Stakeholders in the Nigeria Electricity Supply Industry (NESI) have been advised to get themselves acquainted with institutional and regulatory framework, the Bill for an Act to Repeal the Electric Power Sector Reform (EPSRA) Act 2005 presently with the national assembly intends to introduce, in order to ensure compliance if the bill is eventually passed through the legislative houses and sent for the assent of the President.
This view was contained in Olaniwun Ajayi’s report on the power sector, titled: “2021 Power & Infrastructure Wrap Up / Outlook.”
According to the report, the principal objective of the EPSRA Bill, as provided in Section 1 (Objective of the Bill) is to provide a comprehensive legal and institutional framework that will guide the operation of a privatised, contract and rule based competitive electricity market in Nigeria and attract, through transformative policy and regulatory measures, private sector investments in the entire power value chain of the NESI.
The EPSRA Bill is currently awaiting the report of the committee at the National Assembly
Some of the highlights of the bill:
Under the EPSRA Bill, the TCN is required to, in accordance with the terms of its licence and within such stage or period of the market as NERC may in a written directive specify, incorporate an ISO as a company limited by shares or such ownership and governance structure as NERC may specify. Furthermore, the transitioning into the new entity, including the commencement and completion of novation of all market and system related contractual rights and obligations by the TCN to the ISO, is to be done no later than twelve (12) months further to the declaration of the medium-term electricity market by NERC.
The EPSRA Bill provides that any question of law which arises from an order or decision of NERC shall be referred to for determination by the Electricity Appeal Tribunal (the Tribunal). Therefore, generally, the jurisdiction vested in the High Court in relation to dispute settlement in the NESI has been effectively replaced with that of the Tribunal.
Further, compliance with an order or decision of NERC by a licensee is required unless the order or decision is stayed by the Tribunal, instead of the High Court as obtainable under EPSRA. This reinforces the legislative intent that there must be mandatory recourse to the Tribunal before access to courts.
Section 64 (5) of the EPSRA Bill provides that any person who contravenes the provision of operating without a licence shall be liable on conviction to a fine not exceeding Three Million Naira (NGN3,000,000.00) or to imprisonment for a period not exceeding three (3) years or to both such a fine and imprisonment.
Furthermore, the EPSRA Bill provides for the explicit statutory power of NERC to approve franchising arrangements within the franchise areas of the distribution or supply licensees. The section also provides clarification on the following issues: (i) a franchise is an exception to the rule prohibiting the operation of distribution infrastructure without a licence, (ii) a franchisee is not a distribution or supply licensee (iii) a franchisee is bound by the terms and conditions of the supply or distribution license, and (iv) the distribution licensee or supply licensee will bear ultimate responsibility for the quality of supply and coverage within their franchise areas.
Cancellation of Licenses
Generally, NERC has the power to cancel the license of a licensee on the basis that the licensee’s financial position is such that it is unable to perform its obligations fully and efficiently. However, the EPSRA Bill has proposed a proviso to this provision in that NERC cannot invoke this ground against a licensee where the licensee’s inability to perform its obligations under the license is due to non-compliance by other government agencies or other licensees with their obligations under the EPSRA Bill or other extant laws.
Administration of a Licensee
NERC has been granted the statutory power to place the business and undertaking of a canceled licensee under administration and appoint an administrator who is required to act as NERC directs. In addition, the sale of the undertaking of a canceled licensee is made free of existing, debts, mortgage, etc., and creditors can only lay claim to the purchase proceeds
Independent Electricity Distribution Network (IEDNs)
The EPSRA Bill provides that NERC shall have the power to grant IEDN licences to construct, own, operate, maintain, or procure the construction and maintenance of IEDNs in an area with no existing distribution infrastructure, or where the existing distribution infrastructure is unable to meet the demands of such customers. However, no clarification has been provided on the definition of what “unable to meet the demands of such customers” means within the context of the provisions.
Olusola Bello