Power sector reforms:BPE,NERC to set up joint monitoring teams

BPE signboardThe Director General of the Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, has assured that the Bureau and the Nigeria Electricity Regulatory Commission (NERC) are aware of the high expectations of Nigerians on the outcome of the power sector reform and have put in place robust monitoring mechanisms to ensure that the new owners of PHCN Successor Companies were put on their toes to fulfill their contractual obligations.
He made this known in a presentation at the 6th Power Summit for Civil Society Organizations (CSO) Forum held in Abuja from 30 – 31 January 2014
Dikki noted that the agreements signed with the new owners contained some minimum performance standards to be achieved, adding that since NERC and BPE had a common goal in ensuring that the companies achieved high standards in performance, both agencies have agreed to set up joint monitoring teams.
He revealed that the details of the monitoring framework are being finalized by a committee made up of representatives of both agencies.
The DG pointed out that the following agreements and documents provide the basis for monitoring the privatized power companies. They include: Share Sale and Purchase Agreement (SSPA); Performance Agreements (PA);BPE’s Post Privatization Monitoring Template;NERC’s Reporting Compliance Regulation; and NERC’s Terms and Conditions of Licensing.
He stated that the Share Sales and Purchase Agreement (SSPA) clearly spells out the terms and conditions of sale of shares to the investors while the Performance Agreements contain terms of payment and Post Acquisition Plans (PAP) implementation. It also stipulates clear milestones the investor must achieve within a specified period.
He pointed out that NERC’s Reporting Compliance Regulations clearly outlines the level of compliance to set standards by the companies and NERC’s license terms and conditions is the document that shows the mandatory requirements for acquiring a license and the violation of the terms will lead to NERC’s withdrawal of the license.

He reiterated that compliance monitoring gives the BPE express right to enter and monitor privatized enterprises every six months upon five days notice to the company, adding that it also empowers the Bureau to carry out an audit or review of the business once every six months.
Dikki further stated that the performance obligations and liquidated damages mandates the purchaser to ensure the company achieves the minimum performance targets; failing which the purchaser shall be made liable to pay liquidated damages for performance below agreed standards.
He noted that the purchaser must comply with Post Acquisition Plan and initial budget, adding that the consent of BPE is required for annual revisions to budgets and plans for first five years and afterwards, BPE will have the veto rights regarding certain expenditures as provided in the reserved matters.
The DG pointed some of the key objectives of the reform and privatization of the sector as reducing the cost of doing business in Nigeria so as to attract new investments through provision of quality and dependable power supply to the economy for industrial, commercial and socio-domestic activities.
He noted that the reform and privatization of the sector was aimed at improving the overall efficiency of the distribution, generation and transmission network; provide Nigerians with basic and affordable infrastructure to enable them create employment for themselves and to attract massive investment across the value chain so as to expand electricity coverage in the country.
The other objectives of the reform, according to the Director General, included the repeal of monopoly laws that restricted entry into the Nigeria Electricity Supply Industry (NESI) and the liberalization of the sector to create an enabling environment for private sector investment in the sector.
He added that the intent of the reform was also the creation of an electricity market that is private sector-driven.
He further noted that another critical objective of the reform was to create a regulatory agency with full powers to regulate the sector and to ensure the separation of the roles of policy formulation, regulation and operations.

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