It is time to reconstitute the board of Nigerian Electricity Regulatory Commission

For 13 months, the federal government has perhaps unknowingly contributed largely to creating an unstable regulatory environment for Nigeria’s power market and investments. Since the tenure of the last commissioners of the Nigerian Electricity Regulatory Commission (NERC) led by Dr. Sam Amadi ended in December 2015, the government has vacillated in reconstituting a new board of commissioners for the electricity regulator. When it lately made nominations to these positions, it failed to come good, thus creating needless controversies to buttress the fact that it has yet to understand that in matters of regulating public good, competence and not politics should take priority.

However, the government actions or inactions are in clear contravention of the law. Perhaps in appreciation of the importance of the regulator, the Electric Power Sector Reform Act (EPSRA) 2005 which gave bearing to the reformed electricity market stated that the appointment of the seven-man board of commissioners be done within a specified period. Section 35 (5) of the act states that “all appointments or reappointments of commissioners shall be made before expiry of their term of office,” while Section 39 of the act further underlines this urgency when it states that “on the death of, or vacation of office by, a commissioner, the President shall nominate a candidate to fill that vacancy, and submit that nomination to the Senate, within one month, in accordance with section 34.”

We are constrained to accept as true that the government has forgotten that in any privatised market like Nigeria’s electricity market, the regulator has to act as a surrogate competition, and in doing that, it would need utmost independence, as well as verified understanding of the market’s interactions to keep it in progress. So the question remains: Why has it taken more than a full year to appoint the board of this key regulator?

The power sector, as presently constituted, hurts badly and has become too serious to be ignored. It is the life blood of the economy and it has become reasonable to worry why government has continued to shirk its responsibility. The value an experienced regulator brings to market interplays is always profound and appreciated in the long run by stakeholders or market participants when it matters to them. The job of an independent regulator is not limited to licensing and promotion of investments, but includes complex tasks of ensuring that its regulations are fair and balanced for licensees, consumers, investors, and other stakeholders, all primed to the country’s overall economic goals. All this requires deep market-based experience to accomplish.

We believe that after three years of privatisation, current private sector market participants would have advanced their knowledge of the market processes and indeed have gained immense knowledge and leverage that can only be matched by a quick-witted regulator. Thus the practice of shipping in an entire board to regulate a sector they have limited knowledge of should indeed not be contemplated. This has not really helped as was the case with the many slip-ups of the last board. In the precarious state that we are in, we do not need the services of men or women who will take their time to learn the ropes.

This is why we think that the government could adapt the Central Bank of Nigeria (CBN) model of board recruitment in NERC. We are of the view that a hybrid of proficient senior management persons at NERC with few external persons would stabilise and advance electricity regulation in Nigeria.

Mindful of the importance of electricity to the country’s economic development, we urge the government to fulfil its responsibility of guaranteeing fairness in the conduct of electricity business in Nigeria by bringing people with the requisite experience in regulation to the board of NERC.