A Review of the Nigerian Energy Industry

Nnaji seeks strong regulations, institutions in power sector


15 April 2014, Lagos – A former Minister for Power, Professor Bart Nnaji has stated that for the reforms in the power sector to be sustained, there must be strong institutions and regulations that would ensure continuity and protect the consumers and investors.

Speaking at the just-concluded 7th Lagos Economic Summit tagged ‘EHINGBETI 2014,’ Nnaji said it was very critical for the country to have a very strong regulator that would not be beholding to anybody but the Nigerian public it was meant to serve, stressing that the Nigerian Electricity Regulatory Commission (NERC) is a very critical element in the power reform.

The former minister, who aligned his views with the presentation by a former President of Georgia, Mr. Mikheil Saakaashvili, said only strong institutions similar to the ones in the telecommunication sector would guarantee the sustainability of the power reforms.

“One of the things you heard from the former President of Georgia is about institutions, so that when he left office, things continued to work. What we wanted to do in the power reforms was to create those institutions and environment, whereby if we leave, they will continue to function. These are the kind of structures created in the telecom, so that if somebody comes today and wants to take away your phone, you will fight because you do not want to go back to those days you have to pay to get a line to your house. You are now a free mobile entity – you and your phone and your phone company,” he said.

“That is what we wanted to achieve but you can only achieve that through institutions – institutionalising the policies; institutionalising the reforms and NERC is a very critical element in this. It is really the institution that ensures that people, who are producing power conduct themselves in the way they are supposed to and that they do not price out the public,” he added.

Nnaji said NERC was very important, adding that the regulator has be strong and with the will to deliver.
He also advocated for the creation of economic clusters to ensure that power is delivered to the people.

“The best way, I personally, have seen in being able to deliver power reliably is to have economic clusters. If you have economic cluster, you try to deliver power reliably there and sort out all the problems there. Economic clusters are very important and you can create economic clusters within a distribution company,” he said.

Nnaji said there was nothing stopping Lagos State Government from creating economic clusters, adding that Agbara Estate, for instance, could be carved out as an economic cluster.

He stressed the need for a cost-reflective tariff to ensure that companies that generate power recoup their investment and make profit.

“If we are really serious about having electricity in Nigeria, then we must be able to have cost-reflective tariff, meaning a tariff that allows the person who is building power plant to recover his investment overtime and be able to make a small profit because power sector is not where you make huge profit,” he added.

– Ejiofor Alike, This Day

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