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Of improved power and regulation

By Abiodun Olukoya
13 January 2016   |   3:33 am
THE former Minister of Power, Prof. Bart Nnaji, spoke during the Senate hearing on the power sector which took place in the National Assembly Complex on November 11 and 12, 2015. A news report of the event credits him with having “blamed the regulatory agencies” for “the crippled power supply” in the country during his…
A power transmission facility in Lagos.

A power transmission facility in Lagos.

THE former Minister of Power, Prof. Bart Nnaji, spoke during the Senate hearing on the power sector which took place in the National Assembly Complex on November 11 and 12, 2015. A news report of the event credits him with having “blamed the regulatory agencies” for “the crippled power supply” in the country during his speech. (See “Senate Power Probe: Ex Power Minister Blames Bad Power Supply On Regulatory Agencies,” https://www.naij.com/635739-senate-power-probe-ex-power-minister-blames-bad-power-supply-regulatory-agencies.html).

Providing context, the report said, “the major reason why he blames the regulatory agencies is because they failed to implement their work with discipline.”

Currently, the regulatory agencies in the power sector are the Bureau of Public Enterprises (BPE), the Nigerian Electricity Regulatory Commission (NERC) and the Nigerian Electricity Management Services Agency (NEMSA).

And, in a related development, Nnaji was reported as having attributed the creation of NEMSA to “the failure of the Nigerian Electricity Regulatory Commission (NERC) to understand and undertake technical regulations and enforcement in the sector,” explaining that “the government decided to upgrade the electricity inspectorate unit of the ministry [of power] to the Electricity Management Services Limited (EMSL) and then NEMSA, having recognised NERC’s poor grasp of technical regulation and enforcement.”

Furthermore, that “the failure of NERC to also integrate the inspectorate department into its activities, thus leaving it (NERC) bereft of the capacity to enforce technical standards in the sector, necessitated the creation of NEMSA.” (See “Nnaji: NEMSA Created from NERC’s Poor Grasp of Technical Regulation.” This Day, November 27, 2015, http://www.thisdaylive.com/articles/nnaji-nemsa-created-from-nerc-s-poor-grasp-of-technical-regulation/226483/).

According to the report, Nnaji was speaking at “a stakeholders’ forum organised by NEMSA in Abuja”. And the report noted that he was one of the experts who “crafted President Jonathan’s ‘roadmap to power sector reforms’ using the contents of the Electric Power Sector Reform Act (EPSRA) 2005 which created NERC and other agencies in the sector.” Undoubtedly, the critical issue of regulation should be in the foreground of the power sector discourse. However, by merely raising some commonsense questions, it would be clear that there are gaps that need to be closed in the former minister’s claims against regulation generally or for any specific regulatory agency in the power sector.

For me, raising such questions, in the hope of closing the gaps, is not prompted by a desire to contradict the former minister’s claims, whose contributions to the power sector in various capacities are quite significant. However, it could improve our understanding of the issues in the sector as they relate to regulation and other areas, like a chain of which any broken link adversely affects its effectiveness. By improving our grasp of such issues, we improve our chances of resolving them. And we are not likely to resolve them by ascribing problems fully or in part to the wrong causes, like blaming “crippled power supply” on “regulatory agencies.”

One of the questions pertains to the contribution to poor power supply of such menace as vandalisation of gas and power infrastructure. This crude act of sabotage has been rampant in the country recently. So what do we make of it in the light of the former minister’s seemingly wholesale attribution of “bad power supply” to “regulatory agencies”? Isn’t there a gap that should be closed here in the former minister’s claim, which should amount to clarifying that there are factors beyond the control of the regulatory agencies, some of them forced on the system by sinister, unpatriotic, antisocial forces, which contribute to “bad power supply”?

Also, the country is known to face severe infrastructural challenges in the power sector, being saddled with poor and sometimes obsolete equipment from many years of neglect by past governments to invest adequately in the sector, a situation the power sector reform is expected to reverse through the intervention of private investors. Are the regulatory agencies to blame for the “bad power supply” that results partly from this longstanding problem? And that is even as there are indications that some of the regulatory agencies – like the Bureau of Public Enterprises, through its role in the privatisation of the power sector and its post-privatisation monitoring of the new power companies – are actively involved in establishing a new system devoid of such problems.

As for the reason for the creation of NEMSA, it is incontrovertible that there is “business regulation and then the technical aspect” as stated by the former minister. However, if introducing technical regulation in the reformed power sector was basically the issue, couldn’t what has metamorphosed into NEMSA from EMSL, and as the former electricity inspectorate unit of the ministry of power, have been created as a department in already existing regulatory agencies like NERC and BPE to streamline the number of regulatory agencies and the associated operational cost, while avoiding the clash of institutional egos – as reflected in NERC’s alleged opposition of the creation of NEMSA in the said news report – that can affect the overall efficiency of the power sector?

And on carrying out the functions of business and technical regulation, there are indications that one agency can do so with considerable success, given adequate support from the relevant quarters.

For instance, the role of the BPE in supervising the power sector privatisation has a bearing with business regulation while its post-privatisation monitoring of the new power companies to ensure they deliver on their mandates is a mix of business and technical regulation.

With the reported improvement in infrastructure and service delivery at a station like Egbin power plant, I think it is fair to say that the bureau has so far acquitted itself well in this role, as it did in the role of the business monitoring of the power sector privatisation which international observers rated highly for its transparency, especially Dr. Robert Ichord, the United States Deputy Assistant Secretary of State for Energy Transformation, who reportedly described it as the most comprehensive and most transparent transaction in recent history in his over 30 years’ experience in privatisation.

And as The Punch newspaper acknowledged in a recent editorial, “All the groundwork for the privatisation and liberalisation of the commanding heights of the economy … has been done by the Bureau of Public Enterprises…” (See “Between privatisation and economic failure,” The Punch, January 8, 2015, http://www.punchng.com/between-privatisation-and-economic-failure/). But it is clear that beyond such groundwork is a lot of room for sector-wide improvement in which the BPE and the other regulatory agencies must be supported to play their designated roles well.

Besides, it is clear that the improvement we have witnessed in power supply in recent times could not have been possible without commensurate improvement in regulation. And the way to keep the momentum is by giving credit to the regulatory and other agencies in the power sector where they deserve it, while encouraging them to improve where they need to.

• Olukoya, a public affairs commentator, wrote from Lagos.

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