Get Guardian on Google. NGF plans uniformity as Task Force moves to end revenue leakages
Stakeholders in the electricity sector have raised concerns over weak regulatory enforcement and fragmentation of electricity markets, as the Nigeria Governors’ Forum (NGF) disclosed plans to develop a uniform tariff methodology to guide electricity pricing across states.
At the ongoing Lagos Energy Summit in Lagos, a member of the Presidential Task Force on Power Sector Reset and Restoration, Uzoma Achinanya, accused electricity regulators of failing to monitor and enforce existing regulations, warning that the absence of compliance mechanisms had weakened discipline across the sector.
The NGF, through its representative, Chijioke Chukwu, said it was developing a national minimum electricity code and a uniform tariff methodology to address inconsistencies that could emerge from the decentralisation of electricity regulation across the country.
Achinanya said the country’s electricity challenges required more than the introduction of new regulations, insisting that regulators must ensure operators comply with existing provisions.
He argued that despite the numerous laws and regulations governing the sector, the absence of effective monitoring and enforcement had allowed operators to disregard their obligations.
“And regulation without monitoring and enforcement is no regulation; you can write all the laws, all the regulations. In Nigeria, regulation is more than the height of this building, but no monitoring and no enforcement. That is why nobody is doing it,” he said
He said the proposed electricity market redesign would establish clear responsibilities for regulators, operators and policymakers, while ensuring that all participants in the value chain understood their obligations.
Achinanya also identified poor payment discipline as a major threat to sustainable electricity supply, warning that gas suppliers and generation companies could not continue delivering services without receiving payment.
According to him, the failure to settle energy bills could eventually disrupt supply, regardless of the volume of electricity generated.
“Energy delivered today that is not paid for, in the next 30, 40, 60 days, will stop flowing,” he added.
He said the proposed restructuring would connect energy flows with corresponding financial flows, ensuring that revenue recovered from electricity consumers was sufficient to settle obligations across the value chain.
“And what has been introduced now is that we will go in this direction for the energy flow and come back with another trajectory for the money flow and we must try to block all the loopholes along the line, reduce losses, reduce leakages, so that we can pay everybody who is involved in power generation, transmission, and distribution, including the gas supplier; without that, we would not have 24/7 to apply,” he said.
He further called for improvements in transmission capacity, maintenance of transmission corridors and adequate redundancy to ensure electricity could be moved to areas of greatest demand.
Achinanya disclosed that the proposed market redesign would also consider an end-to-end arrangement involving selected electricity feeders, linking gas supply, generation, transmission and distribution.
On its part, the NGF said concerns over fragmentation were among the issues it had identified since the decentralisation of electricity regulation allowed states to establish their own electricity markets.
Chukwu said the transition from a centralised regulatory framework to multiple state regulators could create inconsistencies in tariffs, licensing requirements and technical standards if common minimum standards were not established.
He said the forum had developed a model electricity law, using the Electricity Act as its parent legislation, to guide states in establishing their regulatory frameworks.
However, he stressed that the model law was not intended for automatic adoption by states, but to provide a framework they could adapt to their peculiar circumstances.
He explained that some states had struggled to enact their own electricity laws because of capacity constraints and limited technical knowledge of the regulatory requirements.
Beyond the model legislation, Chukwu said the NGF was developing public-private partnership guidelines, integrated resource plans, service-level agreements and other instruments to support the establishment of functional state electricity markets.
He disclosed that the forum was also working on a uniform tariff methodology to help states determine their electricity tariffs, following controversies encountered by some states during their attempts to establish pricing frameworks.
“We’re currently working on a uniform tariff methodology that will also help states really get to the point of getting their tariffs out,” he said
Meanwhile, the challenges facing the implementation of state electricity markets were highlighted by Prof. Mobolaji Aluko of Ekiti State, who disclosed that unresolved ownership issues involving legacy distribution companies were delaying investment decisions and frustrating the state’s electricity reforms.
Aluko said the relationship between Ekiti State and the existing distribution companies had been difficult, despite the state’s efforts to establish its own regulatory framework under the Electricity Act.
He explained that although the legacy distribution companies had unbundled their operations into subsidiaries within the state, the new entities remained dependent on their parent companies for important decisions.
According to him, the unstable ownership structures of the parent companies had made it difficult for their subsidiaries to independently approve franchise arrangements and conclude discussions with prospective investors.
He said the situation had become a major obstacle to investment in the state, warning that Ekiti could not continue waiting indefinitely for the ownership issues to be resolved.
Aluko also disclosed that the geographical exclusivity previously enjoyed by the legacy distribution companies within Ekiti had ceased under the state’s regulatory framework, although they retained their existing assets.
He said the state was seeking to open its electricity market to competition and attract investors, but the inability of the subsidiary distribution companies to take independent decisions continued to frustrate the process.
Similarly, the Secretary of the Forum of Commissioners of Power and Energy of Nigeria (FOCPEN), Barr. Omale Omale, said the passage of state electricity laws alone would not guarantee improved electricity access without deliberate efforts to establish the institutions required to implement them.
