The adoption of Law n°2021-31 of July 09, 2021, on the Electricity Code initiated a drastic reform of the legal framework applicable to the electricity sector.
The recent adoption of 4 decrees has completed this reform:
1. decree no. 2023-269, dated February 3, 2023, setting the conditions and procedures for issuing, amending, renewing, and withdrawing permits to operate in the electricity sector;
2. decree no. 2023-285, dated February 07, 2023, on decentralized rural electrification projects;
3. decree no. 2023-286, dated February 7, 2023, on self-generation of electrical energy;
4. Decree no. 2023-444, dated February 28, 2023, laying down procedures for the award of operating licenses for regulated activities in the electricity sector;
Decree no. 2023-269 establishes a specific regime for electricity sector permits, setting out the conditions under which they may be issued and modified (I) and those under which they may be withdrawn/terminated, suspended, and transferred (II).
This scheme applies:
1) to license applications for activities:
• of production;
• of sale;
• of storage facilities with an installed capacity greater than 500 kW;
• of self-generation plants with power thresholds higher than those set by decree n°2023-286;
• of import and export;
• of sale of surplus from self-generation;
2) concession applications for:
• transport;
• distribution;
3) license applications for activities:
• low-voltage network operation;
• retail sales of electrical energy.
A series of decrees will provide the clarifications needed to perfect the legal framework applicable to practice permits in the electricity sector.
I. Issuing and modifying practice titles
A. TITLE ISSUANCE PROCESS
Decree No. 2023-269 enacts a standard regime for issuing a license, a concession, or a lease.
Under its provisions, applications for licenses, concessions, or leases must be submitted to the Minister in charge of Energy in return for a receipt. The file is then forwarded to the Electricity Sector Regulatory Commission (CRSE), which decides its admissibility.
The components of the application file are specified in Article 4 of the decree. Article 6 of the decree lists all the criteria for examining the file. Criteria relating to the company's experience and the good repute of shareholders and managers have now been removed. On the other hand, a technical, financial, economic, environmental, and social feasibility study is also required.
Decree no. 2023-269 also lays down several specific provisions, depending on the type of application. Thus,
• license applications for production, surplus sales, storage, and sales activities must contain, in addition to the documents listed in Article 4 of the decree, those listed in Article 17;
license applications for self-production must contain, in addition to the documents listed in Article 4 of the decree, those listed in Article 18 of the decree;
• import and export license applications must contain, in addition to the documents listed in Article 4 of the decree, those listed in Article 19 of the decree;
• in addition to the documents listed in Article 4 of the decree, applications for concessions/permits for distribution activities must include those listed in Article 20 of the decree;
• in addition to the documents listed in Article 4 of the decree, transport concession applications must include those listed in Article 21.
In terms of transparency, the decree lays down a series of provisions governing the advertising of applications for the issue of a professional title.
With this in mind, during the investigation of the application, the CORSICA:
• makes the application public, by any appropriate means and on its website, indicating the primary information contained in the file;
• indicates the period, which may not be less than 15 calendar days from the date of publication, during which any third party may be heard on the project;
• informs, where necessary, the consumer, operator, and technical administration advisory committees referred to in article 20 of law 2021-32 establishing the organization and powers of the CRSE.
The procedure for applying for a title is virtually identical to that in force under the old regulations. CRSE has 45 days from receipt of the application to give its assent to the Minister for Energy. If necessary, they may call in an expert. In this case, the time limit is suspended.
The Minister in charge of Energy then has 15 calendar days from receipt of the assent to issue the license, concession, or lease by decree if the CRSE's opinion is favorable. The title is automatically granted if no reply is received within the allotted time.
Issuance of an exercise permit gives rise to payment to the State of an operating fee and an annual fee, payable to the CRSE, the amount and methods of determination of which are set by joint order of the Minister of Finance and the Minister of Energy on the proposal of the CRSE.
Regarding the duration of the validity of the titles, the decree limits that of the production, self-production, storage, sale of surplus, and sale licenses to 25 years. The validity of export and import licenses is limited to 5 years. Concessions for transmission, distribution, and management of low-voltage networks are valid for 25 years.
If the opinion of the CRSE is unfavorable, the Minister has 15 calendar days to notify the applicant of the rejection, with reasons. Reasons for rejection must be:
• objectives;
• non-discriminatory;
• properly documented.
Rejection decisions may be appealed before the competent courts. Before referring the matter to the competent court, an appeal must be lodged with the CRSE's Dispute Resolution Committee.
B. TITLE MODIFICATION AND RENEWAL PROCESS
Exercise titles are subject to change.
This modification is carried out under the same conditions and in the same form as the application for issuance of the professional title.
The regime applicable to modifications varies according to whether or not they are substantial.
The modification is substantial when conditions are introduced which, if they had been part of the initial award procedure, could have:
• attract other candidates;
• change the allocation; or
• change the economic balance.
Any request for non-substantial modification is subject to the agreement of the Minister for Energy, after approval by the CRSE, on the presentation of a file justifying such modifications.
On the other hand, introducing a new award procedure is necessary when the modification is substantial.
Exercise titles (license, concession, and leasing) can be renewed for a period identical to their initial validity.
Renewals are made under the same conditions and form as applications for new permits. The holder is only eligible for renewal
if the obligations related to the said title have been fulfilled.
The request must reach the Minister of Energy at least one (1) year before the title expires. The latter notifies the applicant of its decision to renew or refuse.
Renewal of a practice permit gives rise to payment of an operating fee to the State and an annual fee to the CRSE.
II. Withdrawal/termination, suspension, and transfer of practice permits
A. TITLE WITHDRAWAL/TERMINATION & SUSPENSION PROCESS
Withdrawal of a license, or termination of a concession or lease, may occur in the event of a "serious and manifest" breach by the holder of the right to exercise his legal, regulatory, or contractual obligations.
In this case, the CRSE will draw up an instruction file. The file is sent to the titleholder, who has 15 calendar days from the transmission date to submit their written observations.
The CRSE informs the Minister of Energy, who gives the licensee an adversarial hearing.
Following a hearing or an unsuccessful formal notice, the CRSE has 20 calendar days to rule on the suspension or withdrawal of a license or the termination of a concession or leasing agreement. It informs the Minister in charge of Energy.
In the event of a notice of withdrawal of a license or termination of a concession or lease, the CRSE proposes to the Minister responsible for energy the terms and conditions under which the licensee must cease its activities.
The withdrawal decision may be challenged before the competent courts.
B. TITLE TRANSFER
The transfer of shares is subject to the approval of the Minister in charge of Energy, with the assent of the CRSE.
The application for approval must be duly motivated and accompanied by the documents referred to in Article 4 of the decree.
In addition to the aforementioned documents, the following must be provided:
• the draft deed of transfer;
• any agreement agreed or to be agreed, directly or indirectly, relating to the transfer;
• any documents or information deemed helpful by the Minister in charge of Energy.
Author:
FATIMATA SY
Legal Counsel