By Obas Esiedesa, Abuja

Disagreement over the implementation of the Eligible Customer Status, a policy designed by the Federal Government in 2017 that allowed Power Generation Companies, GenCos, to sell electricity directly to customers with capacity to consume at least two Mega Watts of power monthly, has pitched the generators against Electricity Distribution Companies, DisCos.

The Eligible Customer regulation was released by the Nigeria Electricity Regulatory Commission, NERC, in November 2017, following a declaration by then Minister of Power, Babatunde Fashola.

Since then, GenCos and large customers have entered into contracts using the provisions contained in the regulation.

But the DisCos are fighting back saying most of their big customers were being picked off by the GenCos through the Eligible Customer status.

The GenCos in a document presented in one of the meetings called by the Market Operator in Abuja argued that their contracts met the requirements listed by NERC.

According to the document, sighted by Vanguard, the GenCos declared that “the majority of the Eligible Customers are industrial customers, who are involved in one production or the other. By providing them with a cheaper power, the Nigerian economy will have value-addition as production costs will be lower and this rubs off on selling prices. People will patronise the products, investment will increase and unemployment will gradually reduce.

“The high frequency of unrest will reduce. Eligible Customer will encourage GenCos to beef-up their capacity, bulk tariff will reduce due to competition and this will equally be of great benefit to the economy. Currently a number of new bulk energy buyers are emerging to exploit the EC opportunity.

“Note that the ECs on 132kV are not by any rule customers of DisCos. Some bulk consumers are self-generating, and there’s no rule against that. Most of these ECs invested to build 33kV feeders which the Regulatory Orders ceded to the Discos, its construction predates 2015. This is enough sacrifice to even allow such customers to migrate to EC”.

The GenCos disclosed that current eligible customers comprise of the international customers and local customers such as Kam Industries, Olam, Star Pipe, Premium Steel, Datco, Sunflag, among others.

They accused NERC of bowing to pressure from the DisCos to suspend the policy.

The DisCos, however, in a statement issued under the aegis of the Association of the Nigerian Electricity Distributors, ANED, dismissed claims.

Executive Director, Research and Advocacy, ANED, Barr. Sunday Oduntan in the statement pointed out that the contracts signed and operated by the GenCos and the consumers did not meet the requirements set by NERC.

READ ALSO: NBET rates Eko DisCo as electricity market makes N26.5bn in June

According to him, “In response to the insinuation that NERC and the DisCos are colluding to frustrate the implementation of the Regulation, we wish to state unequivocally that this is untrue, unfounded, preposterous, and irresponsible of the stakeholders who have failed to meet the requirements of the Regulation and attempting to pass the buck.

“In fact, to fault NERC (who have been unduly lenient with them) as they have, is undermining the powers of the Commission as the regulator of the Nigerian power sector, vested with the requisite authority to ensure sanity in the Nigerian Electricity Market (NEM) and NESI as provided by the EPSRA.”

Oduntan clarified that NERC has not cancelled the Regulation as claimed, adding that “the directive is simply to stop the illegality that has been perpetrated by these unscrupulous companies and their supplier GenCo who have gone rogue for four years unchecked.”

Attempts to get a reaction from NERC were not successful, as its spokesman, Dr. Usman Arabi failed to take several calls made to him.

However, a reliable source at the Commission told Vanguard that the policy has neither been suspended nor cancelled.

The source who did not want to be named noted that the Commission has so far approved about three Eligible Customer agreements which met the requirement.

The source said: “The Eligible Customer status stands on three legs. The first is that the customer must at least consume 2MWH/H in a month. That qualifies you to apply but there are other conditions.

“One of such conditions is that you must sign an agreement with your supplier and that supplier must sign an agreement with you that it is going to sell to you the volume of power that has not been contracted in Multi-Year Tariff Order, MYTO.

“Any decision NERC has taken is in the interest of every consumers. The tariff is a basket of prices and when you look at those applying for Eligible Customer agreement, the targets are the hydro-generators because they have the lowest tariff. When the lowest tariff is taken out of the basket, the average tariff will rise impacting every consumer in the system”.

The source added: “the third leg of it is this, when MYTO 2005 was announced the Manufacturers Association of Nigeria said they were not going to pay and they went to court. They were consuming power and paying the old tariff. They have now accumulated a lot of arrears in unpaid bills and now they want to run out of the network to sign Eligible Customer Status. It can’t happen, there has to be discipline in the system”.

The source said most of the Eligible Customer contracts in operation in the sector have not been approved by NERC which necessitated the directive to the Transmission Company of Nigeria, TCN, to return the customers back to the DisCos.