Review of the Nigerian Electricity Regulatory Commission .

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Overview of the Nigerian Electricity Regulatory Commission. Presented by Dr. Alimi Abdul-Razaq Executive Commissioner, Legal, Licensing & Enforcement Division, NERC at NARUC/NERC Workshop July 14- 18 2008. Acronyms. NERC – Nigerian Electricity Regulatory Commission
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Outline of the Nigerian Electricity Regulatory Commission Presented by Dr. Alimi Abdul-Razaq Executive Commissioner, Legal, Licensing & Enforcement Division, NERC at NARUC/NERC Workshop July 14-18 2008

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Acronyms NERC – Nigerian Electricity Regulatory Commission NEPA – National Electric Power Authority EPSR Act 2005 – Electric Power Sector Reform Act 2005 NELMCO – Nigerian Electricity Liability Management Company RE – Rural Electrification PHCN – Power Holding Company of Nigeria SCs – Successor Companies IPPs – