THE NIGERIAN POWER SECTOR REGULATORY SYSTEM

The Nigerian Electricity Regulatory Commission (NERC) is the sole umpire of the power sector. The Electric Power Sector Reform Act 2005 (EPSRA) empowered it. The commission operated from 2005 at a time when the National Electric Power Authority (NEPA) turned to PHCN.

The Nigerian power sector is characterized by mostly private business operations and pockets of public support agencies. This has been the case since November 1, 2013. Private investors took over about 17 firms comprising 11 Distribution Companies (DisCos) and six Generation Companies (GenCos) that belonged to the defunct Power Holding Company of Nigeria (PHCN) following the privatisation of the sector.

The federal government made modalities for checks and controls of the industry players by creating a regulator. This led to the establishment of the Nigerian Electricity Regulatory Commission (NERC). NERC ensures the proper coordination of the sector in the three key value chains: generation, transmission and distribution. A board of commissions picked by the presidency and approved by the Senate take the Regulatory Decisions.

Regulatory Progression

Spanning nearly 13 years of its existence, NERC created key instruments in the Nigerian electricity market. These instruments include many rules and regulations, methodology, codes and orders guiding operations in the sector. Popular among these are the Multi-Year Tariff Order (MYTO) setting the price of electricity for wholesale and consumption; grid code, market rule, license terms, with the recent being the Eligible Customer Regulation and Meter Asset Providers (MAP) regulation.

NERC has licensed over 100 companies in the electricity supply industry, consisting of those in the value chain and others providing ancillary services like metering. LuxxorPower is currently in the process of obtaining the required licenses.

But NERC, which ought to be independent, is not the sole master in the sector. Industry sources have argued that due to the slow pace in covering so much ground in regulation fussed with inconsistent government policies, other agencies have crept in to take crumbs of quasi-regulation.

To salvage the aspect of technical enforcement, NERC in 2015 appointed 14 technical inspectors to monitor performances and compliance with extant market rules by electricity firms but it was late already, as a new technical agency had emerged.

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