September 24, 2023

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NERC Cautions against Reversal of Power Sector Privatization


The Nigerian Electricity Regulatory Commission (NERC) on Wednesday advised the Senate Committee on Privatisation which members were on oversight visit to the Commission against the reversal of the Federal Government sales of the power sector utilities.

NERC said this in a press statement signed by Dr. Usman Abba Arabi – Head, Public Affairs Department posted on the site of the Commission

The acting Chairman, Dr. Anthony Akah, mni, said that the Federal Government may not have money to buy back the utilities and may be acting in contravention of the agreement entered with the new owners. Any attempt to reverse sales of the utilities, he added, will send a wrong signal to potential investors.

Rather, Dr. Akah said that the Senate should consider lifting the ban it placed on the bond being proposed for the industry to make cheap funds available for investors and that the Federal Government should consider subsidy option for power sector, considering that some other sectors of the economy are still being subsidised.

He assured that the Commission will develop a robust framework for the utilisation of the Power Sector Bond if approved to ensure prudent and optimal utilisation of the Bond by licensees in the electricity value chain.

The acting Chairman in response to the questions asked by members of Senate Committee on Privatisation, led by Senator Murray Ben-Bruce said that experience from other countries where privatisation was done has shown that three years may not be enough to clear challenges that were created over thirty years in the Nigerian power sector.

Admitting however, that the operators in the sector has not met the signed level of performance agreement reached between them and the Federal Government represented by the Bureau of Public Enterprise (BPE).

He said, “We appreciate your concern. We share your fear. The first three years is always very challenging in most countries where privatisation of the power sector was done. The regulator is very much conversant with the challenges of privatisation in the Nigerian power sector working with other stakeholders to resolve these teething problems.”

“The Commission has identified that the remittance by the electricity distribution companies’ level is too low and it is totally unacceptable to us. The Commission would soon introduce regulatory mechanism to redress this remittance abnormality.”

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Dr. Akah complained over incidences of vandalism, energy theft and scarcity of foreign exchange as some of the social-economic problems which have implications on the cost of producing electricity but are outside the regulatory agency’s area of influence. He said all these challenges are currently receiving the attention of both the regulator and the Federal Government.

He said that electricity is a product with cost of production which must be recovered by the investors and that electricity customers must get value for their money through improved service delivery.

The Acting Chairman reiterated the Commission’s efforts at ensuring that consumers are adequately protected as the Commission has taken great steps at establishing Forum Offices in the six geo-political zones. Presently, there are 18 Forum Offices, which address electricity customers’ complaints with more coming up.

He assured that the Commission has instituted measures to accelerate metering by utilities in line with their performance agreements.

On the issues of continuous estimated billing of electricity customers and non-compliance with the Commission’s regulations, Dr. Akah stated that the Commission has beefed up monitoring and enforcement activities and has recently punished erring electricity distribution companies.

He noted that the Commission insists on stakeholders’ engagement to dialogue with customers for their inputs.

He added that measures such as bond and subsidy could be used to prevent rate shock if the electricity operators must recover cost and that “the Commission would come up with framework to further protect the interests of the electricity customers and also create better operating environment for electricity operators.”

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