A Review of the Nigerian Energy Industry

Power: Local content law to check mass importation by new operators

PHCN distribution 2Oscarline Onwuemenyi

26 January 2014, Sweetcrude, ABUJA – The Nigerian Electricity Regulatory Commission, NERC, on Sunday said its planned local content law would seek to promote the establishment of support industries that will sustain operations in the Nigerian Electricity Supply Industry, NESI.

The commission in a statement in Abuja by its Assistant General Manager, Media, Maryam Abubakar explained that the law would address the identified lacunae in the development of the NESI.

According to NERC, “With the entry of private sector participation (both Nigerian and foreign), the power sector will inevitably be exposed to massive growth both in size and in capital, however, not enough emphasis is being laid on how to encourage national development based on this growth.

“Emphasis should be on how many jobs will be created, in-country value creation, sustainability, safety, environment and above all, the need to maximize value from power activities.”

According to the regulatory agency, development within the sector should focus more on in-country value where licensees consider long term value and promote the use of local capacity.

“There is therefore a need for NERC to provide an avenue for the active participation and growth of the Nigerian industry and citizenry, in the various services and activities that will attend the expansion of electricity access across the country,” the statement noted.

NERC added that it “sees the deliberate utilization of Nigerian human and material resources, goods, works and services in the NESI as a major step in the progress towards a reformed power sector.

“In the NESI, the tendency has been to buy rather than sell and as a result, a lot of job opportunities have been lost as Nigerian jobs have been exported.”

To check this therefore, NERC noted that the regulation on national content in the power sector is intended to “promote deliberate utilization of Nigerian human and material resources, goods, works and services in the industry; opening the NESI at all levels of its complexity to involve Nigerian people and expertise; building capabilities in Nigeria to support increased investment in the industry, as well as leveraging existing and future investment in the NESI in an effort to stimulate the growth of Nigerian and Nigeria-located enterprise.”

The commission further added that the “general focus is on breaking down service-by-service what proportion of work must be domesticated or reserved to a given degree for Nigerian companies. It also seeks to prescribe capacity limits and regulate the recruitment into key technical and executive positions.’

This, according to it, lends Nigerian companies in an orderly manner the responsibility to employ more Nigerians to do these jobs thereby creating increased local economic activity. “The regulation therefore promotes a framework that ensures local competencies are built (to internationally acceptable standards) through the active participation of Nigerians, and the deployment of natural resources and raw materials in electricity industry activities.”

It added that, “The nationality of the shareholders of a company operating in the industry will not be the paramount consideration, though NERC recognizes that is an important element. Emphasis will instead be on progressively increasing the ‘Nigerian content’ of a company, which will be defined as ‘the quantum of composite value added to or created in the Nigerian economy, by a systematic development of capacity and capability through the deliberate utilization of Nigerian human, material resources, entrepreneurship and services in the NESI.”

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