At NERC, We Created A Transparent Regulatory Process – Sam Amadi

Dr Sam Amadi currently serves as Chairman/CEO of the Nigerian Electricity Regulatory Commission (NERC) an independent regulatory body with authority for the regulation of the electric power industry in Nigeria. Amadi speaks with Newswirengr on ongoing Reforms of the Electricity Sector in Nigeria and increased tariff regime amongst others.

Excerpts of the interview….

As a regulator, how do you deal with the Operators and Consumers?

What may be popular and easy to push will be to say customers should pay nothing or pay lower fee but ultimately what is of public interest for sustenance might be to have consumers pay the appropriate price. Sometimes the regulator might be totally misunderstood, vilified and attacked by both the operators and consumers.  In our last meeting actually the operator’s said we have been captured by consumers. Then I told them, I will like to have three, four consumers, editors or writers walk into this room and let’s ask them what they think about us, they will say NERC have been captured by operators.

On one hand consumers think we’ve been captured by operators and on the other operators think we’ve been captured by consumers, that is exactly what a regulators job should be like because you are keeping focus on public interest.

What is the public interest for labor, is that the minimum wage should be high then if it’s high there will be less employment but if minimum wage drops then one can hire two or more people who want to work.

 Since assumption of office, What has been your mandate?

Since we came onboard, our focus has been on three things basically. One of it, is that we created a transparent regulatory process. We are the first agency in this country that fully embraced the freedom of information law; we didn’t wait for any civil society group to ask us to adopt and implement the law.

We did it because we think it is inherent to our work as a regulator, to allow for transparent process, to allow for information disclosure, to make sure that whatever information you ask for we give it to you.

So we have in NERC built a very strong transparent process that is clear to anybody in this industry, you might not agree with the decisions we make.

Tell us about the fixed charge System, was there input from members of the public?

Some people think they should be no fixed charge, some people think we should slash but nobody can dispute that if you come to NERC, go to our website it will be clear to you how we arrived at fixed charge. It will be clear to you why we think it is necessary, it will be clear to you also how we arrived at that decision.

We also accept inputs from the people, we don’t make any rules without public advertisement, and we over advertise and hold public hearings unfortunately the public is never there except the operators.

We’ve asked Civil society stakeholders to organize themselves and focus on this sector because as the market increases it becomes more difficult for individual consumer to understand what’s going on and it becomes easier for economic interest to have preponderant interest.

We have industry stakeholder advisory panel that does a lot of work advising us on how to go forward on some of the issues and we didn’t have civil society representatives. And we decided that the independent person who is suppose to be part of that panel should be from organized, consumer or civil society group.

NERC has been very responsible and responsive to civil society groups. In fact, the house committee rated NERC as the best in terms of freedom of information. Clearly we are committed to transparency.

There is so much being said about MYTTO, do explain the Multi-Year Tariff Order

The second thing NERC has done is that we have succeeded in creating an effective regulatory environment through our MYTTO regulations that today investors are confident. It is ironic, we have very poor network, and even those who bought the PHCN COMPANIES don’t have enough gas to generate to the capacity they committed. Still we advertised for NIPP Plants and it’s all subscribed. We’ve not yet solve the gas problem, transmission is still weak even though its improving. There is huge confidence in the regulatory side of this market.

Our Multi Year Tariff Order is clear transparent and well designed to allow investors recover their money and as a regulator we are firm. We have fought very hard to remove ourselves from any control from the ministry  or the Presidency. Every order we make is approved here and we do not submit ourselves to political override and this is important because it has to do with regulatory risk. Why people are still making investment in this sector is not because we have solved the gas problem, not because we are now generating 6000, 7000 as we ought to but because they can see in the frame work that we are putting in place a clear commitment of the Nigerian government to run electricity market as it ought to be.  You can see that we have been effective.

 What has been your approach to responding to queries from consumers as it concerns Metering?

Apart from being transparent and effective, when people criticize NERC, when consumers complain, we try to respond. When they are difficulties, we are upfront; we are the first to respond. When we say meter will be free, like some people will say, why say nobody will pay for meter again. We say look, the meter component has been factored into the tariff and therefore we expect that the companies will invest in metering and recover through tariff that is how it’s done all over the world. But six months after that order and we discovered that not much is going around in terms of metering, we came out and announced to the citizens that the metering plan failed.

It didn’t fail because the plan was wrong, it failed because there were other unforeseen events. Federal government initiated a higher increase in wage for workers and the CEO said look part of the money that was budgeted had been used to pay almost 100% wage increase . So for a company that spent 400 million a month on its pay roll, they now spend 700 million like Abuja. So when that happened we came out to the public and announced what was happening. Then we now introduced a new scheme to say that look, we foresee the problem that was to arise with metering based on this financial issues. Consumers who want to be metered quickly can advance the cost of meter and recover through deduction of their fixed charge rates over a period of time. We try to respond to the problem of consumer’s and we try to be honest in putting across what are the real constraints. We try to be innovative in addressing the issues; we are not an evasive organization. If there’s a mistake we acknowledge, if things don’t turn out as we think they should turn out, we say this is the reason why it is not happening.

Apart from regulating the generation, transmission, distribution and marketing of electricity in Nigeria, you are saddled with a whole other responsibilities, how much of these duties do the people understand?

Because this is a new sector so to say, many people do not understand the detail of how it works, how prices are fixed, how this rules are made and so on and so forth. Therefore we try as much as possible to keep on these kinds of interactions so that if they are issues you don’t understand we can explain.