May 22, 2024
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ELECTRICITY

Nigerian Government to Investigate 5-Year License Extension for Distribution Companies

The Minister of Power, Adebayo Adelabu, has announced plans for a thorough investigation into the recent 5-year license extension granted to the 11 Distribution Companies (DisCos) in Nigeria. The licenses of these DisCos were up for renewal this year after a decade-long deal between the federal government and private investors, allowing for a 60% acquisition of shares of the defunct Power Holding Company of Nigeria (PHCN) in 2013.

While the contract originally permitted an additional 5 years and an option for a 10-year renewal after a government review of the DisCos’ performance, the Nigerian Electricity Regulatory Commission (NERC) recently revealed the 5-year extension during the inaugural Nigerian Electricity Supply Industry (NESI) conference. The extension aimed to alleviate investor concerns about potential financial losses in a sector requiring long-term investments, according to Dailytrust.

Addressing journalists, Minister Adelabu expressed concerns over the legal and contractual basis of this extension. He highlighted the significance of the performance bond signed with private sector operators, emphasizing that regardless of the license tenure, non-compliance with the bond’s conditions could lead to license revocation. The minister stressed that he had initiated an investigation to scrutinize the extension’s validity and adherence to contractual obligations.

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