As the Senate prepares to screen nominees to the board of the Nigerian Electricity Regulatory Commission (NERC), some stakeholders have set an agenda for the new management.
Experts, consumers and other stakeholders who spoke at the weekend urged the incoming board of NERC to be more proactive in holding operators in the power sector to account.
The Manufacturers Association of Nigeria (MAN) particularly wants electricity distribution companies to be made efficient. The industrialists want a stop to cost-cutting measures and threats of cutting off electricity, while they seek the enforcement of the provisions of the Electricity Power Sector Reform Act (ESPR 2015).
To effectively manage the Nigerian Electricity Supply Industry (NESI), MAN charged NERC to “begin to operate as an impartial judge that enjoys the confidence of all stakeholders.”
“NERC should establish an all-encompassing stakeholders consultative platform with representation from all stakeholders on the NESI value chain. The incoming board should treat the decisions of the Customers Forum as mandatory,” President of MAN, Dr. Frank Udemba Jacobs said.
MAN requested that a special rate be created for manufacturers consuming over 5000kva of electricity while the incoming management should suspend the contentious tariff and revert to previous rates.
“NERC should allow MYTO 2.0 to run its full course (2012 to 2017): This is morally and technically right because MYTO 2.0 was initiated and approved for implementation by NERC to expire in 2017. Based on this, manufacturers have made huge investments and projections. Therefore, the attempt to railroad MYTO 2.1 when MYTO 2.0 is still running will totally disrupt operational plans of manufacturing concerns nationwide and make Nigerian companies and products uncompetitive,” he said.
According to Jacobs, “The manufacturing sector currently consumes a high volume of electricity and contributes more to revenue generated by Discos from electricity bills collections. Our position on tariff is that the process should be transparent and should not include parameters like commercial, technical or collection losses, which arbitrarily transfer inefficiencies of the system to paying users of electricity. In fact, the pricing parameters should not be dollarised as vital inputs used in generation of electricity like gas, thermal, hydro (solar, wind) are available locally.”
On the special tariff class for manufacturers, Jacobs explained: “It is a fact that in other electricity regulatory environment outside Nigeria, bills are generated based on the principle of the more electricity you use, the lower the bill paid. Other countries have a reduced rate for high electricity users. This is not the case in Nigeria, as the negative concept of sculpting prevails where manufacturers (heavy electricity users) are made to pay heavily to subsidise the bills of other consumers. MAN therefore requests that a special rate or tariff class be created for manufacturers consuming over 5000kva of electricity that will decelerate as consumption accelerates.”
A United States-based energy lawyer and global head, energy, infrastructure and project finance group, Ruskat Partners, Felix Ayanruoh, called for establishment of an anti-trust law for the sector.
According to him, “NERC should impress it on the Discos that the metering of all consumers is a must and should be carried out timely. The commission should set a timeline for the Discos in metering of all consumers, failure of which may result in huge fines and eventual revocation of operational licenses.”
The Head of the Power Sector Team at the United Kingdom Department for International Development (DFID)-funded Nigeria Infrastructure Advisory Facility (NIAF), Prof. Chidi Onyia, called for the adoption of a “new regulatory practice that is evidence-based rather than what it has been in the past.”
Onyia charged the incoming NERC board to be more proactive rather than reactive and take out time to work with stakeholders within the market.
“The market and the regulatory practice should be evidence-based. It cannot be based on second-guessing and secondary and third level data from the Discos to the regulator. The regulator needs to have a robust data management process that actually gives it real information. The Central Bank of Nigeria (CBN) is a regulator and does not depend on data from banks to run its checks. Their data set crosschecks what is submitted to them by the banks so that they can flag anomalies.”
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