we are trying to review. And I have ordered an investigation into the extension of the licences if they were in order.”

What transpired at the investigative hearing

A Google engine search using the keyframe “five discos’s licence has expired” broughta news report by the Nation newspaper with the headline, ‘DisCos’ licences expired in October.’

The report, which gave a detailed narration of what happened at the  hearing, did not quote the chairman to say that the licenses had expired, but rather, the managing of the Jos Electricity Distribution Company, one of the DisCos.

“At an investigative hearing of the House Committee on Public Accounts, the chairman of the Committee, Bamidele Salam, had sought to know when the operating licences of the DisCos would expire,” it stated.

Responding, the managing director of the Jos Electricity Distribution Company, Abdul Bello Mohammed, told the lawmakers that the operating licences of all the DisCos expired last in October, but was quick to add that two years were declared as non-performing years.

He said, “The EPS 2005 provided for a tenure of 10 years for the distribution companies. But, however, there’s also a provision for renewal of this licence for another 10 years and then extension by five years.’”

“Asked when the first 10 years were supposed to elapse, Mohammed said, ‘It should be in October this year.’

“But Salam, who was apparently not satisfied by the response, inquired further, saying, “The first 10 years elapsed in October this year and we are in November already.”

Mohammed said, “Yes, by implication going by the provisions of the act. But there are two years that were declared non-performing years and I think they would be added.

“Asked whether the DisCos had applied for the renewal, Mohammed said, ‘it (existing licence) has not expired yet because of the two years’ non-performing,” but was quick to add that “it is the commission (NERC) that will actually clarify that.’”