Do you know that as a business/establishment/private individual in Nigeria you can legally generate your own Electric Power by means of something called a Captive Power Generation permit?
Captive Power generation is the generation of electricity above 1MW for the purpose of consumption by the generator and not sold to a 3rd party.
This article will be talking about Captive Power Generation in Nigeria with a focus on :-
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– The Regulatory Framework governing Captive Power Generation in Nigeria.
– The requirements for a Captive Power Generation permit.
– Post-permit grant regulations governing the operation of Captive Power Generation grants in Nigeria.
What is the Regulatory Framework/Agency governing Captive Power Generation in Nigeria?
Captive Power generation permits are governed by the Nigerian Electricity Regulatory Commission (NERC) through the Electric Power Sector Reform Act 2005 & the NERC Permits for Captive Power Regulations 2008.
What are the requirements for a Captive Power Generation permit?
The requirements for this type of permit are:-
– An application in writing to NERC by a legal representative.
– Payment of prescribed fees (non-refundable) for a Captive Power Generation permit category.
How are Captive Power Generation permit applications commenced?
Applications for Captive Power Generation permits are to be documented, signed and dated by an applicant’s legal representative and addressed to the Secretary, NERC Headquarters via regular mail or hand delivery.
Applications of this nature are to be submitted in 3 paper copies and an electronic version in MS Office software format.
The NERC shall send to an applicant an acknowledgement of the application stating the receipt date.
Are Captive Power Generation applications also to be evaluated?
Yes they are. The NERC may also require of the applicant further information within 1 month of receiving the application for a Captive Power Generation permit.
How long does it take to process a Captive Power Generation permit application?
This takes not more than 3 months from the date of receiving and acknowledging the permit application.
What happens where the supply of Surplus Electric Power which may be generated by a Captive Power Generation permit holder?
A Captive Power Generation permit holder must apply for and receive proper written consent of NERC before supplying surplus power not exceeding 1MW to an off-taker and this will require a Power generation license.
Are Captive Power Generation permit holders required to render Disclosure returns to NERC?
Yes they are. All Captive Power plants shall provide annual detailed information on plant operations including information on health & safety standards and procedures in the plant, environmental issues if any arising from operations of the plant and such other information as NERC may from time to time require.
NERC can also through its officials at any time enter and inspect the premises of a Captive Power Generation facility anytime to ensure compliance with applicable regulations as well as the terms and conditions of the permit.
Can Captive Power Generation permit holders carry out modifications on their facilities without any Regulatory compliance?
No, they cannot. The approval of NERC must be requested for and obtained prior to any planned MAJOR modification to the captive power plant within 5 working days after the receipt of the modification request by NERC.
Regarding all other (minor) modifications or augmentations of the Captive Power plant’s capacity shall be reported to NERC within 24 hours of such modifications/augmentations.
Are there any criminal penalties for Captive Power Generation permit holders violating any Regulatory Framework provisions?
Yes there are. Offenders under Section 94(1) of the Electric Power Sector Reform Act can face a first-time conviction 1-year jail term or a 100 Thousand Naira fine and a 500 Thousand Naira fine or 3-year jail time on subsequent convictions.
Can a Captive Power Generation permit be amended or renewed?
Yes it can. The terms and conditions of a permit may be amended by:-
– an application by the permit holder;
– the commission receiving a complaint from any consumer, eligible customer, consumer association, association of eligible customers, licensee or other permit holder;
– or NERC on its own initiative.
An application for amendment shall be accompanied by a receipt of such fees as may from time to time be prescribed for processing the application.
For renewal of a Captive Power Generation permit,an application has to be made at least 3 months before the expiration of the permit and shall be accompanied by a receipt of such fees as NERC may prescribe for processing the application.
It should be also noted that the procedure for applying for a fresh Captive Power Generation permit shall be followed in a permit renewal.
Can a Captive Power Generation permit be cancelled and if yes, on what grounds?
Yes, a Captive Power Generation permit can be cancelled by NERC via complaints from customers, consumer associations, other permit holders or NERC on its own summary decision on the following grounds :-
– Fraud, misrepresentation or non-disclosure of a material fact in the course of procuring a Captive Power Generation permit or rendering Disclosure/Compliance returns to NERC.
– Willful/unreasonable contravention of the Regulations governing Captive Power Generation permits.
– A failure to comply with the Terms and conditions of a Permit.
– A permit holder becoming insolvent or bankrupt.
How long does it take for NERC to conclude permit cancellation hearings?
This usually takes 60days while rehearings and appeals take 30 days.
Can applications for Captive Power Generation permits be withdrawn by an applicant?
Yes they can, but once withdrawn they cannot be reactivated and can only be resubmitted as new applications to be accompanied by fresh application fees(note that permit application fees are in the first place, non-refundable).
What is the validity period of Captive Power Generation permits?
Captive Power Generation permits have a validity period of 5 years.
What are the fee implications of Captive Power Generation permits?
Captive Power Generation applications come with the following fee categories:-
1-10MW Generation Capacity
Application fee – 50 Thousand Naira
Permit fee – 200 Thousand Naira
Amendment/Renewal fee – 50 Thousand Naira
11-20MW Generation Capacity
Application fee – 50 Thousand Naira
Permit fee – 250 Thousand Naira
Amendment/ Renewal fee- 50 Thousand Naira
21-30MW Generation Capacity
Application fee – 50 Thousand Naira
Permit fee – 300 Thousand Naira
Amendment fee – 50 Thousand Naira
31-40MW Generation Capacity
Application fee – 50 Thousand Naira
Permit fee – 450 Thousand Naira
Amendment/Renewal fee – 50 Thousand Naira
41-50MW Generation Capacity
Application fee – 50 Thousand Naira
Permit fee – 500 Thousand Naira
Amendment/Renewal fee – 50 Thousand Naira
51-100MW Generation Capacity
Application fee – 50 Thousand Naira
Permit fee – 550 Thousand Naira
Amendment/Renewal fee – 50 Thousand Naira
100MW – Above
Application fee – 50 Thousand Naira
Permit fee – 700 Thousand Naira
Amendment/Renewal fee – 50 Thousand Naira.
Conclusion :- Captive Power Generation permits carry a much wider set of operational & Regulatory compliance requirements that require the right type of professional guidance. It is advisable to thus consult with your lawyer if you are interested in procuring this type of Power sector permit.