The Nigerian Electricity Regulatory Commission (NERC) has requested that all the electricity distribution companies (Discos) submit Performance Improvement Plans before granting new electricity rates.
Local media THISDAY has obtained a document titled Performance improvement plan guideline, which explains that its demand is in line with the intentions of the Power Sector Recovery Programme (PSRP) Nigeria initiated with the World Bank.
The document highlighted that in pursuit of the PSRP, “the Commission is implementing a more robust tariff review process aiming at improving the performance of the Nigerian Electricity Supply Industry (NESI).
“The process will involve a review of the application of the capital expenditure allowances in the MYTO (Multi Year Tariff Order) model for compliance with Performance Improvement Plans (PIPs) to be prepared by the distribution companies (Discos) and approved by the commission.”
The implementation of the Performance Improvement Plan will be strictly monitored by the Commission.
Eliminating tariff shortfalls
NERC stressed that the future tariff review will prioritise expenditure by the Discos and reflect changes in the operational environment that have occurred since the last tariff review.
“It is noteworthy that one of the overarching objectives of the PSRP is the elimination of tariff shortfalls and the enforcement of market obligations.
“The PIP developed by Discos shall cover the period 2020 – 2024 tariff period but subject to the contractual provisions of the performance agreements executed between the core investors and the Bureau of Public Enterprises in respect of the allowances for capital and operating expenditure in the remaining term of the agreement, read part of the document.
The document equally stated that upon approval of the PIPs by NERC, it will then form the basis of prioritising and monitoring the capital investment initiatives of the Discos with revenue adjustment for non-implemented projects.
According to the document: “The approved PIPs will also be the basis for the defining performance standards/KPIs for the next five-year tariff period by the commission with emphasis on improvement in energy throughput and delivery by Discos, reduction in aggregate technical/commercial losses and overall improvement in service delivery to customers.”