Encroachment on EEDC licensed area by Ariaria Independent Energy Distribution Network

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…Setting the record straight

 

By Emeka Ezeh

 

THE attention of the Management of Enugu Electricity Distribution Plc (EEDC) has been drawn to a recent publication in the Business Day Newspaper on Monday, June 4, 2018 with the headline, “Emeka Offor’s EEDC slams “stop work’ injunction on Ariaria’s stable power experiment in Aba. “There is need to set the record straight by clarifying issues concerning the attempted encroachment as follows:

 

EEDC is one of the successor companies to the defunct Power Holding Company of Nigeria Plc (PHCN). Following the reforms and privatization programme of the Federal Government of Nigeria, its primary responsibility is to distribute and market electricity across the South East zone. EEDC has 18 District offices within the area. One of these is Ariaria District, which includes Ariaria market and its environs.

 

Between 2003 and 2010, there were a number of incidents of fire outbreak at the Timber Market in Ariaria Market, which usually damaged the electricity distribution facilities in the area. The damaged facilities include: the 300KV substation, low tension poles, insulators and aluminum conductors worth several hundred millions of Naira. As a result of this, the attention of Abia State government was necessary to provide a lasting solution to the incessant fire outbreaks. It was subsequently agreed that the Timber Market would be relocated.

 

Before the relocation was effected, the privatisation occurred and the franchise was handed over to the Core Investor, Interstate Electrics Limited. The situation of Ariaria Market was brought to the attention of the Board of Directors. The Board duly approved funding towards the rehabilitation of the facilities destroyed by the fire outbreak.

 

The efforts to commence the refurbishment, replacement and reconnection of the traders in Ariaria Market were however constrained by a suit filed at the Federal High Court Abuja by Geometrics Aba Power Limited, claiming that the Federal Government of Nigeria had in 2005 granted it a lease over the assets and customers in Aba and Ariaria geographical area, and as a result their company was entitled to manage, upgrade, refurbish and administer customers within the said geographical area. The suit also sought several injunctive reliefs against EEDC regarding the Aba/Ariaria geographical area.

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Owing to the pendency of the suit, and the various injunctive reliefs being claimed before the Court, EEDC was unable to continue its investment plans to refurbish, replace and reconnect the customers in the Ariaria market.

 

Sometime in March 2016, the Honourable Minister of Power and the Office of the Vice President of Federal Republic intervened and brokered an out of court settlement between the parties which culminated in execution of a Term Sheet between the parties in April 2016. The fulfillment of the settlement terms however did not come to fruition due to the inability of Geometric to meet their commitment to Interstate. Consequently, in late 2017, EEDC went ahead to make some investment in the network, when it became obvious that Geometric has reneged in its commitment to Interstate; having waited for 18 months for a commitment that was due in April 2016.

 

The Rural Electrification Agency (REA), an Agency of the Federal Government of Nigeria, subsequently initiated a rural electrification programme whereby it proposed off grid power generation and distribution to Universities and some strategic markets including Ariaria Market in Abia. This initiative was publicised in some electronic and print media, stating that the REA had commenced technical studies of the identified project areas.

 

With due consideration that the Federal Government of Nigeria still owns 40% shares in its business, EEDC planned to negotiate with the Rural Electrification Agency (REA) with regard to the distribution of electricity in the Ariaria Market geographical area as REA does not possess a distribution license and neither are they empowered to build a distribution network.

 

Contrary to the understanding that it was REA that was developing the off-grid power project at Ariaria Market, as published  by the Agency in some print and electronic media, EEDC was surprised to notice that a company known as Ariaria Independent Energy Distribution Network Limited had sponsored a Public Notice in New Telegraph Newspaper dated January 24, 2018, announcing that it had applied to NERC for an Independent Electricity Distribution Network License for Ariaria market.

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Concerned by this development, EEDC conducted several searches at the Corporate Affairs Commission and discovered that Ariaria Independent Energy Distribution Network Limited is a private enterprise with convoluted shareholdings comprising of several companies and shareholders respectively and is indeed a Special Purpose Vehicle for a private off grid electricity power project by private interest groups, and not by the Federal Government as earlier presented to members of the public. In fact, what had been assumed  was a government initiative by REA metamorphosed into a purely private sector business detailing the names of a chain of companies and shareholders as stated above.

 

Furthermore, EEDC is not aware of any transparent procurement process by REA that assigned the project, which was ostensibly conceptualised and  funded by the government, to private developers. It is

noteworthy that as a socially responsible company, EEDC upgraded and refurbished the Shoe Market which adjoins Ariaria Market; and Ariaria was to follow before REA announced their intention to develop the Market in the hope that they will hand the network over to EEDC after development.

 

The shoe market currently enjoys good supply at very reasonable rates which will be extended to Ariaria Market. As a customer focused company, there is need to highlight the potentially high tariff the customers will pay under the IEDN regime compared to the relatively low tariff the Shoe Market customers currently pay.

 

The foregoing notwithstanding, by this singular act, Ariaria Independent Energy Distribution Network Limited encroached and trespassed on EEDC’s distribution licensed coverage area by illegally constructing distribution lines without a license nor the authorization of EEDC.

 

This act is in clear contravention of the regulatory provision that no company can set up a distribution network within a franchise area of a distribution company where there is already an existing and active distribution facility in the area. Furthermore, there are various conditions to be fulfilled for an intending applicant under the NERC Independent Electricity Distribution Network Regulations, 2012 and the NERC Regulations for Mini-Grids, 2016. These conditions however do not appear to have been fulfilled by the applicants.

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Considering the duplicitous act posing a threat to its business, EEDC proactively sent a Notice of Objection dated 15th March 2018 to NERC, vigorously opposing Ariaria Independent Energy Distribution Network Limited’s application for an Independent Electricity Distribution Network License and also requesting NERC to exercise its administrative authority to restrain the trespassers from continuing the construction of parallel distribution lines being in clear violation of the Electric Power Sector Act 2005.

 

Further to that, EEDC instituted legal proceedings at the Federal High Court of Nigeria, Umuahia Judicial Division seeking declaratory and injunctive reliefs as well as damages for trespass. Part of the interlocutory applications filed was a Motion Ex-Parte, praying for an order of interim injunction restraining the trespassers from constructing or continuing the construction of an Independent Electricity Distribution Network within EEDC’s electricity distribution licensed area.This prayer was granted by the presiding Judge, D.E. Osiagor on the 24th of May 2018 to maintain the status quo.

 

It becomes expedient to reiterate that it is an illegality and indeed an unlawful act for any organisation to attempt to embark on the construction of an independent electricity distribution network within EEDC’s licensed coverage area in contravention of extant regulatory provisions.

 

Having set the record straight, we are unable to comment further as the matter remains subject to litigation. We hope to provide further clarification in due course and appreciate the patience and understanding of our esteemed customers as we strive to deliver on our unequivocal and unwavering mandate to deliver power to the South-East. We also remain committed to supporting the Federal Government initiative towards actualising reliable and sustainable power supply for the people of Nigeria.

 

Ezeh is the Head of  Communication , EDDC.

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