....take
it from the horse's mouth: Jonathan did not reverse any tariff. Sam
Amadi and his colleagues changed the tariff through the normal due
process and as part of effective regulation of the sector.
Sam Amadi
I have read some piece of news suggesting that Dr. Goodluck
Jonathan ordered the reversal of electricity tariff during his tenure as
president. Since I left office I have avoided issues concerning
electricity regulation in Nigeria, to give our successors the best
opportunity to do better than we did.
My understanding of public office that the best a former public
officer should do is to truly step aside and be willing to provide
advice if and when it is needed. In the best tradition of public
service, you don’t obstruct the new administration.
But I am constrained to restate the truth of what happened for the
purpose of ensuring proper information to enable the present
administration do its best in fixing the electricity crisis. Throughout
our five years as commissioners of the Nigerian Electricity Regulatory
Commission (NERC), there was no single day that President Jonathan ever
dictated or instructed on policy to the Commission, in relation to any
issue on electricity regulation.
I am bold to state that President Jonathan was a great leader to
the electricity sector for fully supporting the independence of the
regulator. My colleagues and I were determined to maintain the
independence of the regulator and we found a very understanding person
in the former president.
As expected, we made mistakes or took decisions which in retrospect
may not have been optimal. This is expected in human society, hence
development and transformation are iterative, adaptive and
path-dependent.
On the matter of the tariff, the facts are straightforward and
borne out by records. NERC as a regulator has a comprehensive
methodology and business rules for managing tariff. The NERC Act,
methodology and business rules put the responsibility on NERC
commissioners, who vote democratically for every such decision made,
just like the Board of Governors of the Central Bank of Nigeria does on
monetary policy. Every tariff we have issued from 2010 to 2015 did not
receive or require the approval of the president; only NERC
Commissioners decided on these.
Before issuing MYTO 2.0, we debated on what to do with the
collection losses of DisCos from consumers. Two schools of thought then
emerged among the commissioners: One, supported by most Commissioners,
wanted the collection losses to be reduced to zero or to the low level
of the pre-privatisation DisCos. The other school wanted us to keep it
as contracted by DisCos and the Bureau of Public Enterprise, even as it
skyrockets the tariffs. After much debate, the overwhelming position was
to reduce the collection losses. When the draft of the tariff was
issued, the DisCos protested and the commissioners had a rethink,
revised the model and issued MYTO 2.0 that saw more than a 180 percent
tariff increase for a number of customers in some DisCos.
…let’s not be under any illusion that fixing tariff would fix the
electricity crisis in Nigeria. This is a falsehood. In fact,
privatisation, as desirable as it, does not solve the problem.
Obviously, there was a design problem with the reform of the electricity
industry.
Manufacturers and other customer groups protested this astronomical
hike in prices and sent in a formal petition. NERC’s business rules
require it to reconsider a tariff when an aggrieved customer petitions
it within 60 days of the issuance of a tariff order. On the basis of the
petition, NERC held a public hearing at Sheraton Hotel with all DisCo
heads and some consumers groups, where the details of the tariff were
presented and criticised. After the public hearing, the Commission set
up a technical committee to review the allegations and conduct
jurisdictional research on how other electricity markets treat
collection losses.
The NERC technical team recommended that the collection losses
should be set at zero and that any DisCo wanting to have collection
losses above zero should apply, with evidence of its diligent efforts to
control losses. This recommendation was presented to the industry
meeting where the DisCos totally rejected it, expectedly. The NERC
commissioners nevertheless approved it through the usual process of
decision-making and consequently reduced the revenue requirement of the
DisCos, which then resulted in lower tariffs for most customers.
This was a controversial but principled decision based on
contestable evidence and value-based analysis. I am prepared to take
flacks for any intended or unintended consequences of that decision as
the chairman and chief executive of NERC. I still strongly believe that
my reading of effective regulation confirms that it was a good decision
to internalise efficiency in the distribution segment of the electricity
industry. But President Jonathan played no role at all in that
decision. His ministers did not play any role. It was a bona fide
regulatory decision that may be termed wise or unwise, after the facts.
But should not be used to denigrate President Jonathan or the ministers
of Power.
The electricity industry is difficult to manage and regulate
anywhere. It is a difficult job for anyone. So, we should support this
government and its officials as they work hard to improve the situation.
But let’s not be under any illusion that fixing tariff would fix the
electricity crisis in Nigeria. This is a falsehood. In fact,
privatisation, as desirable as it, does not solve the problem.
Obviously, there was a design problem with the reform of the electricity
industry. This is the focus of my book in the making on reform policy
in Africa.
But for now, take it from the horse’s mouth: Jonathan did not
reverse any tariff. Sam Amadi and his colleagues changed the tariff
through the normal due process and as part of effective regulation of
the sector.
Sam Amadi is a lecturer in Law at Baze University, Abuja
Source: Premium Times
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