NERC lacks capacity, it’s just rewarding inefficiency – Uket Obonga

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OilandPower South-Sudan  2020

“I am still wondering”, says a retired university lecturer, “what the Nigerian Electricity Regulatory Commission, NERC stands for – who it represents, and how effective it is in the regulation of activities and programs in the Nigerian power sector. I should think, infant I am sure, that from all indications, it does not in itself understand what it stands for, and secondly and lastly too, it has ended up being a tool, indeed a strong tool, in the hands of illegitimate and profligate governments, this present regime being the worse I have ever seen.”

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“NERC is rewarding inefficiency, it does not have the capacity; their failure has also brought us to where we are now”, Uket Obonga, Secretary, Nigerian Electricity Consumers Advocacy Network, was speaking during Africa Independent Television, AIT’s popular morning programme.

NERC’s lack of regulatory capacity, and its role as an appendage of the ruling class is not coming to the fore the first time, it has been there over time. Sometime in 2019, while speaking with one of the editors of Energy Window International in Owerri, South-East Nigeria, Dr. Sam Amadi, former Chairman, NERC, had raised concerns of believing in NERC as a regulator of a sector whose ability to provide electricity services to the public was abysmally lacking.

“No one pulls the cart before the horse”, he says, “Therefore no one effectively regulates a system that is inadequate. And one cannot create efficient market without products. The Nigerian power sector therefore is inefficient because it lacks capacity. Build capacity before regulation, and privatize when there is sufficiency, thereby creating conditions for effective and efficient regulation, but here the reverse is the case. It therefore should not be expected, based on this premise, that NERC should effectively regulate a sector that has no capacity, this is my point.”

“There was a disconnect from inception”, and “disconnect” he had referred to as “limiting factors”, which he also explained to mean the politically-motivated step of citing most of the power stations away from the source of gas, or points from where gas could easily have been accessible. Other limitations he outlined to include government’s failure to create conditions that enhance smooth and effective operation, a political economy that lacks effective and strategic modus operandi, exacerbated by the leadership quest for ethnic balancing.

He stated that stronger governance and regulation are essential to managing the inefficiency resulting from the chain link theory that defines the industry worldwide, “for Nigeria is not peculiar except the manner of thought and the lackadaisical attitude of those who manage the governance affairs.”

According to him, the chain link theory presupposes that any repair or improvement on one link must also be effected in the other, weak perhaps, for under no circumstance should a weak link be left in isolation or unattended to, from generation and distribution through to transmission. “But I have not seen any innovative, strategic departure, a rethinking the model sort of” says Dr. Amadi, “to bring about positive change.”

Also for Dr. Joy Ogali, Executive Secretary, Generation Companies Association of Nigeria, GENCOS, the Nigerian power sector is bedeviled by inefficiencies, poor governance and abysmal lack in implementing the existing policy framework which was long confirmed to be comprehensive and holistic. Maintaining that privatization was never a wasted effort because, according to her, it brought about enlightenment and capacity development. Adding that whether the hike was a “tariff review or tariff increase”, still owes so much to the nagging problem of inefficiency and other criminal tendencies. She also argued that NERC as a regulatory body does not have any parameter to determine tariff increase, and or “adjustment”, going by the increase. “Which assumption was used in determining tariff increase?” she queried. Expressing concern that transmission and distribution companies were still pushing blames for failure to push to the end users electricity generated by the Gencos. She was arguing on a local TV programme.

For an authority in NERC sometime ago admitted that the Nigerian electricity Market has not been able to move beyond the transition stage, a situation which he said had unavoidably left a huge task of finding a way out of the power sector dilemma in the hands of a Commission whose duty of effective regulation only lies in the adequacy and availability of the products and services for which course it was established.

Going by its name he said, the transition electricity market was expected to have moved the country to contract based electricity market where operators ought to have engaged one another on contractual basis, a stage where generation companies relate with the distribution companies on the basis of power purchase agreement. This unfortunately has not happened because the act of keeping the Gencos at arm’s length while deciding the new tariff regime, for Dr. Joy Ogadi was circumvention, and demonstrates obvious inefficiency.

“The implication of this is that every segment of the market is bleeding and gasping for breath. It requires regulatory dexterity. The Commission could do better than it is doing but it is definitely making some efforts which are too technical and do not need to belabour the electricity customers with this”, says the authority at NERC.

As to whether the Commission is as independent as it should be to enable prompt action towards changing the narrative, the source has this to say: “The Nigerian Electricity Regulatory Commission is the regulator for the value chain in the Nigerian Electricity Supply Industry, and an independent regulatory agency.”

“In a regulated utility market, especially the one with natural monopoly like electricity, the regulator is the competition. It is there in the interest of both the operator and the consuming public. In essence, regulatory activity is a balancing act. You must regulate to keep the operators in business so that the service is always available for the customers, who you must also protect from profiteering.”

“What emerges in such situation is that the regulator is rarely liked by either of the parties. The regulator is loathed by the customers and hated by the operators each of them willing it danced to their tune. The scenario becomes more pronounced in situation like ours when the product is largely inadequate.”

According to him, the law establishing the Commission recognizes its independence, thus one reason why the Commissioners enjoy tenure of office. Adding however that a regulator must be politically sensitive as long as decisions of the Commission are not influenced by the operators except through process of public consultations which he said should be the rule even internationally. Thus, other than the known instance of political interference when the Commissioners were sacked by the Federal Government without recourse to the enabling act, actions and pronouncements of the Commission are also largely independent of government influence, he said.

Engineer Sanusi Garba just took over as the new Chairman of the Nigerian Electricity Regulatory Commission, NERC, following the mandatory retirement of the former Chairman; Prof. James Momoh, who was asked to go home inspite of his plea to be allowed to complete his term as stated in his letter of appointment, a development which attracted comments as the Commission was reported to have twitted.

One Abu Muntas for instance was reported to have said: “May we never experience this kind of leadership again in @NERCNG where NERC was a subsidiary of DisCos. I urge Engr. Sanusi to reposition NERC to work as a Commission and not as a commentator to the DisCos.” There is no doubt many would have prayed the same way Mr. Abu Muntas did, “May we never experience kind of a leadership where NERC would be a subsidiary of Discos.” But prayers most of the time don’t get answered either because it is interest-serving, or because it is motivated by egoistic tendency.

Another Dr. Isreal was also quoted to have said: “Welcome, we pray your leadership will be transparent, lacking corruption unlike that of Professor James Momoh that was fraught with corruption by giving discos leeway to operate against the consumers and stated guild lines.”

And like the biblical Simeon, Dapo Olaomo, as it was reported, also seeks consolation, as the birth of a new NERC officer, Engineer Sanusi Garba was announced. He was quoted to have said: “We expect him”, referring to the new chairman, “to let us have his VISION for the new assignment by which we would be able to track him….” But are we not told that for whosoever seeks a sign might be waiting indefinitely?

EJEKWU

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