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How NASS’ actions undermine power sector

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The National Assembly (NASS) has come under serious attacks over its incessant interference and the roles individual lawmakers are playing, which have allegedly worsened the precarious state of the nation’s power sector. This interference, it is claimed, is undermining the regulatory functions of the Nigerian Electricity Regulatory Commission (NERC).

While the nation’s electricity market is facing serious liquidity crisis hovering around N4t due to inherent loopholes, the NERC ordered Electricity Distribution Companies (DisCos) to meet a minimum remittance for power supply invoices, insisting that it would cancel licences of eight DisCos within 60 days for defaults in the remittances, especially under the 2016 – 2018 Minor Review of the Multi Year Tariff Order (MYTO), and minor remittance order for the year 2019.

But in what most stakeholders described as a move against national interest, the Senate Committee on Power reportedly asked NERC to waive the order due to petitions by electricity distribution companies.The Association of Nigerian Electricity Distributors (ANED), which earlier said that its members would require N8.7b to meet the remittance threshold, also stated that the remittance order may affect DisCos’ operation and staff redundancy.NERC, an independent regulatory agency, which was inaugurated in 2005 was borne out of the Electric Power Sector Reform Act 2005 enacted by the NASS. Hence NERC is an act of parliament established to regulate the electricity industry in Nigeria.

In order to adequately monitor the activities of NERC, the EPSR Act mandates that NERC renders its quarterly report to the National Assembly as provided for in Section 32 (G) of the Act.

Expectedly, most stakeholders noted that the quarterly reports that are submitted to the lawmakers if properly reviewed, would have forestalled incessant interference in the activities of the sector, as the clause was specifically designed for necessary direct collaboration and feedback.
 
The experts stressed that this development has damning implication on NERC as the regulator, especially in the presence of its licensees, among others.Just recently, after NERC fined the Ibadan Electricity Distribution Company (IBEDC) N21m for failure to obey decisions of the NERC’s Forum Office, or treat electricity customer complaints referred to it by the Commission, as well as suspending the board of the company over gross misconduct, the House of Representatives Committee on Power, immediately issued a 48-hour ultimatum to the regulator to reverse its decision.  

With this coming at a time that the Federal Government was making moves to review the sector five years after privatisation, industry players expressed deep concerns that the lawmakers’ activities posed imminent challenges.According to a former Chairman of NERC, Dr. Sam Amadi, there was no basis for the National Assembly to get involved in the regulation of the nation’s electricity market. He said since NERC has the mandate of law to regulate the sector, NASS’ ov
ersight should only relate to a review of the regulatory policy in line with the law, not on action, or on behalf of market operators. 

“NERC should not allow the legislature to get between it and the market, but rather engage the legislature to understand the law and policy supporting its action. In fact, NERC should be proactive by issuing a policy brief on its proposed intervention,” Amadi said.The National President of Association of Public Policy Analysts (APPA), Princewill Okorie, cautioned lawmakers against interfering with moves that are against public interest, stressing that, “It is wrong for National Assembly to support the DisCos. Though they have oversight functions in the power sector. The function should not be about raising issues that would make the DisCos disregard NERC’s directives,” he said.

While emphasising the need for Nigerians to condemn such activities, Okorie noted that the lawmakers may not act wisely since they enjoy facilities that are being financed by taxpayers’ money.The President, Nigeria Consumer Protection Network, Kunle Olubiyo, who noted that the National Assembly’s intervention in cases like these are persuasive and not necessarily binding on NERC, stated that the NASS must desist from being a dumping ground for unnecessary petitions.
 
“The Electric Sector Reform (EPSR Act of 2005) is clear on what the regulatory rules of NERC are. Not until the EPSR Act 2005 is amended, the law is sacrosanct. There are extant rules and regulatory frameworks designed to guide the conduct of market operators/market players and market participants. “What the National Assembly is doing by the incessant and unnecessary interference is like constituting itself into a rent tribunal, or social welfare where all petty issues relating to refusal of a tenant to pay his or her house rents 12 months after the expiration of such rents or mortgages are settled,” Olubiyo said.
 
He noted that the development would only reduce the NASS to a social welfare department, where issues like juvenile delinquency and non-adherence to the basic moral principles of social behaviours among others are treated.“I don’t think this is in the overall interest of sustainable growth and development of the country’s economy and the Nigerian Electricity Demand and Supply Industry (NEDSI). Every players and market participants should be allowed to remain law abiding, and should be bound by all contractual obligations, markets rules, or market settlement discipline.

For Associate professor of Energy Law at the University of Lagos, Yemi Oke, the lawmakers legally and constitutionally are operating within the confines of the law by supervising NERC.He, however, noted that the development confirms the assumptions and argument that the country does not have a regulator primarily because a regulator in a sector like power won’t be effective, unless it is truly independent. 

“NERC has no independence of any sort. It is an assemblage of politically indebted people, who may continue to be loyal to a particular actor. NASS gave recommendations for the appointment of NERC commissioners. Whatever happens, they will always have their constitutional rights to call them to order.
 Stressing that it was inappropriate for the NASS to interfere in the activities of NERC, Oke said the current challenges were an indication of the poor operational structure that constituted the NERC.

“It (NERC) was constituted not to be an independent body. It was constituted in a way to take instructions from the NASS and the Minister of Power, and that was what we saw when the former minister, Babatunde Fashola was dictating to them, telling them what to do and what not to do. Until we have a regulatory regime that ensures pure independence of the regulator, we cannot have a power sector that will attract investors,” the professor said.

When contacted, the General Manager, Public Affairs, NERC, Dr. Usman Abba-Arabi stated that the all extant obligations as stated in the Electric Power Sector Reform Act regarding the National Assembly have always been complied with. On his part, the Chairman, Senate Committee on Power, Gabriel Suswam, his colleagues, Enyinnaya Abaribe and Prince Adeyeye, as well as the spokesman for the House of Representative, Benjamin Kalu neither responded to phone calls or messages sent to them as at the time of filing the report.


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