A Review of the Nigerian Energy Industry

Again, NERC fines Ikeja Disco N131m for breach of metering plan, others

05 October 2015, Lagos – Another electricity distribution company, Ikeja Distribution Company (Disco), has come under the regulatory hammer of the Nigerian Electricity Regulatory Commission (NERC). for flagrant abuse of processes in its makeshift electricity metering plan, the Credited Advance Payment on Metering Initiative (CAPMI).

MD, Ikeja Electric, Mr.-Abiodun-Ajifowobaje-360x225
Mr. Abiodun Ajifowobaje, MD, Ikeja Electric

The NERC on Sunday in Abuja disclosed that it had fined Ikeja Disco the sum of N131.4 million,  following its discovery of the company’s “flagrant breaches” of its CAPMI order, the enabling act of the commission and terms and conditions of its licence.

The commission in a statement from its head of public communication, Dr. Usman Arabi, noted that the fine on Ikeja Disco was contained in an order it issued to it on September 29, 2015.

NERC had recently fined Abuja Disco for similar operational abuses.
Arabi however explained that the fine was a follow up to an earlier ‘notice of commencement of enforcement action’ which it issued to the electricity distribution company alongside 10 others, over ‘manifest and flagrant breaches observed by the commission’ in the implementation of the metering initiative.

According to him: “The seven days granted to show cause why enforcement action should not be commenced expired on August 24, 2015 and IKEDC has failed, refused and or neglected to respond to the manifest and flagrant breaches observed by the commission, or provide a satisfactory response.”

“It is hereby ordered that IKEDC shall with immediate effect from the date of this order; comply with the CAPMI order and forward evidence of full compliance to the commission within two weeks.

“IKEDC shall pay an administrative fine of N250 per minute of every hour of the day for a period of one year from September 29, 2014 to September 28, 2015 for non- compliance with CAPMI order, with a moratorium from May 14, 2013, being the date of the CAPMI order, to September 28, 2014,” Arabi added in the statement.

He further explained that the Disco has then been ordered to pay an administrative fine of N500 per minute of every hour of the day where it continues in default of compliance from October 12, 2015 until compliance.

Arabi noted that by the Disco’s action, it violated Section 63(1) of the Electric Power Sector Reform (EPSR) Act 2005, Section 2(1) of Terms and Conditions of its licence as well as NERC’s order CAPMI.

He said CAPMI was an initiative of the commission to assist the electricity distribution companies close the wide metering gap in the Nigerian Electricity Supply Industry (NESI) and was introduced following a nationwide study conducted by NERC which revealed that more than 50 per cent of electricity consumers are not metered but are on estimated billings.

The initiative, according to him, permits willing electricity customer to pay for meter which should be supplied within 45 days after payment is made. The customer is thereafter refunded his money over a period of time through a rebate or reductions in the fixed charge component of electricity tariff.

The commission, Arabi added, initiated the scheme following complaints of lack of funds to meter customers by the electricity distribution companies, noting that wide metering gap accounts for high incidences of customers’ complaints, commercial losses and high operating cost in NESI.

Arabi equally explained that over one year of CAPMI introduction, NERC conducted public consultations which revealed the reluctance of the Discos to neither provide meters nor implement CAPMI.

He stated that a ‘notice of commencement of enforcement action’ was thereafter issued on August 17, 2015, mandating Ikeja Disco and 10 others to explain within seven days why disciplinary action should not be taken against them following their refusal to implement CAPMI or provide alternative metering scheme for their customers.

The fine, he added, was subsequently imposed following the inability of Ikeja Disco to provide explanation for acting in flagrant disobedience to the EPSR Act 2005, terms and conditions of its licence and failure to respond to the enforcement notice.

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