Loss component removal, devastating decision in power sector–BPE

The Bureau for Public Enterprise (BPE) has said the removal of collection loss component of the Aggregate Technical, Commercial and Collection (ATC&C) losses was the single most dangerous decision taken in the power sector.

The bureau was reacting to a statement credited to the former chairman of the Nigerian Electricity Regulatory Commission (NERC), Sam Amadi, that the power sector coordinated by the agency was designed to fail.

In a statement by the BPE, it accused Amadi of removing the collection losses from the contract with investors, which led to a declaration of force majeure by the distribution companies (DisCos)

“We make bold to say that the removal of collection loss component of the Aggregate Technical, Commercial and Collection (ATC&C) losses was the single most devastating decision so far taken in the power sector.

“The bidders had competed on the basis of aggressive reduction of ATC&C losses within a period of five years and preferred bidders were those who had scored 75% and above on technical evaluation and had the highest ATC&C loss reduction offer.

“The challenge to implementing this structure was that in the Multi-Year Tariff Order that NERC had released ahead of the transaction, it had estimated the ATC&C to average around 25%. BPE informed NERC that based on its own assessment the losses were between 40% and 50%.

“On a general note, we wish to state without any fear of contradiction that the Bureau worked closely with NERC in delivering the power sector transaction. The design of the reform framework was never the exclusive work of the Bureau given that the power sector policy, the Act that replaced the old NEPA Act and the eventual sector structure were subjected to stakeholder reviews through intensive workshops.

“The experiences of other nations and the opinion of critical stakeholders were incorporated into the eventual designs which were well received.

“It is also pertinent to note that all the transaction documents such as request for proposal (RFP), draft contracts, evaluation criteria etc. were all endorsed by NERC before they were issued to bidders.

“The members of the evaluation team had a combined experience of over 300 years in the relevant subject matter. It therefore beggar’s belief that somebody who was appointed Chairman of NERC with zero years of experience in the power sector should seat in judgment over the outcome of PHCN successor company’s evaluation.

 “The amendments made to the RFP were not done to reduce the threshold for qualification; rather they were done to provide more clarity and transparency to the transaction.

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