TheCable

Nigeria’s electricity distribution companies (DisCos) have resolved to sue the federal government over the declaration of “eligible customer”, TheCable understands.

Babatunde Fashola, minister of power, had made a declaration of the eligible customers in the Nigerian electricity market on May 19, invoking section 27 of the power sector reform act.

Under the declaration, big consumers of electricity — those who use nothing less than 2MW per month — are now allowed to buy directly from generating companies (GenCos) and bypass the DisCos.

While the GenCos are happy with the development — it will allow them to sell “stranded” capacity and also address the issue of unpaid power supply — DisCos are of the opinion that it will harm their business.

TheCable understands that the DisCos have been consulting among themselves in recent weeks and have finally resolved to challenge the ministerial declaration in court.

“It is illegal and injurious to our financial health,” an insider said.

DisCos depend on big consumers for revenue because of the culture of unpaid bills and energy theft among smaller customers.

They are also often unable to buy all the power on offer from GenCos owing to financial constrains, leading to “stranded” capacity, this time with the generating companies at the losing end.

The declaration of “eligible customer” followed government’s assessment of the market status.

GenCos see it as an answer to the inability of the DisCos to fulfil their obligations.

It is expected to promote retail competition in the market.

There are 11 DisCos, namely Kaduna, Yola, Port Harcourt, Kano, Jos, Ikeja, Ibadan, Enugu, Eko, Benin and Abuja Electricity Distribution Company Plc.

There are over 20 GenCos.