House C’tee Recommends Non-renewal of Manitoba Contract

  •  Indicts NERC for lax regulation in power sector

Damilola Oyedele in Abuja

The House of Representatives Committee on Power has urged the federal government not to renew the management contract it has with Manitoba Hydro International (MHI), which currently manages the Transmission Company of Nigeria (TCN).

This, it said, is because the contract with MHI, which expires at the end of this month, is not yielding the desired result.

The committee also indicted the Nigerian Electricity Regulatory Commission (NERC) for failing to enforce its authority in the power sector, as a regulator by applying appropriate penalties and sanctions to defaults by market participants, resulting in laxity in compliance with the rules, regulations and orders instituted by the agency.

It urged President Muhammadu Buhari to immediately nominate the Commissioners of NERC in line with Section 34 of the Electric Power Sector Reform (EPSR) Act so as to reinstate the regulatory function of the sector. It also called for the funding of the Rural Electrification Agency in line with Sections 89 and 90 of the Act.

These were part of the recommendations contained in the report of the House Committee on Power’s investigation, on a planned payment of N2.7 billion by the Board of the Nigerian Electricity Regulatory Commission to its members, whose’s tenures recently expired.

The committee, chaired by Hon. Daniel Asuquo, also called for the payment of the renumeration packages of the immediate past NERC Commissioners.

“However, the statutory position of the remuneration of future Commissioners must be determined with respect to the standards set for such Agencies by the National Salaries, Income and Wages Commission (NSIWC) and Pension Commission of Nigeria (PENCON), to avoid the ambiguities of the past,’ the report read.

It also recommended that NERC be compelled to monitor the activities of the Distribution and Generation Companies, for proper enforcement of regulations and performance agreements.

“They should establish full-proof internal control systems in order to optimize business processes with transparent reporting standards and enforcement of compliance to NERC regulatory operational procedures and guidelines. Internally, NERC should automate the tariff computation platform and ensure that all the parameters are appropriately dimensioned according to the rules of tariff computation,” it said.

It added that NERC regulation of market participants must be on real-time basis rather than periodic request for information while responsible supervisory officers must be assigned and charged with the task of ensuring compliance.
The report further reads in part:

“That the tariff platform must be automated immediately in order to correct the anomalies in the parameters and assumptions in deriving the tariff. Electricity tariff reviews must be in accordance with statutory provisions and consultations with all stakeholders. Consumer protection is very important, both on pricing and service delivery. The Electricity tariff framework must be automated and made full-proof of human manipulation;”

“…That the House should mandate NERC to conduct a retroactive forensic audit and investigation of electricity delivered, invoiced, revenue collected and settlements made to the market participants from October 1, 2013 to date. This exercise would unveil the leakages and the culprits would be required to refund misappropriated funds”
“…That the System Operator and Market Operator roles must be merged and licensed immediately to become the Independent System Operator (ISO) as provided by Section 25(b) of the EPSR Act. The ISO is the “engine room” of the Power Committee Report on NERC N2.7B Severance Package & Regulatory Activities electricity market and must be well constituted and equipped to perform its core functions as stated in the Act;”

“…Adequate succession planning must be put in place with the effective establishment of the System Operator (SO) and the Transmission Service Provider (TSP) as provided by Section 25 of the Electric Power Sector Reform (EPSR) Act. The Act does not provide for the existence of a Transmission Company of Nigeria after the dis-integration of the SO and the TSP.”

It should be recalled that the House recently mandated its Committees on Power and Privatisation to investigate allegations of fraud against Manitoba.