NERC threatens to dissolve Discos' boards over poor performance

The Nigerian Electricity Regulatory Commission (NERC) is cracking down on electricity distribution companies in Nigeria, citing poor performance as the primary reason behind the heavy sanctions it is considering, including the dissolution of their boards. George Etomi, a Director at Eko Electricity Distribution Company, shed light on the situation in an interview with CNBC Africa. During the interview, Etomi addressed the recent comments made by the electricity regulator, emphasizing that NERC has the authority to supervise the industry and take corrective measures when necessary. He highlighted that NERC's focus on supervising the sector is essential for maintaining market confidence and ensuring fair practices among all industry players. One of the key issues raised by NERC was the failure of some electricity distribution companies to meet their metering commitments. Etomi clarified that there are performance agreements in place that outline the responsibilities and duties of all parties involved, including the distribution companies. He mentioned that while some progress has been made in metering certain categories of customers, such as maximum demand customers, there is still work to be done in household metering. Furthermore, NERC's concerns about 'operational excesses' within the industry were also touched upon during the interview. Etomi noted that without specific details on these operational excesses, it is challenging to address them effectively. He underscored the importance of following established procedures and laws in dealing with regulatory issues, emphasizing that there is a structured process for resolving disputes. The discussion then turned to the broader challenges facing the electricity sector in Nigeria, particularly the issue of cost-reflective tariffs. Etomi highlighted the critical role of cost-reflective tariffs in creating liquidity in the industry and making it more attractive for investment. He acknowledged the political sensitivity surrounding tariff adjustments but stressed the need to find alternative ways to ensure the financial viability of the sector. Addressing the government's role in sensitizing the public about the true cost of electricity, Etomi emphasized the importance of educating consumers on the underlying expenses involved in power generation. He argued that a shift in mindset is necessary to foster a more sustainable approach to energy consumption and billing. Finally, Etomi touched upon the significance of debt repayment within the sector, noting that clearing backlog debts is essential for restoring financial stability and instilling confidence in the market. He called for a collaborative effort among all stakeholders to address outstanding debts and facilitate a more sustainable financial environment for the electricity industry. In conclusion, the interview highlighted the complex challenges facing the electricity distribution companies in Nigeria and the critical role of regulatory oversight in maintaining industry standards and promoting market confidence.