The review of the performance of the electricity distribution companies carved out of the defunct Power Holding Company of Nigeria will take place before December 2019.
The Director-General, Bureau of Public Enterprises, Mr Alex Okoh, disclosed this in a statement made available to our correspondent in Abuja on Sunday.
Okoh said the five-year period stipulated in the performance agreements signed with the core investors in the distribution companies for the final review of their handling of the Discos would fall due on December 31, 2019.
The review will determine whether the core investors have met some targets specified in the agreements signed with the companies
Okoh said, “Following the interest shown by various stakeholders in the electricity industry and indeed the general public with regard to the date for the final review of the performance of the privatised electricity distribution companies, the BPE wishes to clarify as follows:
“That pursuant to the successful conclusion of the privatisation transaction for 10 of the Discos, the utility companies were handed over to the core investors on the 1st of November, 2013.
“The associated performance agreements signed in August 2013 provided, among other performance indices, that the core investors covenanted to achieve agreed reduction targets of aggregate technical, commercial and collection losses.
“That due to lack of adequate technical information relating to the state of the infrastructure at the time of concluding the transaction, the base level of losses in the utilities imputed in the performance agreements were based on provisional estimates. That the terms of the performance agreements provide for a five-year tenor during which the core investors in the Discos are required to fully achieve far-reaching efficiency improvement targets.
“The performance agreement further provides that a study to establish the baseline level of aggregate technical, commercial and collection losses for the performance measurement will be carried out by the Discos within one year after takeover and the outcome presented to the Nigerian Electricity Regulatory Commission for approval.
“The approved loss level shall form the basis of determining the performance of the core investors by the BPE and subsequent tariff computation by NERC.”
The BPE boss added that NERC subsequently approved the outcome of the baseline loss study and issued a tariff order, with an effective date of January 1, 2015.
According to him, the approval automatically marks the beginning of the five-year tenor of the performance agreements executed between the core investors and the BPE.
Okoh added, “In this regard, we wish to clarify that the five-year performance agreement for all the electricity distribution companies, with the exception of the Kaduna Disco, became effective on the 1st of January, 2015 and the fifth year anniversary for final performance review would therefore be the 31st of December, 2019.
“The bureau wishes to assure the public that the relevant agencies of government are conducting a periodic review of the performance of the Discos under the management of the core investors with a view to evaluating the achievement of the terms of covenants agreed with the Federal Government well ahead of the December 2019 dateline.”