Prof Chinedu Nebo, Power Minister
- BPE, development partners raise concern on import
Chineme Okafor
A private bill called the Nigerian Electricity Management Authority (NEMSA) bill currently before the National Assembly may derail the federal government’s ongoing reform of Nigeria’s electricity sector, THISDAY has learnt.
Believed to be sponsored by the Chairman, House of Representatives on Committee on Power, Patrick Ikhariale, with unconfirmed support from the Ministry of Power, the bill proposes a new authority whose mandate would duplicate or usurp that of the Nigerian Electricity Regulatory Commission (NERC), Standards Organisation of Nigeria (SON) and other relevant government agencies in the country.
Except for the reported inputs of the Ministry of Power, the bill is being considered in the National Assembly without the knowledge of the Federal Executive Council (FEC) whose power sector reform would be affected by its passage.
Sources at the presidency told THISDAY yesterday in Abuja that with regards to its imports, if signed into law, the bill would amongst other possible losses, derail the federal government’s plans for the power sector as entrenched in the National Electric Power Policy (NEPP 2001) and the Electric Power Sector Reform Act (EPSR 2005).
Currently, reforms in the Nigerian power sector are hinged on both the NEPP and EPSR which grant legal, regulatory and institutional charters that govern the power sector. In particular, the EPSR Act which established NERC as the sole regulator of the electricity sector, grants the Commission in Clause 32 of its Part III the functions and roles which the proposed NEMSA seeks to either usurp or duplicate.
Stakeholders in the sector told the paper that the new development was already creating unwholesome ripples in the electricity sector as was last week witnessed at a public hearing on the bill by the National Assembly.
The NERC and the Ministry of Power had at the meeting exchanged unhealthy remarks to suggest their disagreements with the development.
Also, industry operators and international development partners whose commitment to the power sector had continued to grow following reports of confidence with government’s credible execution of policies in the sector, are equally worried by the possible consequences of the new development on the sector.
Some of the entities which had expressed their disapproval of the bill either in writing or meetings with top managers of the sector are the World Bank, Nigeria Infrastructure Advisory Fund (NIAF) and Bureau of Public Enterprises (BPE).
For instance, the BPE in a comment it presented to a committee of lawyers that were assembled by the Permanent Secretary in the ministry, Godknows Igali, to understudy the import of the overlapping functions between NERC and the proposed NEMSA warned against its likely consequences.
It said the functions and roles that are to be assigned under the NEMSA bill to the new authority were totally alien to and not in tandem with the federal government’s policy direction in the power sector.
The privatisation agency equally said in the comment which THISDAY got, that the EPSR Act 2005 vests all regulatory functions in the power sector to the NERC, including technical regulation and maintenance of industry standard which NEMSA seeks to appropriate.
“Part of the reason why many sector including the power sector have had stunted growth is policy somersaults and inconsistencies. The NEMSA bill seeks to put the reform process in disarray and introduce confusion thus depressing the much needed investments in the sector,” BPE warned in its comments.
While explaining that the sector stance to gain nothing from the proposed bill, BPE said: “The NEMSA bill is a private member initiative. It does not have the input of the FGN in it. The bill seeks to distort the reform direction of government as spelt out in the sector policy and the enabling law.
“Furthermore, some of the implications of the proposed NEMSA bill for the sector are that it will lead to lack of clarity in the industry and overlapping functions and roles with two agencies of government conferred with the powers to regulate the same field.
“It will increase the cost of doing business by enlarging the regulatory umbrella within which investors have to navigate in order to operate in the Nigerian Electricity Supply Industry (NESI),” it added.
The comments further said: “It negates the federal government’s policy of creating a one-stop shop for investors looking out for investment opportunities in the country. It will also create distortions and confusion in the minds and transactional market in the already executed industry agreements in which NEMSA is not featured.
“It leads to multiplicity of agencies with the attendant high costs of overheads to government against the cardinal principle of government to shrink the size of government.
“Globally, regulation means setting out the rules of the game in a particular environment, licensing or registering players therein and spelling out the deterring modalities in the event any of the players goes out of line. Thus, enforcement is an intrinsic part of regulation. To suggest (as the NEMSA bill seeks to do) that NERC the regulator should set the rules and another agency should enforce them is akin to introducing anarchy in the reform process.”
A similar copy of a review on the proposed bill by NIAF which THISDAY equally got, stated that regulatory uncertainty in the market as to which body is statutorily empowered to regulate safety and standards would affect the development of electricity market if the bill gets passed.
Like other development partners, NIAF also questioned the funding arrangements of the proposed NEMSA, saying it is very unclear and open to abuse.
Reports indicate that the proposed agency will rely on fees, charges and any other income accruing to it from licensees as well as grants of money or other property and statutory government allocations to run its operation, such plan will amount to extortion of licensees in the sector.
At the public hearing, it was reported that the NEMSA is a mutation of the Electricity Management Services Limited (EMSL) which served as a non-core service provider to the defunct Power Holding Company of Nigeria (PHCN) but was subsequently merged with the Electrical Inspectorate Department of the ministry of power following the enactment of ESPR Act 2005 to take over the engineering laboratory, training institutions, meter testing stations and central storage system of the PHCN.
While the ministry of power is seeking for the establishment of NEMSA, NERC however said that such proposal to assign its functions to NEMSA runs contrary to the principles of the EPSR Act 2005; its Chairman, Dr. Sam Amadi also explained that the effort negates the principles behind ongoing reform in the power sector.
Amadi in his presentation noted that the proposed NEMSA would rather than satisfy public interest, satisfy the self-interests of few government officials; he however clarified that the remark was not directed at the minister of power or permanent secretary.
