Task Before NERC’s Commissioners

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Seven commissioner-designates of the Nigerian Electricity Regulatory Commission were nominated in July by President Muhammadu Buhari. While the Senate is yet to confirm them, Chineme Okafor writes that they have a clear job to do at the commission whenever they assume office

In July, President Muhammadu Buhari nominated Akintunde Ibitayo Akinwande, a professor in the Electrical Engineering and Computer Science Department of the Massachusetts Institute of Technology (MIT), as the Executive Chairman of the Nigerian Electricity Regulatory Commission (NERC).

Along with six others, Akinwande will succeed the Sam Amadi-led board of NERC commissioners whose tenure ended in December 2015.

But while the Senate is yet to confirm this new set of commissioners, THISDAY spoke with experts and operators in the country’s electricity market on what the industry expects from the nominees and the need for the incoming commissioners to creatively regulate the industry with absolute compliance to the dictates of the Electric Power Sector Reform Act (EPSRA) 2005.

Their clear statutory tasks

First, their responsibilities as contained in the EPSRA are clear, and include helping the Regulator accomplish its objects and functions.
From the Act, they are to ensure that NERC creates, promotes, and preserves an efficient industry and market structures; and ensures optimal utilisation of resources for the provision of electricity services.

The new team is equally expected to help the Regulator maximise access to electricity services by promoting and facilitating consumer connections to distribution systems in both rural and urban areas

NERC commissioners also ensure that an adequate supply of electricity is available to consumers and that the prices charged by licensees are fair to consumers as well as sufficient to allow the licensees to finance their activities and earn reasonable profits.
They are to also ensure that safety, security, reliability, and quality of service in the production and delivery of electricity to consumers is optimum.

It is also the duty of the regulator to ensure that regulation is fair and balanced for licensees, consumers, investors, and other stakeholders; as well as promote competition and private sector participation, when and where feasible in the sector.

When they resume, they will equally be required to establish or approve appropriate operating codes for safety, security, reliability and quality standards; establish appropriate consumer rights and obligations regarding the provision and use of electric services; and provide more licenses and regulations for persons engaged in the generation, transmission, system operation, distribution, and trading of electricity in the country.

Apart from these, they are to also approve amendments to the market rules, which guide the behaviours of operators in the industry, and monitor the operation of the electricity market.

Expectations of the market

The competence of the incoming commissioners, from comments shared by market operators with THISDAY would be judged by their first moves and how fast they would be in setting out with their tasks.

Already, the country’s electricity market is not in a very healthy condition. It has its liquidity challenges to contend with; unexpected but hidden government interference in market processes, as well as systemic acts of individuality and blame shifting, all of which ensure that very little achievements are recorded from time to time.

As explained by Prof. Chidi Onyia, who leads the Power Sector Team at the Nigeria Infrastructure Advisory Facility (NIAF), the degree to which the Regulator is independent and takes evidence-based decisions, for the benefit of all the stakeholders in the electricity market, is the degree to which the privatised electricity market will endure, be efficient and equally profitable.

“One of the key things that the Regulator should do is to work based on evidence, be more proactive rather than reactive and take out time to work with stakeholders within the market. They are coming newly and the market operatives are more experienced because they have been here longer while the new appointees may not have so much regulatory experience in Nigeria and so, there will be a learning curve.

“They have to work hard to restore market confidence. We think this can be done quickly by following appropriate regulatory practice in the market,” said Onyia in his advisory to the incoming NERC board.

Similarly, the working relationship between NERC and other stakeholders has been collaborative and consultative. Over the years, the Regulator has indicated its willingness to adapt and fit its regulations to the realities of the market where required, and the new commissioners must ensure this is sustained.

