The Nigerian Electricity Regulatory Commission (NERC) threatens to suspend licences of eight regional distribution companies over eleventh, giving them 60 days to provide explanations. They failed to pay for electricity they bought from the Nigerian Bulk Electricity Trading (NBET), the Nigerian bulk trader. Indeed, the eight companies acquired for NGN36.1bn (US$100m) of energy from NBET in July 2019, but payback to the public entity only NGN5.9bn (US$16m).
Due to the liquidity crisis distribution companies are experiencing, the regulator has determined a minimum threshold they have to pay back to the bulk trader for the electricity they obtain. The eight companies exposed to potential sanctions have transferred to the NBET an amount inferior to the expected minimum remittance, which range from 13% to 49% of their purchases.
If the NERC ends up sanctioning the distribution companies, it would the first time it applies a regulation instructing them to pay 100% of the electricity they bought, as the regulator considers it endangers the whole electricity value chain.
The eight distribution companies which could have their licences revoked include Ikeja Electric (supplying a part of Lagos State), Abuja Electricity Distribution Company (in charge of the capital city), as well as Kano Electricity Distribution Company and Port Harcourt Electricity Distribution Company, providing power to two of the most populated regional cities.
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