[size=13pt]Power sector reforms yet to benefit Nigerians – NERC boss[/size]

OSCARLINE ONWUEMENYI

ABUJA – The Chairman and Chief Executive Officer, Nigerian Electricity Regulatory Commission, NERC, Dr. Sam Amadi, has said that there has been little or no difference in the state of power supply in the country since the power reform was initiated by former president Olusegun Obasanjo’s government in 2005.

Amadi, who made the remarks last week in an address at a workshop on Major Review of the Multi-Year Tariff Order, MYTO, organized by the NERC, in Abuja, noted that Commission was in the process of consulting with stakeholders over the need or otherwise to increase electricity tariff in the country.

He urged the stakeholders to be objective over the review process, noting that, “Public power supply in the country is still a standby in most homes and offices, as it was in 2005 when the reform in the sector began.”

He added that, “The state of electricity generation in this country is so terrible that one patriotic duty of every Nigerian is to speak strongly and critically about what needs to be done to review the situation.

“To us at the Commission, there cannot be a better time than now to put issues plaguing the sector back on the front burner. It comes as the Federal government is on the verge of divesting sole ownership and control of successor PHCN companies to allow private equity and management in line with the spirit of the Electric Power Sector Reform Act, 2005.”

According to Amadi, the general belief in the electricity sector is that current MYTO prices cannot support investments, as they are much lower than in most developing countries, noting that market imperfections such as as low generation capacity, low private sector participation, high and unprecedented operating costs and overheads still abound in the industry.

He added that, “As daunting as these challenges seem, we cannot give in to these frustrations if we must succeed. We must confront the pricing challenge while taking into consideration the prevailing economic situation of our country folk.

“For the avoidance of doubt, there is no guarantee whether the tariff will go up or down. It is the outcome of this consultation that will determine where the electricity tariff goes.”

Amadi noted that all over the world, prices have played a dual role in achieving efficiencies in the distribution of goods and services to consumers and in driving private investment into the economy.

“Therefore, if we must achieve the goal of giving every citizen access to stable, reliable and fairly-priced electric power, a reliable and sustainable framework must be put in place to ensure the robust interaction of market forces with social policy to attain equilibrium.

“This, we can do by establishing a pricing regime that will sustain massive private sector investment and guarantee a positive return on investment, while also being fair to underprivileged consumers.”

The NERC boss observed that prior to the introduction of MYTO, the industry was characterized by lack of a transparent price determination process and abysmally low tariffs, adding that the PHCN-fixed government-determined tariffs are mostly based on the political whims and considerations as opposed to the economic principle of full cost recovery.

“This promoted inefficient pricing of electricity and constrained the ability of government itself to recoup costs of investment. This ultimately undermined the growth potential of the sector because it totally distorted the economics of the electricity and deferred private sector participation until now,” he stated.

He explained that “MYTO provides for periodic review of the cost parameters through the minor (annual) and major (five-yearly) review windows. The annual review of the framework takes into cognizance changes in gas price, inflation and exchange rates while the major review considers holistic changes in major parameters.”

Amadi however, pointed out that despite the attributes of MYTO, “the market is yet to become robust. The market has failed to achieve optimum efficiency and milestones as envisaged by the Commission. The much needed private sector investment especially in the distribution sector has not materialized.”

He argued that the workshop was timely and marked “another bold step in our search for sustainable solutions that will drive all the economic and developmental aspirations of this newly inaugurated administration of President Goodluck Jonathan during the next four years.

“This is just the beginning of the consultation process, and we expect robust contributions and input from stakeholders towards creating a transparent and valuable power sector reform.”

http://www.vanguardngr.com/2011/09/power-sector-reforms-yet-to-benefit-nigerians-%E2%80%93-nerc-boss/

we are tired of power reform etc each day. do the damn thing or shut it