Financial Energy Review
The Transmission Company of Nigeria (TCN) has been directed by the Minister of Power, Abubakar D. Aliyu to reconnect those power companies that were disconnected from the national grid for noncompliance with the Market Rules, effective from today, May 1, 2023
According to a press statement from the Market Operator and TCN, the companies will be connected to the national grid by midnight today, following the intervention of the minister who has considered the collateral consequences on the paying Disco Customers.
The statement which was signed by TCN Market Operator Dr.E.A Eje said the Suspended & Disconnected defaulting Market Participants will be reconnected to the National Grid at the instance of the Honourable Minister of Power.
He said the intervention by the Honorable Minister of Power has automatically prolonged the grace period to 60 days from this publication.
“All Market defaulters should comply with the provisions of the Market Rules with respect to payment of their outstanding invoices, posting of adequate Bank Guarantees (BG), and forwarding of their active Power Purchase Agreements (PPA) as the case may be, to the Market Operator/TCN.”
“It should be noted that other defaulters who are yet to be Suspended/Disconnected should cure their defaults within this sixty (60) days. At the expiration of this grace period, the Market Operator will resume sanctions in line with the Market Rules.
The MO/TCN is hereby urging the erring Discos to seize this opportunity to fix their defaults as we applaud the intervention of the Honorable Minister of Power.”
Aba Power has been having a running battle with TCN because the later disconnected it from the national grid for not noncompliance of the Market Rule.
The Market Operator says it is mindful of the need to ensure the continued sustenance of the Nigerian Electricity Supply Industry (NESI), which requires strict adherence to Market Rules and the application of sanctions where necessary. Recently the Market Operator suspended APLE Electric Limited, Kano and Kaduna Electricity Distribution Companies for breach of the Market Rules, which governs and sanitizes the Nigerian Electricity Supply Industry.
Due diligence was observed by the Market Operator before issuing the suspension/disconnection order which is in accordance with procedures of the rules guiding the market. This is to ensure the preservation of the Market and that non-compliant Participants are held accountable for their actions.
APL Electric Limited was found to be in non-compliance with the Market Rules for not having adequate Bank Guaranty and for incomplete payments of APLE’s Market Operator’s invoices for September 2022 to February 2023.
As per the Market Rules, the Market Operator first sent a request for a Bank Guarantee to APLE on the 29th of November 2022. However, the company failed to provide the required Bank guarantee. Consequently, a Notice of Event of Default was issued to APLE on 7th of December 2022, for incomplete payment of issued invoices.
Following the Notice of Event of Default, a Notice of Intent to Issue a Suspension Order was issued on 14th December 2022. Based on the Market Rules APLE requested for a Hearing which was held online on the 20th of December 2022, where APLE was given an opportunity to show just cause why it should not be issued a Suspended/Disconnected Order.
After the hearing, a 14-business day notice was issued on the 21st of March, 2023 in three (3) national daily newspapers (Daily Trust, Guardian & Thisday newspapers), as required by the Market Rules. Thereafter, a Suspension Order was issued on the 19th of April, 2023 which required APLE to cure its Defaults.
The Disconnection Order was carried out on the 20th of April, in line with the Market Rules. This order resulted in the disconnection of the Feeders within the APLE franchise area until such a time that they provide the required bank guarantee and settle their outstanding invoices with the Market Operator.
Also, the Kaduna and Kano Electricity Distribution Companies were equally found to be in non-compliance with the Market Rules for not having adequate Bank Guarantees and for incomplete payments of their Market Operator’s invoices for the time-line January 2020 to February 2023.
Both companies were sent a request for their Bank Guarantees in line with the Market Rules, on the 16th of February 2022 and they failed to provide the required Bank Guarantees. Consequently, a Notice of Event of Default was issued on 2nd of March 2022, for incomplete payment of invoices.
This was followed by a Notice of Intent to Issue a Suspension Order, issued on 9 May 2022. Both DisCos requested for Hearing which were held on 31st May 2022 (KEDCO) and 2 June 2022 (KAEDCO), where both DisCos were given an opportunity to show just cause not to be suspended/disconnected.
After the hearing, a 14-business day notice was issued on the 21st of March, 2023 in three (3) national daily newspapers (Daily Trust, Guardian & Thisday newspapers), as required by the Market Rules. Thereafter, a Suspension Order was issued on the 20th of April 2023, which required KAEDCO and KEDCO to cure their Defaults.
The Disconnection Order was then carried out on the 26th of April, 2023 in line with the Market Rules. This order resulted in the disconnection of the major Feeders within the franchise areas of both KAEDCO and KEDCO, until such a time that they provide the required bank guarantees and settle their outstanding invoices with the Market Operator.
The Market Rules provide clear and concise procedures for enforcing compliance with its provisions, and in these cases, the Market Operator acted in accordance with procedures to ensure that non-compliant Participants are held accountable for their actions.
