The sub-franchising is a distribution franchising business model that can be initiated by DisCos or customer groups (community) within a specified geographic boundary. The community, through a registered association, may formally approach the DisCos to declare its interest and initiate franchising arrangements in the areas of supply, metering, billing and collection including additional investment in the distribution networks where appropriate.

Integrated Resources Limited franchising operations is well structured, it allows IRL as a third party operator to provide revenue collection and protection services, fault clearance, network operations and maintenance services, meter reading and inspection services and customer services to electricity customers on behalf of the DISCOs. Distribution franchising is considered as an extended arm of the respective distribution company and is the last leg of electricity distribution corporate restructuring process.

Integrated Resources Limited implementation of the distribution franchising will help to stimulate the desired prudent investments in filling the funding and infrastructure gap, distribution franchising will help bridge DisCos supply deficit, because the current power generation level is significantly lower than the customer load demand in the various DisCos across the country.

NERC Approval of Distribution Franchising

According to NERC, proposals for the franchising arrangement can either be initiated by DisCos or customer groups (community) within a specified geographical boundary.

NERC stressed that any unserved or underserved community has the option of exploring the provisions of NERC’s Regulation on Independent Electricity Distribution Network (IEDN) in finding solutions to their supply challenges as may be applicable.

Objectives of the Distribution Franchising Regulations

The overarching objective of the proposed regulation on distribution franchising is to facilitate the development of favourable business models that would attract third party investments in the supply of adequate, safe, reliable and prudently priced electricity to customers of DisCos. The implementation of the Distribution Franchising is expected to provide the following contributions:

1. Improved Investments in the Networks;

Depending on the terms of the Franchise Agreement, it is expected that this Regulation will stimulate the desired prudent investments in filling the funding and infrastructure gap in the distribution subsector of the NESI.

      2. Bridging of Power Supply Deficit;

The current power generation level is significantly lower than the customer load demand in the various DisCos across the country. To bridge this supply deficit, the Franchisee may procure from other sources of power outside the contracted capacity with NBET on a bilateral arrangement through the national grid or from embedded generation sources. In this regard, the Bulk Power Procurement Regulation and Embedded Generation Regulation shall be applicable as appropriate.

      3. Improved Customer Satisfaction;

It is expected that there will be improved customer satisfaction in terms of availability, quality of electricity supply and customer services.

Consultation Paper on Distribution Franchising in Nigeria

1. Technological Improvements; Facilitate adoption of advanced technologies in the design and operations of modern grid systems that can offer cheaper and flexible alternatives to customers.
2. Better Service: To avail opportunities for underserved customer groups desirous of better services by prompting the Distribution Company to engage Franchisee(s) for the provision of the desired services in the respective area(s).