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Operating licences issued to the new owners of the
privatised Power Holding Company of Nigeria, PHCN
companies, and other operators in the power
sector is valid only for 10 years, the Federal
Government has said. The licences may thereafter be extended for a
maximum of five years. The Nigeria Electricity Regulatory Commission,
NERC, in a notice pasted on its website, titled,
“Public notice on the interpretation of sections 71
(10) and 72 (1) of the Electric Power Sector Reform
(EPSR) Act 2005, regarding the tenure of its
licences,” said upon application, the license can be renewed for an additional 10 years. According to the NERC, Section 71(10) provides
that: “A licence shall be valid for a period of up to,
but not exceeding ten years, provided that the
Commission may extend the period of a licence
taking into account the nature of the undertaking
or business, for an additional period not exceeding five years at a time it determines that it is in the
public interest to do so” the Chairman/Chief Executive Officer, NERC, Dr. Sam
Amadi, who signed the notice, said the clarification
became necessary following the need to mitigate
the risks associated with short licence tenure. The move is also meant to provide financiers as well
as other contracting entities the comfort they
require to accommodate the long-term gestation of
most electricity industry projects He said: “This notice serves as clarification of the
position of NERC on these provisions to assure
stakeholders in the electricity industry and other
interested parties that upon application and
subject, only to compliance with the Terms and
Conditions of the Licence. “The combined effect of sections 71(10) and 72(1)
guarantees the Licensee a cumulative licence tenure
of twenty five (25) years made up of the initial ten
(10) year grant, a five (5) year extension and
another ten (10) years upon renewal.”

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