Discos reject embedded projects in franchise areas

A showdown is imminent in the power sector as two electricity distribution companies, Enugu and Eko DisCos have taken shots at two private companies they say are encroaching on their franchise areas through offering location specific power generation called embedded generation.

This is as the Nigerian Electricity Regulatory Commission (NERC) granted a 9.5 megawatts embedded electricity generation licence to one of the firms Ariaria Market Independent Power Plant Limited and an independent electricity distribution licence to distribute same within Ariaria Market to Ariaria Independent Energy Distribution Network Limited.

The Commission said in a statement on Tuesday by Vivian Mbonu, who heads NERC’s media unit that the licences granted to Araiaria were affirmation of the Commission’s commitment and response to the long-time yearnings of the market for a stable, reliable and sustainable electricity supply to improve quality of goods and services by Nigerian enterprises and entrepreneurs.
However in what could shape out to be a protracted conflict, the DisCos have written to NERC in objection to the companies operations. BusinessDay contacted NERC for its plan to tackle the situation but is yet to get a response before publication.

In an advertorial published in newspapers, Eko DisCo warned a private company, PIPP LVI Distribution Limited to remove all the lines it laid on its network and cease from soliciting further business from its customers.
Similarly, the Enugu DisCo in an advertorial said “Ariaria Independent Energy Distribution Network Limited (AIEDN) encroached and trespassed on its distribution licensed coverage area by illegally constructing distribution lines without a license nor the authorization of the DisCo.
“This act is in clear contravention of the regulatory provision that no company can set up a distribution network within a franchise area of a distribution company where there is already an existing and active distribution facility in the area,” said Enugu DisCo.

The DisCo argued that contrary to an earlier impression that the project was an intervention by the Rural Electrification Agency (REA) to salvage supply in underserved areas. The AIEDN network is owned by Ariaria Market Energy Solution Limited (AMESL), who Enugu DisCo claimed it was implementing a compressed natural gas (CNG) solution rather than generating power from renewable energy sources.

Enugu DisCo has gone to court to secure an injunction stopping AMSEL from embarking on the proposed rural electrification project planned for 32,000 shops in Ariria market, in Aba, Abia state.
“We are waiting for NERC to make a pronouncement but for now we have a court injunction against the company,” said Emeka Eze, spokesman of EEDC.
Meanwhile, one of the investors in AMESL, Ubani Nkaginieme, earlier told BusinessDay that AMESL was aware of moves in a court in Umuahia against the Ariaria Project.
Nkaginieme, said the Ariaria experiment was a blessing to the Enyimba City and a win-win to the traders, the association, the investor (AMESL), the Abia State government, and the federal government.
In both cases, the concerns of the DisCos are the loss of market share from more efficient generators who are honing in on some of their most lucrative franchise areas which presents a threat to their business.

“Everyone just sees the power sector as juicy area and wants a share,” says Akin Akinpelu, technical specialist at the Association of Nigerian Electricity Distribution (ANED) in a chat with BusinesDay.
But to large swaths of Nigerians who are in darkness due to inefficient power distribution, they would gladly do a deal with whomever can provide them with power. It is this service gaps that is providing opportunities for more efficient operators.
Eko DisCo agrees there are gaps but pushes the blame to the previous owners, “We do not deny that we inherited a lot of industry issues from the now defunct PHCN but we can assure you that we have not relented in our effort to improve things,” said Godwin Idemudia, general manager, corporate communications, Eko DisCo.

Idemudia says the DisCo is constantly working on improving its service delivery and “won’t stop till we achieve the targets we have set for ourselves. We believe this is what is critical.”
Chuks Nwani, an energy lawyer said litigation would bog down the power sector which has already seen more than its fair share of litigations. Nigeria’s power sector with shortfalls now estimated at over N1.3trillion, the bulk of these arising from a failure of DisCos to improve collections and lack of tariff that reflects the true cost of distributing power.