The Nigerian Electricity Regulatory Commission ("NERC") Regulation for Mini-Grids, 2016 ("the Regulation") regulates mini-grids power generation in Nigeria. Mini-grids covers generation of power supply to more than one customer which can either be isolated or connected to Distribution licensee's network ("the DisCo") for the purpose of generating electricity between 0 kilowatt and 1 (one) megawatt.
The mini-grad operator ("the operator") shall enter into a contract with the connected community ("the community") before contracting a Tripartite contract. The Tripartite contract is between the operator, DisCo and the community ("the Agreement"). The executed Agreement shall be delivered to NERC for approval to enable the operator carry out its activities. The Agreement is in form of Annex 11 of the Regulation.
Under the Agreement, the DisCo shall grant the operator an exclusive right of usage of the interconnected network ("the network") for an agreed term. The operator has a right to conduct a physical condition examination of the network to confirm that apart from the listed deficiencies, the network conforms to NERC technical codes. The operator may carry out repairs, make new connections upon NERC's approval to extend the network in accordance with the technical codes and connect the amount of generator to cover power generation of 1 (one) megawatt. The operator's generator must be able to supply electricity to the community at least 95% of the time.
The DisCo shall pay the operator compensation if it terminates the Agreement or if the operator terminates the Agreement for expiration of the DisCo's licence, its insolvency, breach of the terms of the Agreement and misrepresentation. The DisCo shall give the operator all technical information to enable it perform its obligations under the Agreement and obtain the necessary approvals from NERC to enable it carry out its interconnect activities.
The cost of connection to the mini-grid generation assets shall be borne by the operator. The DisCo and operator shall agree on ownership of the new connections constructed by the operator. The mini-grid operator shall provide electricity to the community on a tariff which would be approved by NERC. Upon the initial term for the project planning, construction and commission of the project to be agreed by the parties, the Agreement shall be automatically renewed for a period of 20 years.
The operator shall carry out its obligation under the Agreement in accordance with the Regulation, Good Industry Practice, NERC's Technical codes and its standard requirements.
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