A Review of the Nigerian Energy Industry

NERC fines Ikeja Disco N131m

*Ikeja Electricity Distribution Company.
*Ikeja Electricity Distribution Company.

05 October 2015, Lagos – The Ikeja Electricity Distribution Company, IKEDC, has been fined the sum of N131, 400, 000.00 (one hundred and thirty-one million, four hundred thousand Naira) by the Nigerian Electricity Regulatory Commission, NERC, for “flagrant breaches” of the Credited Advance Payment on Metering Initiative (CAPMI) Order, enabling act of the Commission and terms and conditions of its license.

The fine, which was contained in Order NERC/141, was issued on September 29, 2015 as a follow up to an earlier “Notice of Commencement of Enforcement Action” on the electricity distribution company, alongside 10 others, over “manifest and flagrant breaches observed by the Commission” in the implementation of the metering initiative.

The order reads that “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 N250.00 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”.

The electricity distribution company was further ordered to “pay an administrative fine of N500.00 per minute of every hour of the day where it continues in default of compliance from October 12, 2015 until compliance.”

IKEDC action, according to the Order 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 the “Commission’s Order on Credited Advance Payment on Metering Initiative CAPMI.”

CAPMI is an initiative of the Commission to assist the electricity distribution companies close the wide metering gap in the Nigerian Electricity Supply Industry (NESI).

It was introduced following a nationwide study conducted by NERC, which revealed that more than 50 percent of electricity consumers are not metered but are on estimated billings.

The initiative 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 initiated the scheme following complaints of lack of funds to meter customers by the electricity distribution companies.

Whereas wide metering gap accounts for high incidences of customers’ complaints, commercial losses and high operating cost in NESI.

Over one year of CAPMI introduction, through an Order of the Commission issued on May 14, 2015, NERC conducted public consultations which revealed reluctance of the Discos to neither provide meters nor implement CAPMI.

A Notice of Commencement of Enforcement Action was thereafter issued on August 17, 2015 mandating Ikeja Electricity Distribution Company and 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 was subsequently imposed following the inability of IKEDC 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 notice of commencement of enforcement action.

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