Electricity Tariff Hike: Senate lacks powers to order reversal — ex-NERC boss

Former NERC Chairman, Sam Amadi
Former NERC Chairman, Sam Amadi

The immediate past Chairman, ​​Nigerian Electricity Regulatory Commission (NERC), Sam Amadi, on Friday described ​the ​Nigerian Senate’s recent directive for the suspension of the new electricity tariff regime as illegal, unconstitutional and a direct encroachment on executive independence.

Mr. Amadi, who spoke to PREMIUM TIMES in an exclusive interview in Abuja, said apart from the Senate lacking the constitutional right to give such a directive, NERC, as presently constituted, was incompetent to suspend or rescind the tariff order issued by the former ​c​ommissioners.

The former NERC boss said until a new ​c​ommission has been reconstituted to consider reviewing or totally suspending the order, “nobody anywhere can validly review or suspend the current tariff”​.​

“It is not wise for the Senate to instruct NERC to stop the tariff,” Mr. Amadi said. “It will create serious regulatory risks across the market value chain. People will begin to look at it and say there is no independence of the industry regulator.

“The National Assembly knows how tariffs are arrived at. They follow a process. If the National Assembly is truly objective, they could have invited NERC to come and give evidence that they followed the law and process they made. If they think the laws were not followed or good enough they have a right to streamline the law or make new regulations.

“The order by the Senate for NERC to rescind the tariff is a direct infringement on the independence of the executive to initiate policies, in this case through NERC. It is a subtle derogation of the powers of the executive. It offends the concept of separation of power. The legislature should not interfere and direct executive action. That is clearly against the law. It is unconstitutional,” he explained.

The former NERC Chairman, who is also a lawyer, said although the lawmakers could give policy guidance, by expressing their views on what they think was wrong, NERC should be allowed to exercise its independence to either accept or reject it.

​I​ssuing a directive for the electricity sector regulator to suspend an order that is a quasi-legislation backed by law would not only set a dangerous precedence, but would also create a process that, if NERC disobeys, would trigger a fight with the legislators.

He said the way out of the situation was for the National Assembly to understand that its directive was wrong, as it “contravenes the very law they made empowering NERC, and NERC only, to decide on the issue of tariffs.”

“Tariffs do not come through executive fiat,” Mr. Amadi pointed out. “Suspending tariffs should go through a process similar to when it was made. At the moment, there is no NERC in place to carry out the Senate’s directive to suspend the tariffs implementation. The decision can only be taken by a properly constituted Board, which was recently dissolved.

According to him, it was not prudential for the National Assembly to direct NERC to rescind the decision on electricity tariffs, arguing that it would amount to an encroachment into executive functions.

“If NERC obeys the Senate and rescind the order, it would have put itself in a double bind between the executive and the legislature.

“Such obedience would violate the provision of the Act that empowered NERC to issue the order in the first place in line with its regulatory role, and increased the regulatory risks in the market, as people would not be sure whether it has the independence to exercise its role as a regulator.

“On the other hand, if NERC does not obey, it would have put it in a confrontational path with the legislature. It is a situation that could have been avoided if the legislature had properly interrogated the process, to find out the real cost profile that NERC used to arrive at the tariffs, not the outcry,” he explained.

The 11 electricity distribution companies (DISCOs) under the aegis of the Association of Nigerian Electricity Distributors (ANED) have already warned of the consequences of suspending the new tariffs.

ANED’s Executive Director, Advocacy & Research, Sunday Oduntan, said heeding the Senate’s resolution would undermine the various agreements with the federal government prior the privatization exercise that a market-priced tariff which reflects its costs of distributing electricity to consumers would be enthroned in the sector.

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