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‘How we are tackling the power sector challenges’

Imamuddeen Talba, the chief executive officer, Nigerian Electricity Regulatory Commission (NERC), speaks on  the measures put in place by the Federal Government to solve power crisis in the country.

Mr. Imamuddeen Talba

When you took over NERC, what were the structures you met on ground?
When I took over at  the commission, there were certain structures on ground. The former management had already issued licences to Independent Power Project (IPP) stakeholders, it established a technical crew for operations in the industry and other regulatory frameworks were also established to ensure rapid development in the sector.

The sector has suffered over the years. What is your commission doing to improve electricity generation capacity to stimulate industrial growth and development, now and in the long-run?

I quite agree  that the power sector suffered  over years. The reason being that, there were no appreciable investments made by government from 1979 to about 1999; that caused a major decay in the sector. However, if you look at the initiative taken by the present administration, especially the current actions of President Goodluck Jonathan  in making tangible investments and putting needed structures in place to revamp the sector for greater productivity, you would see that a lot has  been done to turn the sector around.

The massive investments and structures put on ground by the government shows total commitment and proactive steps to revive the sector. Infact, with the level of commitment shown by the government in the implementation of the power sector reform, I am glad to say that  Jonathan is approaching the issue of electricity supply pragmatically and holistically to realise positive outcome.

The initiative of government is to ensure that the sector functions optimally to stimulate rapid economic growth and development in line with the government’s policy towards the realisation of its Vision 20:2020 target.

Apparently, with the establishment of the Presidential Action Committee on Power (PACP), the unbundling of Power Holding Company of Nigeria (PHCN), establishment of NERC as a regulatory body and the launch of the roadmap to power sector reform, it means that the coast is now clear for the  private sector  to come in.  Realistically speaking, government alone does not have the capacity to tackle the challenges facing the sector at present. So, with a conducive business environment assuring prospective investors of full cost reflective tariffs, the sector would be able to maximise outputs in the long-run.

Could you tell us precisely the current power generation capacity in the country at the moment?
The current power generation capacity is between 3,500 and 3,800mega watts. This is because the government is now making appreciable investments in the sector.

Also, the roadmap itself is a practical way of implementing the provisions of the Act and nobody has any reservation about the Act. What Mr. President is saying is that  there was delay in the process of the implementation of the Act. So, he decided to fast track the entire process of implementation to enhance development in the sector.

And there is tremendous improvement in power supply since the beginning of this year. There is this controversy surrounding the endorsement of the multi-year tariff order released by NERC, as some manufacturers are insisting that increase in electricity tariff would affect the cost of their operations. To start with, Nigeria ’s power tariff is the lowest in Africa right now. So, if electricity tariff remains very low, investors would not want to come and put their money in the sector because every entrepreneur is in business to make profit.

We must be realistic about the issue of tariff review and consumers should be willing to pay more for the electricity they consume on daily basis. We should be able to pay for services rendered and electricity tariff must be cost-reflective to attract foreign investments into the sector.

Most importantly, we must review the tariff to reflect the actual cost of generation and distribution of electricity in the country. That  is why the introduction of pre-payment metres a few years ago by the commission became necessary to ensure that consumers of electricity pay for amount of power they consume on regular basis.

Also, Nigerians would have to reason to complain about shortage of pre-payment metres because the investors who are in the business to make profit would ensure availability of the pre-payment metre to every consumer.

On the other hand, increase in this year’s multi-year tariff  order would not affect retail tariff for consumers across the country. This is  because the 2008 tariff order has frozen retail tariffs at N6.00 for 2008, N7.00 for 2009 and N8.50 for 2010 average per kilowatt hour (kwh), meaning that the  year’s review would only affect the wholesale price and not the retail tariff.
As a major stakeholder in the sector, how much in naira and kobo do you think government should invest to revamp the sector for optimum production?
I would not tell you that because I do not precisely what the government wants to invest in terms of money. What I know is that government is making massive investments capable of repositioning the sector for rapid growth.
Some stakeholders are of the opinion that the Independent Power Project (IPP) is not realistic now.

How do you react?
IPP is on-going but people do not get across to know what is happening. I could tell you categorically that 17 out of 36 IPP operators who were issued licences are in operations.

Government is doing everything within its capacity to encourage the private sector participation in developing the power sector in the country, because government alone would not solve the problem facing the sector.

The private sector has the financial capability and technical-know-how to drive the sector. So, government is trying to create an enabling environment for private sector players to come in.

Last year, government failed in its promise to meet 6,000mw electricity generation capacity even after so much assurance. Do you think that target is realisable this year 2010?

Well, the truth is that government did not say it would meet the target of 6,000mw this year. What government is saying is that, since that target was not realisable last year, due to a lot of factors such as lack of infrastructure and the fact that some power projects were not completed because of logistic problem, that it would take practical steps to improve power generation in the country, which is exactly what the president is doing through the PACP, by putting measures in place to fast track the implementation of  the reforms.

What would you say are your challenges and how do you intend to improve on the existing structures in the commission?

I am a regulator and my job is to regulate the industry because, before the now, we did not have the industry. We are doing our best to provide a good regulatory framework that would propel growth in the sector. We have done so much in our independent distribution network.


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