NEMSA bill: What manner of proposed electricity legislation?
At a time when the nascent private sector-driven power sector is still struggling to find its feet, a member of the House of Representatives has proposed a bill for an act to establish the National Electricity Management Services Authority (NEMSA), on which a public hearing was held recently.
It stands logic on its head that the new body, which is capable of weakening regulation and creating regulatory uncertainty in the sector, is being sought to be created in addition to the Nigerian Electricity Regulatory Commission (NERC), which has been vested with the authority for the regulation of the electric power industry.
The bill, which is a private member’s bill, proposed by Patrick Ikhariale (PDP, Edo State), chairman of the House Committee on Power and Steel, seeks to situate NEMSA as a technical regulator and enforcement institution in the Nigerian Electricity Supply Industry (NESI).
The bill proposes to convert the Electricity Inspectorate Service (EIS) – whose functions, previously carried out under the auspices of the Ministry of Power, had been transferred to NERC in the Electric Power Sector Reform Act (ESPRA) 2005 – to NEMSA. The bill further proposes that NEMSA will also take over the staff and assets of the current Electricity Management Services Plc.
The proposed body shall be responsible for the enforcement of technical standards and regulations, as well as technical inspection in the Nigerian electrical supply industry, among others.
As industry analysts have noted, a review of the EPSRA 2005 and Nigerian Electricity Regulatory Commission (NERC) regulations reveals that the enactment of the NEMSA Act would lead to a duplication of roles and functions. According to Section 32(1) (e) of the EPSRA, NERC is already tasked with the responsibility of ensuring the safety, security, reliability, and quality service in the production and delivery of electricity to consumers. Others include the set of functions found under Section 32(2) (b) of the EPSRA.
There is absolutely no reason to create another regulatory body as this will not only be tantamount to jeopardising the ongoing reforms, it will also be a drain on the public finance as it appears to driven by the jobs-for-the-boys phenomenon.
We make bold to say that enacting a new legislation would be superfluous since there is no case that has been made that NERC was not living up to its responsibilities, which include formation and review of electricity tariffs, transparent policies regarding subsidies, promotion of policies that are efficient and environmentally friendly, and also forming and enforcing of standards in the creation and use of electricity.
The functions of NEMSA as proposed in the bill do not only conflict and overlap with the functions and roles of NERC but also of other subsisting institutions.
The National Electric Power Policy 2011 which is the foundation of Nigeria’s power sector reform and the EPSRA 2005, particularly section 32 provides clearly for the mandate of the NERC as the technical and economic regulator of the electricity supply industry.
We recall that the EPSRA Act established the regulator NERC to be independent of government and market operators so it can inspire confidence of stakeholders.
The fact that the proposed NEMSA will report to the supervising minister in the Ministry of Power will deepen government interference in the business of regulation and it is capable of creating excessive regulatory risks, which could be a disincentive to investment in the sector. For the success of the power sector to be sustained regulatory clarity and an independent regulator are indispensable. We thus urge that the proposed NEMSA bill be withdrawn immediately.