A Review of the Nigerian Energy Industry

Power firms declare force majeure over tariffs, insurgency

27 May 2015, Lagos – Some electricity distribution companies popularly known as DISCOs have declared political force majeure, the Bureau of Public Enterprises, BPE,  has said.

Professor Chinedu Nebo, Nigeria's Minister of Power.
Professor Chinedu Nebo, Nigeria’s Minister of Power.

The Head of Public Communications at the privatisation agency, Mr. Alex Okoh, who said this in a statement made available to our correspondent in Abuja on Tuesday, also disclosed that the Yola Electricity Distribution Company had declared another force majeure as a result of insurgency in the area of its operation.

The force majeure clause is a standard clause in most contracts and it includes events such as natural disasters, wars and other occurrences not within the power or control of the executing party, which makes the implementation of the contract impossible.

Okoh said the existence of the clause, which the investors invoked, was normal in contracts but added that the notification of force majeure did not mean the acceptance.

He said, “There are two notices of declarations of force majeure; namely political force majeure by some DISCOs occasioned by change in tariff. This political force majeure was reported to the NCP meeting held on Thursday, April 16, 2015.

“The NCP deliberated on the matter and set up a committee chaired by the Minister of Power to engage the DISCOs and resolve the matter. Membership of the committee comprises representatives of the Ministry of Power, NERC and the BPE.

“Series of meetings have been held and the DISCOs have already indicated their willingness to withdraw the notices of force majeure based on the progress made in resolving the tariff issues.”

He also said, “The second notice of declaration of force majeure is that of Yola Electricity Distribution Company. YEDC had on six occasions (November 10, 2013, August 27, 2014, October 15, 2014, April 9, 2015, April 30, 2015 and May 13, 2015) given notice of force majeure.

“Consequently, the matter was tabled before the Technical Committee Power sub-committee at one of its meetings. The TC Power Sub-committee recognised the reality of the force majeure which is in line with Clause 7 in the Share Purchase Agreement and made recommendations to the TC. Clause 7 states that in a war situation, where the core investor cannot operate, it can invoke force majeure on issues beyond its control.”

According to Okoh, the committee held meetings and appointed a consultant – Messrs SEWA West Africa Limited – that toured areas of operations of the DISCO and submitted a report to the committee on its findings.

The report of SEWA was reviewed by the committee and recommendations were made to the Vice-President for subsequent approval of the President.

The BPE spokesman added, “We wish to clarify that the BPE as the secretariat of the National Council on Privatisation does not have the powers to approve the disbursement of funds. For the avoidance of doubt, we like to inform that it is the Vice President, National Council on Privatisation and Mr. President that have the approval powers. And there is a process of obtaining such approvals from each of the mentioned approving authorities.


– Punch

In this article

Join the Conversation