June 22, 2009

NASB, NERC Set to Standardise Electricity Accounting

AS part of efforts aimed at eas ing the transition of the electricity sector to a private sector initiative driven industry, the Nigerian Electricity Regulatory Commission (NERC) and the Nigerian Accounting Standards Board (NASB) have announced plans to evolve a new set of accounting standards for companies operating in the sector.

Energy Minister

Energy Minister

This was the subject of a one_day enlightenment forum jointly organised by the NASB and the NERC in Lagos .
In his welcome address, the NERC Administrator, Mr Imamuddeen Talba, said the development of the standard is part of efforts being made by the commission to promote efficiency in the industry and reinforce investors’ confidence.

“The commission is committed to ensuring adequate, reliable, safe and affordable electricity to all Nigerians.   The commission is striving to achieve this by enhancing private sector participation, consumer protection and fair regulation.

The commission will always promote and preserve an efficient industry and market structure to ensure optimal utilisation of resources.  Prices charged will be sufficient to enable licensees to finance their activities and allow for reasonable earnings for efficient operations, Talba declared.

He listed some of the benefits of the standard to include provision of accurate means of reporting cost and determining tariff, fair comparison of performances of the various entities, protection of investors and provision of a uniform means of valuing assets.

Commending the initiative of the NERC in collaborating with his Board in developing accounting standard for electricity, the NASB Chief Executive, Mr Godson Nnadi, sought the collaboration of other regulators in creating the right framework for producing credible financial reporting which would boost investors’ confidence.

He also predicted a revolution in the sector, saying the 18 unbundled companies which will emerge from the present Power Holding Company of Nigeria (PHCN) would be treated as private companies.

“We are going to treat each of the 18 unbundled entities like private sector companies and they have to follow the rules.
You can’t be a parastatal and a company at the same time.  They are going to be treated like companies which will operate economically. As far as we are concerned we are not going to treat them like government ministries”, he said.
According to Nnadi, the NASB has issued a total of 30 accounting standards which have the full weight of the law.

He also disclosed that the NASB Act 2003 gave the NASB the power to set accounting standards, ensure compliance and impose sanctions for infractions.