NERC has also flexed its muscles to check entrenched interests of the old Power Holding Company of Nigeria (PHCN) by demonstrating its commitment to both the market and consumers. It has wielded the big stick when needed, and this too must be sustained by Akinwande and his team.
Another very important task, which the new board must strive to accomplish in good time, is the mending of fences between the NERC and the market’s technical regulator – the Nigerian Electricity Management Services Agency (NEMSA).
The Akinwande-led team must realise that the hallmark of the legal and regulatory framework of successfully deregulated industries has always been the existence of a regulatory authority furnished with comprehensive powers.

The new NERC team should also appreciate that the government decided to share this comprehensive powers between the NERC and NEMSA, with the intention of creating a sound industry.
This action was seen as a duality and thoroughly resisted by the Amadi-led team amongst others, though on fair and reasonable grounds, thus creating some volumes of power struggles and uncertainty.
But the new commissioners must seek for better ways or processes to engage and work with the NEMSA, rather than continuing on the old path.

A clearly defined terms of engagement with NEMSA could create a win-win for the industry.
The new team must understand that clearly, a continuation on this will create uncertainty and confusion for the market and private investors to make investment. The sector at this moment or any other time cannot afford to have such developments linger.

Other tasks which the new commissioners would be expected to take up as they resume will also include conclusion of the consultation and ratification of the mini-grid regulation to enable investments in that segment of the sector, sustained pressure on the electricity distribution companies (Discos) to improve on their metering of consumers, as well as taking up for good the government’s plans for renewable energy with a view to improving on its deployment in Nigeria.

Unveiling the new commissioners
According to his academic profile, Akinwande who will succeed Amadi as NERC’s chairman is a professor in the electrical engineering and computer science department of the Massachusetts Institute of Technology, Cambridge, MA.

He received a B.Sc. (1978) in electrical and electronic engineering from the University of Ife, Nigeria, a MS (1981) and Ph.D. (1986) in electrical engineering from Stanford University, Stanford, California.

He reportedly joined Honeywell Inc. in 1986 where he initially conducted research on GaAs Complementary FET technology for very high speed and low power signal processing, and later joined the Si Microstructures group where he conducted research on pressure sensors, accelerometers, thin-film field emission and display devices.

Akinwande joined MIT’s Microsystems Technology Laboratories (MTL) in January 1995 where his research focuses on micro-fabrication and electronic devices with particular emphasis on smart sensors and actuators, intelligent displays, large area electronics (macro-electronics), field emission and field ionization devices, mass spectrometry and electric propulsion.
He is also a recipient of the 1996 National Science Foundation (NSF) Career Award, and holds numerous patents in microelectromechanical systems (MEMS), electronics on flexible substrates, and display technologies.

Musiliu Oseni (south-west nominee), has a BSc in economics (first class) from University of Ibadan in 2007; MSc energy economics and policy (with distinction) from University of Surrey, UK, 2010 and PhD in business energy economics in 2015 from the University of Cambridge, UK.
Dafe Akpeneye (south-south nominee) is a 2001 law graduate from Obafemi Awolowo University and currently the Director, Regulatory Services/General Counsel, West Africa for PricewaterCoopers Nigeria.

Okafor Nwoye (south-east nominee) is a professor in the department of electrical engineering, University of Lagos. He is a specialist in power systems and control.

Sanusi Garba (north-west nominee), got a Bsc in engineering from Ahmadu Bello Univeristy (ABU), Zaria in 1974, and a master’s in industrial management from the University of Birmingham in 1980.
Nathan Shatti (north-east nominee) is a former commissioner for finance in Adamawa state. He is also a Fellow of Chartered Accountants, and was formerly with Exxon Mobil in several countries in Europe and East Africa before becoming manager, treasury and banking services in Mobil Oil Nigeria Plc in 2006. He graduated in accounting from ABU Zaria in 1990.

Moses Arigu (north-central nominee) is currently the GCS Partner vice-president (capital markets technology and operations), Royal Bank of Canada. Before then he was with JPMorgan Chase (Investment Bank, New York). He was also with Credit Suisse (Swiss Bank, New York), from 2005 to 2007.