Jonathan Didn’t Order Electricity Tariff Reversal, Ex-Nerc Chair Replies Fashola

I have read some piece of news suggesting
that Dr. Goodluck Jonathan ordered the
reversal of electricity tariff during his tenure
as president. Since I left office I have
avoided issues concerning electricity
regulation in Nigeria, to give our successors
the best opportunity to do better than we
did.
My understanding of public office that the
best a former public officer should do is to
truly step aside and be willing to provide
advice if and when it is needed. In the best
tradition of public service, you don’t
obstruct the new administration.
But I am constrained to restate the truth of
what happened for the purpose of ensuring
proper information to enable the present
administration do its best in fixing the
electricity crisis. Throughout our five years
as commissioners of the Nigerian Electricity
Regulatory Commission (NERC), there was no
single day that President Jonathan ever
dictated or instructed on policy to the
Commission, in relation to any issue on
electricity regulation.
I am bold to state that President Jonathan
was a great leader to the electricity sector
for fully supporting the independence of the
regulator. My colleagues and I were
determined to maintain the independence
of the regulator and we found a very
understanding person in the former
president.
As expected, we made mistakes or took
decisions which in retrospect may not have
been optimal. This is expected in human
society, hence development and
transformation are iterative, adaptive and
path-dependent.
On the matter of the tariff, the facts are
straightforward and borne out by records.
NERC as a regulator has a comprehensive
methodology and business rules for
managing tariff. The NERC Act, methodology
and business rules put the responsibility on
NERC commissioners, who vote
democratically for every such decision made,
just like the Board of Governors of the
Central Bank of Nigeria does on monetary
policy. Every tariff we have issued from 2010
to 2015 did not receive or require the
approval of the president; only NERC
Commissioners decided on these.
Before issuing MYTO 2.0, we debated on
what to do with the collection losses of
DisCos from consumers. Two schools of
thought then emerged among the
commissioners: One, supported by most
Commissioners, wanted the collection losses
to be reduced to zero or to the low level of
the pre-privatisation DisCos. The other
school wanted us to keep it as contracted by
DisCos and the Bureau of Public Enterprise,
even as it skyrockets the tariffs. After much
debate, the overwhelming position was to
reduce the collection losses. When the draft
of the tariff was issued, the DisCos protested
and the commissioners had a rethink,
revised the model and issued MYTO 2.0 that
saw more than a 180 percent tariff increase
for a number of customers in some DisCos.
…let’s not be under any illusion that fixing
tariff would fix the electricity crisis in
Nigeria. This is a falsehood. In fact,
privatisation, as desirable as it, does not
solve the problem. Obviously, there was a
design problem with the reform of the
electricity industry.
Manufacturers and other customer groups
protested this astronomical hike in prices
and sent in a formal petition. NERC’s
business rules require it to reconsider a
tariff when an aggrieved customer petitions
it within 60 days of the issuance of a tariff
order. On the basis of the petition, NERC held
a public hearing at Sheraton Hotel with all
DisCo heads and some consumers groups,
where the details of the tariff were
presented and criticised. After the public
hearing, the Commission set up a technical
committee to review the allegations and
conduct jurisdictional research on how
other electricity markets treat collection
losses.

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