Disquiet in Electricity Market Over New Bill

Electricity-Meter

The House of Representatives’ Committee on Power and Steel will today commence a public hearing on the bill establishing the National Electricity Management Authority (NEMSA).

BusinessDay investigations reveal that analyses by various stakeholders across the sector indicate that the functions of NEMSA as proposed in the House of Reps Bill conflict and overlap with the functions and roles not only of Nigerian Electricity Regulatory Commission (NERC) but other subsisting institutions.

The Bill, a private member’s Bill, proposed by Hon. Patrick Ikhariale (PDP, Edo State), chairman of the House Committee on Power and Steel, proposes to situate NEMSA as a technical regulator and enforcement institution in the Nigerian Electricity Supply Industry (NESI). The bill seeks to convert the Electricity Inspectorate Service (EIS, whose functions previously carried out under the auspices of the Ministry of Power had been transferred to NERC in the Electric Power Sector Reform Act, to the National Electricity Management Authority (NEMSA)). The Bill further proposes that NEMSA will also take over the staff and assets of the current Electricity Management Services Plc.

The Nigerian Electricity Regulatory Commission (NERC) has powers similar to those being sought to be vested in the new authority. The National Electric Power Policy (NEPP) 2011 which is the foundation of Nigeria’s power sector reform and the Electric Power Sector Reform Act (EPSR) 2005, particularly section 32 provides clearly for the mandate of the NERC as the technical and economic regulator of the Nigerian Electricity Supply Industry (NESI).

Analysts who spoke to BusinessDay are of the view that the proponents of new bill will end up taking Nigeria several steps backward, adding that it will further delay the execution of the massive projects necessary to give Nigerians access to electricity, as operators will have to contend with the absence of clear and distinct regulation.

“Any instrument which is inconsistent with the extant provisions of the EPSR Act negates the principle behind the power sector reform as articulated in the NEPP and the EPSR Act. Sound privatisation and a strong regulator mean less graft and less of undue government interference but this is now under threat by the bill which seeks to create parallel regulator and weaken NERC”.

Another aspect of the new bill which portends danger is that while NERC is an independent federal agency and regulator, NEMSA will report to the supervising minister in the Ministry of Power with all the far reaching implications of regulators taking direct orders from and being hired and fired by the Ministry.

According to a power sector expert, “NERC may not move quickly but they are deliberate in consulting before acting and they are not answerable to political whims. NERC has advertised for engineering consultants to work with it as inspectors in the five electricity zones established for the country. This promises a new era of business development and growth for Nigerian engineering firms but with this attempt to balkanize NERC’s regulatory powers by special interests within the Ministry of Power, all those plans are now uncertain.”

Other negative implications of the NEMSA bill is that it will create regulatory uncertainty in the market as to which body is statutorily empowered to regulate safety and standards, particularly as economic decisions by NERC on matters such as tariffs and competition have immediate implication on engineering matters such as construction of new assets and system operations. It is likely that this will lead to lack of clarity in the industry and overlapping functions and roles with two agencies of government conferred with the powers to regulate the same field.

BusinessDay investigations reveal that serving officers in the Ministry of Power, anxious to claw back their previous vast powers of control and patronage over the power sector and clip the wings of a NERC that was steadily gaining a reputation for open, transparent regulation, had previously led the minister to believe that NERC and other industry players were agreeable to the unsolicited effort by the House Committee on Power to change the nature and basis of regulating a fledgling private sector driven electricity market. It is now known that the Minister of Power, having realized the real intentions of these bureaucratic special interests within his Ministry, has come out very strongly against any support for this House Bill and has instead been reiterating his support for the protection of NERC as a strong regulator of technical and economic activity in the Nigerian electricity market.

Our investigations further reveal that the only country in Africa with dual regulators is Ghana, which is experiencing conflicts with two parallel bodies regulating the power sector. For Nigeria, NEMSA, after 8 years of establishing a single regulator and within 8 months of privatizing state-owned enterprises, following reassurances by the Executive and Legislature that regulatory certainty is guaranteed, the sudden appearance of a Private Member’s Bill without any form of prior formal consultation with the National Council on Privatisation (NERC) or the Ministry of Power will surely send a wrong signal to investors and the public who may be left with no option than to perceive the Federal Government as being inconsistent in its policies and paying lip service to the much touted power sector reforms.

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