AMADI: NIGERIA CAN BENEFIT FROM SINGLE REGULATOR FOR GAS AND POWER

Electric Power Policy (NEPP).

Again, the government also hired a management contractor to manage transmission instead of relying on public sector bureaucracy. This is an admission of inefficiency in transmission services. Because transmission service is like a national highway it was considered not appropriate to fully privatise it. There is doubt if private firms will fully fund such public good if it remains a common service.

But we are faced with a grave problem here, which is the possibility that if we succeed in growing generation we may lack sufficient transmission capacity to deliver such power to the grid. This is why the embedded generation regulation is helpful. With it we can avoid the transmission bottleneck in connecting modular power to demand load.

But more than this, NERC is proposing a radical solution to the problem. Firstly, we are unbundling TCN to have two distinct companies. There will be a Transmission Service Provider (TSP) and an Independent System Operator (ISO) coming out of the present TCN. We have already secured a technical paper on this and the commission has asked its internal technical committee under comparative jurisdictional research to compare models from similar and different electricity markets across the world.

After the report of the committee we will conduct public consultation to ascertain the views of other stakeholders. Our mind is drifting towards having a non-profit ISO to be jointly owned and funded by all generators and distributors in the market. This saves government from using its public sector borrowing or budget to fund expansion in transmission services.

Everything will be financed by the market and there will still be no service failure. That is one of the benefits of some of NERC’s bold interventions. They are creating financial viability and service improvement with less and less of public sector financing. This is a huge relief in these days of lean revenue. What about the seeming faulty corporate governance system at TCN? NERC is focused in entrenching good corporate governance as a way of encouraging sustainable investment in the transmission network. Before now, the bane of the power sector has been misdirected investment. We are now reforming public and private sector investment such that every investment into the sector is based on approved investment plan that must be prudent and relevant to be recovered.

The fact that all investments have to be recovered through the market imposes a disciplinary influence on behavior of regulated entity. Such the trade-off for NERC providing a cost reflective wheeling charge for TCN is that it commits to the most transparent and accountable corporate governance. Once we reform the corporate governance of TCN and provide it with a cost-reflective wheeling charge, then we have cured its perennial lack of investible fund and guaranteed sustainable expansion of transmission services. Our energy mix still puts renewable below the cadre, is this not an aberration in a country with so much renewable energy resources? Before now we did not pay much attention on renewal energy and other means of generating power. But all that has changed now. We have licensed IPPs to generate power from wind.

We have the Kaduna wind farm. We have received inquiries from firms who want to generate power from coastal wind around Badagry. We have solar plants across Nigeria, particularly in northern Nigeria. We have licensed over 2000 megawatts of coal power.

So, in a matter of years, we may have over 20 per cent of available energy coming from renewables. Small dams will also play key roles. This is a new development. In fact, our new initiative of micro grid based on embedded generation is designed to tap into the great renewable resources in Nigeria.

So, NERC has done a great service to encourage renewable energy in three ways. First, we have developed a licensing framework for renewable electricity. Second, we have developed robust Feed-in Tariff that provides commercial incentives for investment in renewable energy project. Thirdly, we have developed embedded generation and independent distribution network regulations that taps into the abundant potential of renewable energy in Nigeria.

So, with renewable energy, NERC has also practically changed the game. All we need is some kind of fiscal policy from government to encourage project developers in renewable energy