Power
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In keeping with the goals of the power sector reform, the Nigerian Electricity Regulatory Commission has started consultations with relevant stakeholders with a view to determining the operational structure of the Transmission Company of Nigeria to make it more efficient
| By Anayo Ezugwu | Jun. 23, 2014 @ 01:00 GMT
THE Nigerian Electricity Regulatory Commission, NERC, has begun a meeting with relevant stakeholders in Nigeria’s Electricity Supply Industry, NESI, to determine the operational structure of the Transmission Company of Nigeria, TCN. Sam Amadi, chairman, NERC, said the commission was still in consultation with the ministry of power and TCN, to determine its final unbundling into separate and efficient units in line with the goals of the power sector reforms.
“We are thinking seriously about the next form that TCN will take in going forward. The various models available are those of an independent system operator, that is, like a Non-Governmental Organisation owned by the generators in the market; they set up a governance framework, appoint trustees and the owners are the generators which exemplifies the non-discriminatory nature of the system operator which guarantees free access to all generators.
“In a private market, if the system operator is placed efficiently and professionally, the possibilities of manipulation in the market will be rare and so the NERC is keen that we change the governance framework to take the system operator and market operator to be like an independent NGOs that are not owned and managed by government but by trusteeship of operators who have stakes in the operations,” he said.
The NERC chairman further stated that another option available for consideration is the initiation of a regional system operator, but that the processes involved may limit the possibility of its adoption. “A second big argument is that we have a regional system operator, that will regionalise the networks but that is a big argument for the future because of a lot of issues around the politics, framework and constitution.
The other issue is that by the time we take out the system and market operators to form an independent system and market operator, the transmission service provider will be left as a wire business but the best will still be that it remained in the hands of the government because it is cheaper for the government to create the highways and there might not be enough incentives for private investors to provide public goods like that which is subject to free riding. So, because it is public good and you cannot restrict access to it, it still makes sense that the transmission service provider remain in the hands of government but subject to regulation in terms of procurement.”
On the current challenges of the TCN vis-à-vis the performance of its management contractor, Manitoba Hydro International so far, Amadi said: “The main challenge with TCN is actually managerial, the Manitoba management contract and the way it is being implemented. The TCN needs to show much more capability and Manitoba needs to show much more managerial competence because it is not just financial challenges that TCN has but management challenges in change management.
Manitoba needs to initiate strong change management process into the new organisation. The failure in the old TCN is not just a failure of poor funding but human management; poor culture of excellence and efficiency and that is why we expect Manitoba to begin to show strong results in change management, clarity in reporting line and management system,” he said.
Amadi explained that part of what is called the seven disciplines of the power sector is prudent and accountable public sector investment; public sector investment either budgetary or turnkey projects must be prudent and accountable. “That means you must report to the regulator your investment decisions and they must be approved before expenditure,” he added.
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