Power Sector Regulation Still Adrift


After taking forever before the appointment of commissioners for the Nigerian Electricity Regulatory Commission, Chineme Okafor writes that the federal government still has the unfinished job of reconstituting a complete board for the agency


It has taken the federal government more than one year to recognise that Nigeria’s privatised electricity market has operated without a properly constituted regulatory agency.

After a very long time, the government eventually sent a list of seven people to the Senate for screening and confirmation as commissioners for the Nigerian Electricity Regulatory Commission (NERC), but the outcome of the screening and confirmation did not go as expected.

In 2016, President Muhammadu Buhari had sent to the Senate a list, which had in it Sanusi Garba (North West), nominated for the vice chairman position; Nathan Rogers Shatti (North East); Dr. Moses Arigu (North Central); Dafe Akpedeye (South-south); Prof. Frank Okafor (South-east), and Dr. Musilliu Oseni (South West).

The president’s list also included the chairmanship nominee, Prof. Akintunde Ibitayo Akinwande, a US based scholar, who however turned down the job offer after refusing to appear before the Senate Committee on Power for screening and confirmation.

When reports broke that Akinwande rejected the government’s offer, it was indicated that he claimed the government did not consult him before submitting his name for the job and that he was engaged in the US and unable to accept the offer.

After a lot of commotion, the six nominees were however screened and confirmed by the Senate last week, without Akinwande whom the government had waited for to change his mind.

The development, notwithstanding showed that the lacklustre decision and approach of the government on this were evidence of lack of sound appreciation of the place of a firm and stable regulator..


NERC without a board

Already, it is now 13 months since the tenure of the last board of commissioners led by Dr. Sam Amadi expired in December 2015.

For this long, NERC has fairly regulated the business activities of operators in Nigeria’s power sector without commissioners, contrary to sections 34 and 35 (5), as well as other relevant sections of the Electric Power Sector Reform Act (EPSRA) 2005, which stipulate that the commissionsers must be in place at all times for the regulator to be fully and validly functional.

Under an acting Chairman, Dr. Anthony Akah, the commission has made efforts to steady the regulatory environment. It has within this period evidently stepped up its enforcement actions against recalcitrant operators in the industry; yet it can however not be said to be fully operational at least within the context of the EPSRA 2005 upon which it is founded.

Along with its top management, the makeshift NERC has from all indications taken up some remedial actions to ensure that the delivery of electricity services in the country is unhindered within a very peculiar regulatory condition.

Its provisional management team which comprises top managers with diverse experience in electricity market regulation have also within this period prevented the privatised electricity market from a possible collapse, having held on firmly to enforcing some existing market regulations which ordinarily could have been ignored or contested by operators on account of the instability in the regulatory agency.

It was equally perhaps out of ingenuity that the provisional management team at NERC scaled through a legal action against the 2015 electricity tariff, which the last board left for it and which from experts’ views at that time could have crippled the market’s financials.

But the extent to which this interim arrangement can hold up the tough demands of market regulations and certain regulatory responsibilities has remained limited, thus making it relevant that a properly constituted commission be put in place by the government.

There are established instances that demand quick and smart regulatory intervention but which it is not entirely clear if the provisional management at NERC would be firm in addressing. One of such is that the market, which by established milestones, should be in a Transitional Market mode by now and all businesses conducted on contract basis, has yet to get into that mode.

A fully constituted NERC would by all means hold operators to account on this.

Attempts to get operators to activate certain contractual obligations they signed up to have also not been very successful, with some operators preferring to institute a legal action against the government on this. One of such was the legal action against the Nigerian Bulk Electricity Trading Plc (NBET) by some electricity distribution companies (Discos). Experts stated that such wayward acts would need the firm grip of a properly constituted NERC to clear.

Aggregating these anomalies and some others in the market thus indicate that the absence of fully constituted regulatory commissioners for the NERC cannot be discounted or assumed immaterial to the growth of Nigeria’s electricity industry.

Board appointment in disarray

Even after it took so long to appoint commissioners for the NERC, the government’s efforts did not go without some unnecessary hiccups, which experts envisage could add to the already self-inflicted market uncertainty.

Section 34 of the EPSRA 2005 specifically deals with the appointment of a seven-man board of commissioners for the NERC, while Section 35 (5) of the same Act stated the period which the appointment have to be made. Both clearly emphasised the importance of stability in the commission.

Specifically, Section 35 (5) said, “all appointments or reappointments of commissioners shall be made before expiry of their term of office,” to emphasise its contempt for vacuum at the NERC commissioners post.

The Act also recognised the need to maintain stability in the NERC and power sector regulation, and further stated in Section 39 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.”

And while it is not clear what the situation would eventually turn out to be, Akinwande’s rejection of the job offer and the Senate’s subsequent confirmation of the six others does not suggest that the regulatory uncertainty created by the government would go away soon.

The Senate has already asked President Buhari to nominate another person for the chairmanship of the commission considering that Akinwande was not recommended for confirmation because he failed to appear for screening.

Experts, who spoke to THISDAY on this development, posited that the absence of a chairman-designate for the NERC means that the board is not fully constituted and as such the possible inauguration of the other six commissioner designates cannot be considered valid.

“Well it is simple. The commission is incomplete and the vice chairman cannot act because this is not a case of the chairman not being around or reigning. It is a case of non-appointment of a chairman so the commission is not yet constituted,” said one of the experts who preferred to speak without his name on print.

They also stated that the government may be setting itself up to fail on hands-on regulation of the power sector by overlooking the inherent capacities in NERC which they explained could be added to the mix to bridge the learning gap between the new people and the market.