The Nigerian Electricity Regulatory Commission (NERC) often grants licences to firms who apply to build power plants under the ‘Good Cause’ consideration.
This is done along with the fulfilment of the various requirements stipulated for them including an Environmental and Social Impact Assessment (ESIA), and the Power Purchase Agreement (PPA) entered with the Nigerian Bulk Electricity Trading Plc (NBET).
The commission made the decision after it rose from its 10th Formal Meeting of April 19 and 20, 2018 in line with the Electric Power Sector Reform Act (EPSRA) 2005.
It an Order No. 179/2018 signed by the Chairman of NERC, Prof. James Momoh and the Commissioner, Legal, Licencing and Compliance, Dafe Akpeneye, dated April 20, 2018, the commission said “no new licence application brought under the ‘Good Cause’ exceptions shall be considered by the commission with effect from 20 April 2018.”
NERC however created a caveat to consider special applications as the Order read:
“Exceptional circumstances such as policy directives by the Federal Government of Nigeria to promote a specific fuel type or other such directives may be considered by the Commission as transactions exempt from the applications of the Regulation on a case-by-case basis.”
The ‘good cause’ condition is contained in the Procurement of Generation Capacity Regulation 2014. Section 5.2 of the regulation prohibits soliciting for proposals to provide generation capacity without approval from NERC.
NERC approves all additional capacity for ‘Good Cause: to stabilise the grid and improve electricity supply.
In the fresh Order, Commission said it is now reviewing what could be classified as good cause for demanding new generation capacity as contained in the 2014 regulation.
As such, it suspended new entrants until “a final decision on the review of this definition and classification is reached by it.”
In 2015, the Commission decried the condition where out of about 70 generation licences it has issued, over 24 of them were inactive and threatened to revoke them.
In May 2017, nine electricity generation licences that could add 1,653 megawatts (MW) to the national grid were idle after 10 years of their issuance.
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