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Jonathan signs controversial bill for two power regulators

By on May 28, 2015

Word leaked last night from the seat of government in Aso Rock, Abuja, that President Goodluck Jonathan has given his assent to the controversial bill creating two parallel regulating bodies for the recently privatised power sector, raising a red flag for investors and others watching the industry.

This followed an ambitious plan of the permanent secretary at the ministry of power, Godknows Igali, to break the Transmission Company of Nigeria (TCN) into two separate entities, while also creating two parallel regulators for the power industry, a move that now threatens to take back the progress of the sector and perhaps one of the president’s legacy achievements.

Igali, a close confidant of President Goodluck Jonathan, spearheaded the passage of the controversial bill to establish the Nigeria’s Electricity Management Services Authority, contrary to provisions of section 32 of the electricity reform act.

That bill was passed, despite the opposition of the NERC, the BPE and the office of the Vice President, who chairs the National Council on Privatisation, and last night BusinessDay learnt that the president’s assent came, despite counsel by the legal team in Aso Rock that he should with hold assent.

BusinessDay learnt that the permanent secretary unilaterally split TCN into two new companies without the approval of the board of TCN and he has already gone ahead to direct the redeployment of staff of TCN to the new companies.

All firms operating in the electricity sector must be licensed by the regulator, NERC but this requirement has been set aside.

Industry sources say Igali has been on a campaign to set up two parallel regulatory bodies for the sector, one NERC and the other controlled by the ministry of power, which has seen itself lose considerable clout under a privatised electricity market.

The power ministry fought the establishment of the transition company for a long time and when that fight failed, it frustrated the hand over of the management of TCN to the Canadian contractors, which won the bid to run it.

The worry for investors is that once you have two regulators, a supremacy tussle will ensue, with both fighting to protect their turf and in the process, decisions would be delayed and clarity would be lost.

The power sector has been riddled with intrigue among government officials in the last one year, resulting in the failure to resolve the crisis over the $500 million Geometric power plant and the strangulating gas shortage confronting the nation.

A similar move in Ghana has meant that the minister is constantly engaged in resolving conflicts between the rival regulators, denying the sector of the much-needed private investment.

 

[Business Day]