NERC Moves against Foreign Dominance in Power Sector

Babatunde Raji Fashola

Chineme Okafor in Abuja

The Nigerian Electricity Regulatory Commission (NERC) has commenced the implementation of a new law that will efficiently regulate the deployment of foreign equipment, workforce, and other services in Nigeria without allowing them to dominate operations in Nigeria’s electricity market.

NERC explained that the law titled: ‘Regulation on National Content Development for the Power Sector,’ was enacted in 2014, but its implementation was started this month.

It explained that going forward, electricity distribution companies (Discos); generation companies (Gencos) and the Transmission Company of Nigeria (TCN) would have to abide by the minimum local content standards in the regulation.
NERC’s implementation of a local content law in the power sector is modelled after the local content law in Nigeria’s oil and gas sector.

Speaking Thursday at a workshop organised by NERC on local content regulation in Abuja, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, lamented that the electricity sector has remained vulnerable to the vagaries of foreign services, especially with regards to transactions often executed in the United States dollars against the naira.

Fashola said it was necessary for Nigeria to begin to develop local capacity in the power sector to cut down its dependence on foreign equipment and services.

He added that NERC’s local content law was also in line with the federal government’s Executive Order 5 enacted in 2018 to promote the use of Nigerian content in contracts and services in the country’s engineering and science sectors.

In his speech, NERC’s Chairman, Prof. James Momoh, said at the workshop that the implementation of the law would be immediate, adding that operators in the sector were expected to abide by it or risk regulatory sanctions.
Momoh noted that the expectations of the commission were contained in the schedule of the local content law.

According to the schedule, which was obtained by THISDAY, NERC expects Gencos to fully engage local manpower in the construction of foundations for power generation turbines, transformer plinths, control rooms and cable trenches as well as other civil works for power plants.

It added that 10 and 20 per cent of transmission equipment such as switchgears and sub-station equipment used by the TCN could be sourced locally between 2020 and 2024 respectively, while civil works for transmission projects would have to be wholly done locally starting from 2019.

Also for the Discos, the NERC explained that 25 per cent of the distribution transformers used by them would have been locally sourced from 2019, and 75 per cent by 2024.

Also, 40 per cent of meters the Discos install at users’ points would also be sourced locally while they will source for all of their meters locally by 2024.

It indicated that 75 per cent of the health, safety and environment (HSE) jobs in the power sector would be reserved for Nigerians starting from 2019, while no foreigner would be allowed to take up any HSE job in the sector by 2024.

Also, 25 per cent of the operations and maintenance (O&M) jobs in the sector, the NERC stated would be reserved for Nigerians from 2019, while 75 per cent of O&M jobs in the sector would be for Nigerians by 2024.

NERC added that no foreigner would be allowed to take up the job of cable laying, accounting and auditing, haulage and cable jointing in the sector going further, while by 2024, no foreigner would be allowed to take up any administrative job in the sector.

Fashola explained that it was the job of the NERC to protect the power sector from external dominance, adding that if the regulation was diligently complied with by operators, Nigerians would have more jobs from the sector which he also said would develop further.

“The Nigerian Electricity Supply Industry is heavily dependent on imported human resources, material, equipment and services. It is consequently vulnerable to foreign exchange availability and rates, to the extent that contracts for gas and generation are denominated in foreign currency.

“It is time to systemically develop Nigerian capacity and content in the industry for its long term growth and stability. The objective is to deliberately utilise Nigerian human and material resources, goods, works and services in the industry,” said Fashola, who was represented at the workshop by the Director of Procurement in the ministry, Mr. Ahmed Abdul.