Jonathan Didn’t Order Electricity Tariff Reversal, Ex-NERC Chair Replies Fashola

The immediate past chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, last night said that the Minister of Power, Works, and Housing, Mr. Babatunde Fashola, was economical with the truth when he claimed that former president Goodluck Jonathan, forced the regulatory agency to shelve an increment in electricity tariff so he could make political gains from it in the 2015 presidential election.

Amadi, who ran the NERC with six other commissioners for five years, starting from 2010 to 2015, explained that there was never a time Jonathan or any of the power ministers under him attempted to influence the decision of the commission under their charge.

He said in a statement to THISDAY in Abuja, that all the decisions of the regulator were taken by its commissioners on a democratic basis.

Fashola, had while delivering a lecture on Thursday in Lagos, claimed that the former president forced NERC to shelve a planned tariff increment to give him some advantage in the election. He also alleged that the decision resulted in huge revenue shortfalls in the sector, a development he said had become a huge problem for the government of President Muhammadu Buhari.

Faulting Fashola's claims, Amadi said: "I have read some piece of news suggesting that President Jonathan ordered the reversal of electricity tariff during his tenure as President.

"Since I have left office I have avoided issues about electricity regulation in Nigeria to give our successors the best opportunity to do better than we did. My understanding of public office that the best a former public officer should do is to truly step aside and be willing to provide advice if and when it is needed. In the best tradition of public service you don't obstruct the new administration.

"But I am constrained to restate the truth of what happened for the purpose of ensuring proper information to enable the present administration do their best to fix the electricity crisis."

He added that: "Throughout our five years as Commissioners of NERC there was no single day that President Jonathan ever dictated or instructed policy to the commission concerning any issue on electricity regulation.

"I am bold to state that President Jonathan was a great president to the electricity sector for fully supporting the independence of the regulator. My colleagues and I were determined to maintain the independence of the regulator and we found a very understanding President in President Goodluck Jonathan."

Amadi further explained: "On the matter of the tariff, the facts are straightforward and borne out by records. NERC as a regulator has comprehensive methodology and business rules for regulating tariff. The Act, methodology and business rules put the responsibility on NERC commissioners who vote democratically for every such decisions, just like the Board of Governors of the CBN does for monetary policies. Every tariff we have issued from 2010 to 2015 did not receive or require the approval of the President. Only NERC Commissioners approved them."

He provided detail of how the 2015 electricity tariff was calculated, adding that the processes were controversial and involved all stakeholders in the electricity value chain including consumer groups, but without any intrusion from the government.

According to Amadi: "Before we issued MYTO 2.0 we debated on what to do with collection losses that discos collect from consumers. Two schools of thought emerged amongst the commissioners. One school, supported by most commissioners, wanted the collection losses to be reduced to zero or to the low level of pre-privatisation Discos.

"The other school wanted us to keep it as contracted by Discos and BPE even as it skyrockets the tariffs. After much debate the overwhelming position was to reduce the collection losses. When the draft of the tariff was issued, the discos protested and the commissioners had a rethink, revised the model and issued MYTO 2.0 that saw more than 180 per cent increase in some Discos for some customers.

"The manufacturers and other customer groups protested this astronomical hike in tariff and sent formal petition. NERC business rules require NERC to reconsider the tariff at the petition of an aggrieved customer who petitions within 60 days of issuance of tariff order. Based on the petition, NERC held a public hearing at Sheraton with all Disco heads and some consumers groups where the details of the tariff were presented and criticised. After the public hearing NERC set up a technical committee to review the allegations and conduct jurisdictional research on how other electricity markets treat collection losses."

Continuing, he stated: "The NERC technical team recommended that the collection losses should be set at zero and any Disco that wants to have collection losses above zero should apply with evidence of its diligent effort to control losses. This recommendation was presented to the industry meeting where the Discos expectedly totally rejected it. The NERC Commissioners nevertheless approved it through the usual process of decision-making and consequently reduced the revenue requirement of the Discos, which then resulted in lower tariff for most customers.

"This was a controversial but principled decision based on contestable evidence and value-based analysis. I am prepared to take slacks for any intended or unintended consequences of that decision as the Chairman and Chief Executive of NERC. I still strongly believe that my reading of effective regulation confirms that it was a good decision to internalise efficiency in the distribution segment of the electricity industry."

"But President Jonathan played no role at all in that decision. His ministers did not play any role. It was a bona fide regulatory decision that may be termed wise or unwise, after the facts. But should not be used to denigrate President Jonathan or the ministers of power.

"Take it from the horse's mouth: Jonathan did not reverse any tariff. Sam Amadi and his colleagues changed the tariff through the normal due process and as part of effective regulation of the sector," he added.