‘Market not mature enough’ — FG suspends transfer of electricity oversight to states

Adebayo Adelabu, the minister of power, says the federal government has suspended the transfer of regulatory authority to state governments.

Adelabu disclosed this while speaking at the 8th edition of the Africa Energy Market Place (AEMP) conference in Abuja on Friday.

In April, the Nigerian Electricity Regulatory Commission (NERC) transferred oversight of the electricity market in Ondo, Ekiti and Enugu to the state’s electricity regulatory bureau (OSERB).

The minister, however, said the transfer would be suspended due to the need for state governments, and stakeholders in the power sector to properly understand what is required to operate an electricity market.

He said adequate understanding of the transfer of regulatory oversight of the electricity market to states is imperative for the survival and sustainability of the nation’s power sector.

“Therefore, we must tread carefully, we should not be in a hurry. The market is not a mature market, it is not mature enough. With everything centralised for a single regulator, we have a myriad of issues. Now we intend to create a regulatory framework across the 36 states, it is something that we must do in a highly systematic and strategic manner,” he said.

“We need just a couple of states as a pilot, which is why I actually halted granting of further regulatory autonomy to states.”

‘TRANSFER OF REGULATORY OVERSIGHT IN SELECTED STATES’

Adelabu also said the transfer of regulatory oversight will be piloted in selected states across the geopolitical zones in the country.

“When we have each of these zones represented in the pilot and we allow it to run for three to six months, or up to a year, all the possible issues would have been reflected so that we are going to have a learning curve, and all those issues will be addressed before granting further regulatory autonomy because I have a feeling that we don’t have a comprehensive understanding of what this autonomy means,” he said.

“The fact that we gave a state regulatory autonomy doesn’t mean that it’s just about distribution of electricity but it is regulation across the value chain. Generation within your territory, transmission within your territory, and distribution in your territory, including tariff setting.

“The moment you take over the regulatory activities of Lagos state, when we talk about tariff, about subsidy, it will be on your neck as a state. I do not know the balance sheet you want to leverage to guarantee the necessary settlements on a monthly basis.

“So we all have to sit down and let everybody have a complete understanding of what this means. We will know if we are ready to have full autonomy or it will be a partial autonomy for the meantime before we achieve a mature electricity market.”

The minister further said most stakeholders underestimate the capacity required to have regulatory authorities in 36 states, and the FCT.

Adelabu also said each state needs to have a framework capable enough to protect assets and liabilities, address vandalism and consumer protection, and have enough capital for continuous investments and maintenance of infrastructures.