Nigeria's Epileptic Power Sector under the Spotlight, as Private Investors Take over PHCN

Nigeria's epileptic power sector has come under the spotlight, following the conclusion of the sale of the assets of the Power Holding Company of Nigeria (PHCN) to private investors.

Analysts have come unwavering with the type of regulatory actions required to make a success of the electricity market, few days after all but one of the 14 preferred bidders for the successor companies of PHCN paid up for the electricity company’s assets. “We need a regulator that is independent and has experts in various areas including engineering, law, among others. We also need a regulator well equipped for the future. Further, we need one, which would continuously co-operate with the gas regulators as you can hardly speak about electric power in Nigeria without making reference to gas. Issues relating to adequate staffing should also be given the care it requires,” Ayodele Oni, an energy law and policy expert and senior associate in top law firm, Banwo & Ighodalo, said.

That will be the focus, because from August 21, 2013, the country’s electricity sector becomes fully deregulated, and electricity deliveries consequently have been opened to competition. Finally buckling to pressure, Nigeria has become of the latest emerging market economy to undertake this step, but the long era of government control has left the sector very vulnerable. “High level of regulation needs to follow this development. We must avoid a situation where the regulator becomes subservient to the operators. I therefore suggest further strengthening of the regulatory authority,” according to Bola Osunsanya, managing director, Oando Gas and Power, saying that regulator must also be on top of situations so that no operator is allowed to short-change the Nigerian public.

While it is given to assume that the onset of a private sector driven electricity industry in the country will usher in an era of better efficiency and responsiveness, experiences across sectors of the economy have shown that the new dawn of electricity supply that Nigerians have yearned for, over decades, will only come if the new generating and distribution companies (gencos and discos) are properly regulated, ensuring that there is a balance between their activities and consumers’ interests. “The regulator should be professional. Professional in the sense that the interests of consumers are very well protected. In this type of industry, the consumer is very vulnerable. So, we need a very strong regulator that is able to protect consumers from exploitation, as well as ensure that investors derive enough benefits,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry. According to him, regulation is the business of government, but what is important is to ensure that the regulatory agency is made of professionals and they should have the power and autonomy to operate professionally. The political leadership needs to give them the space to operate very well, he added.