A Review of the Nigerian Energy Industry

TCN: N1.6bn Manitoba contract threatened

24 September 2015, Lagos – The continued internal wrangling at the Transmission Company of Nigeria may lead to the eventual collapse of the recently renewed N1.6bn management contract, which the firm has with Manitoba Hydro International Limited.

nercThe MHI, a Canadian firm contracted by the Federal Government to manage the TCN, had last month threatened to withdraw from the country over alleged “substantial breach of contract” on the grounds that the Market Operator, a part of the transmission company, had opened a different bank account into which electricity funds were allegedly being diverted.

The PUNCH had exclusively reported that in a bid to address the differences, the Nigerian Electricity Regulatory Commission had directed the MO and the TCN to maintain a single account for the payment of electricity funds.

“On the issue of opening of a new account, we have resolved it by directing them to close the new account and revert to the old one,” the Chairman, NERC, Dr. Sam Amadi, had told our correspondent.

But one month after the directive was given, it was gathered that the instruction had not been implemented, a development that was viewed by the MHI as continued breach of contract.

“The Market Operator has continued to flout the orders of the regulator and the management contractor sees this as a threat and breach of its contract with the Federal Government, which was only renewed in July this year,” a senior official of the TCN, who pleaded not to be named due to the sensitive nature of the subject, said.

However, NERC on Wednesday said it had issued notices of commencement of enforcement action on the MO for operating a unilateral bank account.

The commission said the notices were issued to the Market Operator on Monday, adding that it gave it a seven-day ultimatum to take remedial action by winding down the operation of the unilateral bank account and report compliance, adding that failure would necessitate disciplinary action.

The MO issues market settlements and invoices due to the participants and service providers in the Nigerian electricity supply industry, while the TCN is a licensee of NERC.

NERC stated that the TCN, based on its licence, had the powers to manage the MO and the System Operator, and was responsible for the wheeling of electricity from the generation to the distribution companies.

NERC in a statement admitted that issues arose when at the dusk of the immediate past administration, the Federal Government appointed some employees in the Market Operator division as a separate management; and the TCN, in response, removed the names of the elevated workers from its payroll.

The MO, which partly manages cash flow in the electricity market, reacted by opening a separate bank account other than the one known to the TCN.

NERC said, “The matter was subsequently brought before the commission at its August 19, 2015 regulatory meeting. Parties were consequently issued directives on August 27, 2015, to take remedial actions, which they are yet to comply with.”

The commission stated that in separate notices signed by its Deputy General Manager, Enforcement Unit, Mr. Chijioke Obi, the parties were told that their continued actions were in disobedience to Section 63(1) of the Electric Power Sector Reform Act, 2005.

It said the TCN was specifically directed to “put the appointed/elevated staff back on the payroll and on the level that matches the present status in the interim until counter presidential directive to the one elevating and appointing them to the positions.”

It directed the MO to “immediately close the subsidiary account, restore the original account to the normal condition of consensual approval and inform the commission accordingly.”

The commission, in the notices to parties, said that their failure to comply with the relevant laws and conditions of the TCN licence would compel it to start enforcement proceeding against the transmission firm.

  • Punch
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