A private bill called the Nigerian Electricity Management Authority (NEMSA) bill currently before the National Assembly may derail the federal government’s ongoing reform of Nigeria’s electricity sector, THISDAY has learnt.
Believed to be sponsored by the Chairman, House of Representatives on Committee on Power, Patrick Ikhariale, with unconfirmed support from the Ministry of Power, the bill proposes a new authority whose mandate would duplicate or usurp that of the Nigerian Electricity Regulatory Commission (NERC), Standards Organisation of Nigeria (SON) and other relevant government agencies in the country.
Except for the reported inputs of the Ministry of Power, the bill is being considered in the National Assembly without the knowledge of the Federal Executive Council (FEC) whose power sector reform would be affected by its passage.
Sources at the presidency told THISDAY yesterday in Abuja that with regards to its imports, if signed into law, the bill would amongst other possible losses, derail the federal government’s plans for the power sector as entrenched in the National Electric Power Policy (NEPP 2001) and the Electric Power Sector Reform Act (EPSR 2005).
Currently, reforms in the Nigerian power sector are hinged on both the NEPP and EPSR which grant legal, regulatory and institutional charters that govern the power sector. In particular, the EPSR Act which established NERC as the sole regulator of the electricity sector, grants the Commission in Clause 32 of its Part III the functions and roles which the proposed NEMSA seeks to either usurp or duplicate.
Stakeholders in the sector told the paper that the new development was already creating unwholesome ripples in the electricity sector as was last week witnessed at a public hearing on the bill by the National Assembly.
The NERC and the Ministry of Power had at the meeting exchanged unhealthy remarks to suggest their disagreements with the development.
Also, industry operators and international development partners whose commitment to the power sector had continued to grow following reports of confidence with government’s credible execution of policies in the sector, are equally worried by the possible consequences of the new development on the sector.
Some of the entities which had expressed their disapproval of the bill either in writing or meetings with top managers of the sector are the World Bank, Nigeria Infrastructure Advisory Fund (NIAF) and Bureau of Public Enterprises (BPE).
For instance, the BPE in a comment it presented to a committee of lawyers that were assembled by the Permanent Secretary in the ministry, Godknows Igali, to understudy the import of the overlapping functions between NERC and the proposed NEMSA warned against its likely consequences.
It said the functions and roles that are to be assigned under the NEMSA bill to the new authority were totally alien to and not in tandem with the federal government’s policy direction in the power sector.
The privatisation agency equally said in the comment which THISDAY got, that the EPSR Act 2005 vests all regulatory functions in the power sector to the NERC, including technical regulation and maintenance of industry standard which NEMSA seeks to appropriate.
“Part of the reason why many sector including the power sector have had stunted growth is policy somersaults and inconsistencies. The NEMSA bill seeks to put the reform process in disarray and introduce confusion thus depressing the much needed investments in the sector,” BPE warned in its comments.
While explaining that the sector stance to gain nothing from the proposed bill, BPE said: “The NEMSA bill is a private member initiative. It does not have the input of the FGN in it. The bill seeks to distort the reform direction of government as spelt out in the sector policy and the enabling law.
“Furthermore, some of the implications of the proposed NEMSA bill for the sector are that it will lead to lack of clarity in the industry and overlapping functions and roles with two agencies of government conferred with the powers to regulate the same field.
“It will increase the cost of doing business by enlarging the regulatory umbrella within which investors have to navigate in order to operate in the Nigerian Electricity Supply Industry (NESI),” it added.
The comments further said: “It negates the federal government’s policy of creating a one-stop shop for investors looking out for investment opportunities in the country. It will also create distortions and confusion in the minds and transactional market in the already executed industry agreements in which NEMSA is not featured.
“It leads to multiplicity of agencies with the attendant high costs of overheads to government against the cardinal principle of government to shrink the size of government.
“Globally, regulation means setting out the rules of the game in a particular environment, licensing or registering players therein and spelling out the deterring modalities in the event any of the players goes out of line. Thus, enforcement is an intrinsic part of regulation. To suggest (as the NEMSA bill seeks to do) that NERC the regulator should set the rules and another agency should enforce them is akin to introducing anarchy in the reform process.”
A similar copy of a review on the proposed bill by NIAF which THISDAY equally got, stated that regulatory uncertainty in the market as to which body is statutorily empowered to regulate safety and standards would affect the development of electricity market if the bill gets passed.
Like other development partners, NIAF also questioned the funding arrangements of the proposed NEMSA, saying it is very unclear and open to abuse.
Reports indicate that the proposed agency will rely on fees, charges and any other income accruing to it from licensees as well as grants of money or other property and statutory government allocations to run its operation, such plan will amount to extortion of licensees in the sector.
At the public hearing, it was reported that the NEMSA is a mutation of the Electricity Management Services Limited (EMSL) which served as a non-core service provider to the defunct Power Holding Company of Nigeria (PHCN) but was subsequently merged with the Electrical Inspectorate Department of the ministry of power following the enactment of ESPR Act 2005 to take over the engineering laboratory, training institutions, meter testing stations and central storage system of the PHCN.
While the ministry of power is seeking for the establishment of NEMSA, NERC however said that such proposal to assign its functions to NEMSA runs contrary to the principles of the EPSR Act 2005; its Chairman, Dr. Sam Amadi also explained that the effort negates the principles behind ongoing reform in the power sector.
Amadi in his presentation noted that the proposed NEMSA would rather than satisfy public interest, satisfy the self-interests of few government officials; he however clarified that the remark was not directed at the minister of power or permanent secretary.
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