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‘Nigeria needs total deregulation of power sector for efficiency’

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Stakeholders, including the Chief Operating Officer (COO) of Nestoil Group and Managing Director/CEO, Century Power Generation Ltd., Dr. Chukwueloka Umeh, have said total deregulation would bring about effectiveness and efficiency in the power sector.

Umeh said deregulation which will ensure cost-reflective tariff takes effect, will motivate investors to put their money into all areas of the electricity value chain, which will ensure that electricity consumers have value for their money.

He said this during a virtual dialogue on, “The Dilemma of Electricity Tariff Regulation in Nigeria,” where he reiterated that the government should let the sector first develop before coming up with regulations, akin to the growth in the telecommunication sector.

Until the government realises that power is not a social service, Nigerians won’t enjoy stable power supply, he asserted.

According to him, what the government should be concerned about is setting the regulations that would encourage investors to pump in their resources into the sector and not regulation stifling it.

He said: “Total deregulation of the sector as was done with the telecommunication sector is the way to go if Nigerians must enjoy stable electricity with the right pricing”.

Nigeria’s government recently put on hold the implementation of a new tariff by the electricity distribution companies (DISCOs) amidst uproar from consumers nationwide.

Umeh said the complete liberalisation of the sector remains the best solution, as it would enable many investors to participate, not only in generation and distribution but also in the provision of infrastructures required to provide stable power distribution.

He bemoaned that the power sector recovery programme (PCRP) of the government has failed, saying it is high time the government explored other alternatives.

“We should start thinking differently. It is time to take a very different approach. We need to completely deregulate the sector. Allow the sector to grow, give room for investors to come in and then regulate it,” he said.

Umeh noted that allowing private firms to be involved in metering consumers was a smart move by the government but restated that total deregulation which would attract more firms as was done with the telecom sector remains the best option.

Nigerian Electricity Regulatory Commission (NERC), had in August last year, announced it was reviewing the tariff with a planned increase, which was done through consultations with the distribution companies (DisCos), and other stakeholders in the sector.

It said the Order had considered the actual changes in appropriate macroeconomic variables and available generation capacity in updating the operating MYTO 2015 Tariff Order for the period spanning from January 1, 2016, to December 31, 2018.

NERC further said a major review was planned to be ready by December 2019, and for implementation by January 2020, but the increase scheduled for April this year was however differed to July, amid the impacts of the COVID-19 pandemic before an intervention of the National Assembly delayed the plan till next year.

The Executive Secretary, Association of Power Generation Companies (APGC), Joy Ogaji, in a report on the “Interplay of Cost-Reflective Tariff and Service Delivery,” urged that electricity bills should show key performance indices (KPIs) and variables, and explain movements.

She noted that while the sector needs cost reflective tariff, consumers are dissatisfied with the current level of service delivery in the sector.

“Their dissatisfaction is centred mainly on the lack of desired service in commensurate to the bills from the electricity that is supplied from the national grid. This level of dissatisfaction has led to increased consumer restiveness and apathy to everything in power, including payment of electricity bills, as no one is willing to pay for services not rendered.

“Therefore, the average electricity consumer is not enthusiastic about paying higher for electricity, unless there is substantial improvement in service delivery from the distribution companies,” she stated.

She added that to ensure transparency, NERC could issue a regulatory order mandating DisCos to meter all feeders and distribution transformers if no such Order yet exists.


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