Federal Govt. Deregulates Electricity – Nigerian Electricity Regulatory Commission Announces

The Nigerian Electricity Regulatory Commission has issued regulations enabling communities and local governments to generate and distribute electricity within their areas.

Local governments and communities with financial capability can now generate and distribute electricity, according to  two new regulations issued by the Nigerian Electricity Regulatory Commission, writes Martin Ayankola.

One of the two regulations, titled, “NERC Regulation on Embedded Generation 2012,” and issued on March 7, 2012, permits investors, communities, states and local governments to generate and distribute electricity for their exclusive consumption using facilities of existing electricity distribution companies or independent electricity distribution network operators.

Another regulation, issued on the same day, titled, “NERC Regulation for  Independent Electricity Distribution,” permits communities, local and state governments to invest in electricity distribution networks in areas without access to the grid or distribution network or areas poorly serviced.

Thus, state governments with investments in infrastructure for power generation and distribution can now begin to distribute electricity.

Also, according to the new regulations,  states and local governments with enough financial capability, can now take fuller advantage of the regulations to provide adequate power for their constituents.

The Electric Power Sector Reform  Act, which established the Nigerian Electricity Regulatory Commission, is the enabling law for the power sector reform. The regulations, according to a statement posted on the website  of NERC,  are products of about six months’ intensive research and stakeholder consultations by employees of the commission.

The regulations, the statement  said,   were direct attempts to cater for about 40 per cent of the country’s population without access to electricity. The regulations are also capable of addressing the problem of poor quality of electricity supply.

Signing the two regulations,the Chairman, NERC,  Dr. Sam Amadi, said that they would provide the needed solutions to the shortage in supply of electricity in the country.

He said, “These are the most important regulations today in this country because we do not have enough electricity to go round. We also have so many constraints preventing us from having enough to generate, transmit and distribute.

“From now on, the much expected expansion in the electricity supply to the end- users would be easily realisable. With these regulations, we have further unlocked the opportunities in the sector to community, private and government participations. The laws are expected to revolutionise the sector.”

He enthused further that the appropriate tariff to encourage the use of renewable and alternative sources of power generation would soon be put in place by the commission. Amadi commended the efforts of the officials of NERC  that were able to put together such  regulations after due consultation with industry stakeholders.

He said that similar efforts in the past would have been contracted out to consultants at a huge cost to the commission.

Meanwhile, Amadi also told our correspondent on the telephone that the new electricity tariff would take effect on June 1.

Also, the NERC  had recently  warned electricity distribution companies not to charge their customers rates outside what was approved by it last year before the introduction of the new tariff.

The warning came on the heels of increasing number of petitions and complaints received by the commission that some of the distribution companies were cashing in on the recent media reports over planned increase in the electricity tariff and charging their customers rates other than those approved by the commission.

Reacting to the development, Amadi said, “No tariff increase has been announced. Chief executive officers of distribution companies who collect tariffs beyond what was approved last year are operating in disobedience of the industry’s regulations.”

“It is an offence to charge rates outside the approved tariff regime. Any errant distribution company will be made to refund its customers money collected in excess of the approved tariffs,” Amadi added.

He said that NERC would not spare any chief executive officer of errant electricity distribution company as applicable sanctions stipulated in the Electric Power Sector Reform Act 2005 would be meted out on those acting in defiance of the Act.

The chairman said that the commission was harmonising submissions made in the course of stakeholders consultations held towards the planned tariff regime and that the final figures would be announced through the media, to put both the customers and operators on notice.

The existing tariff regime is the last schedule of Multi Year Tariff Order that was announced last year and will pave way for MYTO II this year. The MYTO is the model used in calculating prices of electricity. It was introduced in 2008 by NERC  to replace the rule of the thumb practice in determining prices of electricity.

The new tariff, taking effect on June I, is part of the many measures being taken by NERC in conjunction with the BPE to ensure a successful privatisation of the power sector.

It has been estimated that the country needs an average of $10bn investments annually in the power sector for it to  realise its  potential. The nation currently generate about 4,000 megawatts against demand in the region of 10,000MW.

Source: Punch Newspaper

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Ugo is an author at www.gistus.com.

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