Adebayo Adelabu, the minister of power, says the federal
government has suspended the transfer of regulatory authority to state
governments.
Adelabu disclosed this while speaking at the 8th edition of
the Africa Energy Market Place (AEMP) conference in Abuja on Friday.
In April, the Nigerian Electricity Regulatory Commission
(NERC) transferred oversight of the electricity market in Ondo, Ekiti and Enugu
to the state’s electricity regulatory bureau (OSERB).
The minister, however, said the transfer would be suspended due to the need for state governments, and stakeholders in the power sector to properly understand what is required to operate an electricity market.
He said adequate understanding of the transfer of regulatory
oversight of the electricity market to states is imperative for the survival
and sustainability of the nation’s power sector.
“Therefore, we must tread carefully, we should not be in a
hurry. The market is not a mature market, it is not mature enough. With
everything centralised for a single regulator, we have a myriad of issues. Now
we intend to create a regulatory framework across the 36 states, it is
something that we must do in a highly systematic and strategic manner,” he
said.
“We need just a couple of states as a pilot, which is why I
actually halted granting of further regulatory autonomy to states.”
‘TRANSFER OF
REGULATORY OVERSIGHT IN SELECTED STATES’
Adelabu also said the transfer of regulatory oversight will
be piloted in selected states across the geopolitical zones in the country.
“When we have each of these zones represented in the pilot
and we allow it to run for three to six months, or up to a year, all the
possible issues would have been reflected so that we are going to have a
learning curve, and all those issues will be addressed before granting further
regulatory autonomy because I have a feeling that we don’t have a comprehensive
understanding of what this autonomy means,” he said.
“The fact that we gave a state regulatory autonomy doesn’t
mean that it’s just about distribution of electricity but it is regulation
across the value chain. Generation within your territory, transmission within your
territory, and distribution in your territory, including tariff setting.
“The moment you take
over the regulatory activities of Lagos state, when we talk about tariff, about
subsidy, it will be on your neck as a state. I do not know the balance sheet
you want to leverage to guarantee the necessary settlements on a monthly basis.
“So we all have to sit down and let everybody have a
complete understanding of what this means. We will know if we are ready to have
full autonomy or it will be a partial autonomy for the meantime before we
achieve a mature electricity market.”
The minister further said most stakeholders underestimate
the capacity required to have regulatory authorities in 36 states, and the FCT.
Adelabu also said each state needs to have a framework
capable enough to protect assets and liabilities, address vandalism and
consumer protection, and have enough capital for continuous investments and
maintenance of infrastructures.
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