December 15, 2017

BPE disagrees on Electricity DisCos force majeure

BPE disagrees on Electricity DisCos force majeure

THE Bureau of Public Enterprises (BPE) has rejected a plan by electricity distribution companies to declare political force majeure.

Investopedia describes Force majeure as a French term literally translated as “greater force”, this clause is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations.

The distribution companies had written to the BPE about their decision to declare force majeure following the policy directive on Eligible Customers and the Eligible Customer Regulations by the Nigerian Electricity Regulatory Commission (NERC).

The Discos claimed that the policy directive on Eligible Customers and the Eligible Customer Regulations have resulted in a change of law which prevents them from fulfilling their obligations under the Performance Agreement.

However, Director General of the privatisation agency, Mr Alex Okoh has said that there is no basis for the issuance of notice to declare force majeure by the electricity distribution companies (Discos).

According to Spokesperson for BPE Mr Chukwuma Nwokoji, Okoh through a letter to the Discos, challenged the assertion by their assertion that there has been a change in law and political force majeure event pursuant to certain clauses in the Performance Agreement the core investors of the Discos signed with the BPE.

As such, he rejected the notice to declare force majeure by the Discos.

But Okoh countered that pursuant to the Electric Power Sector Reform Act 2005, it is obvious that the Minister of Power, Works and Housing are empowered to issue the policy directive specifying the class or classes of end-use customers that shall constitute Eligible Customers. In the same vein, NERC is similarly empowered to issue Eligible Customer Regulations.

Said he: “as you are aware, this is the same Act which midwifed the process whereby the power assets were privatized to the core investors. Given that the Declaration and the Regulations were lawfully and validly issued by the Minister and NERC, and that there has been no change in the law giving rise to a political force majeure event, we are unable to see the basis for the issuance of the notice.”

Okoh added that the BPE, as the contracting party on behalf of the Nigerian government to the agreements which governed the privatisation of the power assets to the core investors, rejects the notice to declare force majeure.

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