Just Before Jonathan Writes Off His Power Sector Testimonial With the NEMSA Bill -By Faloseyi Michael

Truth be told, there are few examples of countries with two regulators in a sector and there is nothing sacrosanct about what we have in place now that it cannot be changed or improved upon. However, having two regulators for the power sector cannot be an improvement on what we have presently.

Arguably the discussion on electricity supply generates so much passion among Nigerians more than any other socio-economic issue in Nigeria today. Nigerians are enthusiastic about doing everything, anything, to get us out of the woods in this regard. It is in this context that whatever recommendation or suggestion anyone has as the solution to the problem will, at all times, appeal to many.

Challenges posed by the acute shortage of electricity supply, viewed from whatever perspective, have assumed the dimension of a dinosaur, or the proverbial elephant whose death invites different types of knives. It is a multi-dimensional challenge. There is enough to contend with from whatever perspective it is dissected.

From the supply end, we have an acute shortage of generation capacity required for our teeming population and economic projections. Besides this, the limited installed capacity cannot be delivered, owing to bottlenecks in gas supply to the thermal power plants due to perennial pipeline vandalism.

At the mid-stream or transmission level, there is the paucity of funds to expand the network on a consistent basis, vandalism of equipment, as well as weak integrity of the existing transmission lines.

At the downstream or the distribution network, the scenario is no different, if not much more complicated, with inadequate supply, weak distribution network, wide metering gap, which has occasioned pervasive over billings, and poor customer care culture among staff of electricity distribution companies.

This was the scenario prior to the conclusion of the sector privatisation in 2013. This unfortunate picture was further compounded with the corruption at every stage of the value chain and the Federal Government’s inability to fund further expansion projects in the power sector.

Privatisation was, therefore, adopted by the Federal Government in 2005 as a way out of the quagmire, with the enactment of the Electric Power Sector Reform (EPSR) Act in March of that year. Successive administrations have since then demonstrated different levels of commitment in the policy implementation from conception to eventual transfer of ownership on November 1, 2013 by the outgoing administration.

The enabling law – EPSR Act 2005 established the Nigerian Electricity Regulatory Commission (NERC) as an independent umpire of this process. Section 3 of the Act assigns the Commission responsibilities over key aspects of technical and economic regulation. This entails tariff regulation, approval of capacity expansion and business plans, oversight, among others. In essence, the Commission was established as a value chain regulator of the electricity industry.

The Act, which established the Commission, is yet to be reviewed. Yet, these responsibilities are about to be assigned to another agency of the Federal Government called the Nigeria Electricity Management Services Authority (NEMSA), which currently exists as a limited liability company. NEMSA charges the industry operators for services rendered, including metre and equipment testing. Though the agency’s job is clearly cut out for it under the present arrangement, yet it wants to be migrated as a regulator. Nigeria Electricity Management Services Limited in its pre-designed format can adequately carry out its responsibilities for the sector as a licensed limited liability company.

The questions being raised by the unfortunate and ill-thought-out NEMSA Bill is how many more limited liability companies in the sector will mutate into statutory bodies with their own Act? Needless to say, Nigerians are yet to see the much needed gain of this reform in terms of uninterrupted power supply. One undeniable fact, however, is that the privatisation of the electricity sector in Nigeria has been executed in a manner that continues to draw applause from other countries of the world. South Africa recently said it was adopting the Nigerian model to privatise its electricity sector.

With this effort, investors’ confidence is created in the system, especially by the transparent and quality of leadership being provided by the sector regulator. New business horizons are beginning to open up, while expansion of capacities at every stage of the value chain of electricity production is also going. What is required at this stage is the discipline to stay on course. This, however, may not likely be with the ominous development.

While we are yet to recover from the euphoria of pulling through the privatisation of the power sector with the transfer of ownership in 2013, we seem to be taking actions that are inimical to a process that was worldly acclaimed as successful. Ironically, the process that could be held out as a testimonial for the outgoing administration of President Goodluck Jonathan is about being reverted just at the twilight of the same administration.

A portentous implication of the NEMSA bill is that it could reverse whatever commendation the President has received over his handling of the privatisation of the power sector. The NEMSA bill, for whatever it is worth, is a duplication of the role for which NERC was created to perform. Its passage into law will create uncertainty in the emerging electricity market. Investors who are gradually warming up to enter our market will no longer see reasons to invest their money here. Whatever gains we have made or are hoping to make will be either stagnated or reversed.

For those who may not know, the role assigned NEMSA in the bill entails enforcement of technical standards and regulations, technical inspections, testing and certification of all categories of electrical installations, electrical metres and instruments etc, to ensure the efficient production and delivery of safe, reliable and sustainable electricity power supply.

Interestingly, promoters of the NEMSA Bill are some of the best hands the President can parade as reliable advisers and bureaucrats. They are working hands in gloves with politicians in the National Assembly, who hardly do anything, but for the personal benefits. The ultimate aim of this Bill is to create two regulatory agencies for the power sector. They argue that NEMSA should handle technical regulation, while NERC handles economic regulation.

Truth be told, there are few examples of countries with two regulators in a sector and there is nothing sacrosanct about what we have in place now that it cannot be changed or improved upon. However, having two regulators for the power sector cannot be an improvement on what we have presently.

Besides, the enabling act for the sector reform was enacted in 2005. But for all practical purposes, the law has only been put to test for barely one-and-a-half years, with the transfer of ownership of the utilities to new owners in November 2013. Why therefore are we in a haste to make changes? The existence of two regulatory agencies, besides creating confusion in the system, especially when EPSR Act 2005 that created NERC has not been reviewed, is at a cost to the consumers of electricity. I don’t think that is what Nigerians are asking for. Nigerians want electricity like yesterday, not the creation of agencies that end up fighting for space, while the job is left undone.

This much was made known at the public hearing at the National Assembly by the Bureau of Public Enterprise (BPE), Nigeria, the Infrastructure Advisory Facility (NIAF) and some other knowledgeable individuals and organisation, except the promoters of this Bill.

Therefore, signing NEMSA Bill into law by President Jonathan at the dusk of his administration has two major casualties, the first being the system that would be thrown into confusion or reverse gear. The other casualty is the President’s testimonial of advancing the privatisation of the power sector, which would have been damaged with this bill whose major objective would be the proliferation of agencies at a time our economy is running on half tank!

Mr. Michael, Head, Media Unit, Nigerian Electricity Regulatory Commission (NERC), wrote in from Abuja.