AfDB: Power Market Regulation Still Poor in Nigeria, 14 Others

By Chineme Okafor in Abuja 

The African Development Bank (AfDB) has said that the level of regulatory independence in 15 African countries has remained poor even after about two decades of electricity market regulation in those countries.

It said in a new report – “Electricity Regulatory Index for Africa (ERI),” which it launched at the 2018 Africa Energy Forum (AEF) in Mauritius, that stronger regulatory independence was required to accelerate investment in energy and power assets in Africa.

According to multilateral institution, the ERI measured the level of development of regulatory frameworks in 15 African countries including Nigeria, and examined their impact on the performance of their respective electricity sectors.

It also identified areas in which improvement were most needed in to include: Cameroon, Cote d’Ivoire, Gambia, Ghana, Kenya, Lesotho, Malawi, Namibia, Nigeria, Senegal, South Africa, Tanzania, Togo, Uganda, and Zimbabwe.

According to the report, though the majority of African countries have developed relatively robust institutional frameworks for the regulation of their electricity sectors, much work remained to be done to strengthen regulatory independence of their electricity regulators.

Specifically, the report noted: “On average, well developed electricity regulatory governance systems exist in all fifteen sample countries. However, there is room for improvement with respect to accountability and independence to align with international best practices often necessary to attract future investment into the sector.

“Although many sample countries had established the legal and institutional frameworks for electricity sector regulation, regulators are yet to build an adequate level of capacity and develop appropriate mechanisms to effectively carry out their mandates and make decisions under key aspects of regulatory substance.”

It, however, added that: “In spite of falling well short of international best practices, regulators in the sample countries have a moderately positive impact in the sector, especially when it comes to measures being instituted to promote energy access and enhance commercial quality of electricity to consumers; however on average, regulators faltered most with respect to instituting cost-reflective tariffs.”

Commenting on the report, the Vice President, Power, Energy Climate and Green Growth Complex at the AfDB, Amadou Hott, said: “The main goal with the ERI is to incite key stakeholders in the African power sector to address regulatory performance and the gaps identified in the study.”