The Nigerian Electricity Regulatory Commission (NERC) has said it would only encourage healthy market competition but not tolerate unwholesome cartel practices in the emerging Nigerian electricity market.
NERC disclosed this in Abuja, at the weekend, that it would outlaw the newly found union of investors who bought successor distribution companies created from the unbundling of the Power Holding Company of Nigeria (PHCN), “the Disco Roundtable.”
The “Disco Roundtable,” which is chaired by the pioneer chairman of NERC, Dr. Ransome Owan, was ostensibly formed to advance the interests of investors in the PHCN distribution companies.
It had before now asked for among other things, an extension in the payment deadline for the outstanding 75 per cent bid price of the distribution companies, a request the federal government actually turned down.
But the chairman of NERC, Dr. Sam Amadi, told journalists at a session on the ongoing PHCN privatisation process and the commencement of a competitive electricity market in Nigeria that the commission had asked the “Disco Roundtable” to shelve whatever plans it may have on possibly solidifying their union as it would not tolerate any act of corporate trust in the power sector.
“No, we have told them that there will be nothing like Disco Roundtable after they have taken over, each person would have to come to NERC for whatever issues they may have in the sector, they won’t come to us in a group.
“We will not tolerate any cartel, they are to operate individually; at this level, they can come together but after take over, they have to seize from existing,” Amadi said while responding to a question on fears that the Disco Roundtable may eventually metamorphose into an electricity distribution cartel if allowed to continue in the long run.
He further said: “We have taken a stand against formation of cartel in the sector going by Nigeria’s penchant for mixing business with politics. A typical Nigerian business sense is to leverage on public platform for individual interest but we will resist that.
“We won’t be going out to fight any cartel so to say but as a regulator, we will resist attempts to arm-twist our operations through our regulatory tools. Our “fit and proper guideline” for example gives clear guidelines on who is expected to manage certain affairs of such companies, while we really don’t care about who owns the companies, we care about who manages them and so will not tolerate an instance where the wrong set of people are in charge of operations.”
The chairman explained that with each distribution company operating on unique cost structure, it would be difficult for any cartel to operate successfully in the sector, adding that such disco-based tariff system would effectively minimise unwholesome market power.
“Cartel is a natural principle because people will exploit various avenues to make money, they will put pressure on the regulator just as the consumers will too but I want you to know that there will be heavy financial sanctions on operators who fail to abide by the industry guideline.
“Proceeds from such sanctions will be put into the Power Consumer Fund (PCF), which will be used to subsidise low income consumers of electricity in the country,” Amadi added.
Speaking on the extant challenges of metering electricity consumers in the country, Amadi said: “Metering is a crisis issue in the sector and has remained a crisis even now. Metering will not happen in a fantastic manner but it will surely happen gradually because the companies will have meter consumers to gain revenue, it is their property.
“We have discussed with the minister on the issue of metering fraud perpetrated by PHCN officials and it is agreed that there will an investigation into that to bring the culprits to answer for their misdeeds.
“People, who have paid for meters but have not been supplied one will have to tender their receipts as evidence and with that the government can hold people who are responsible to account for that.”
Information from This Day was used in this report.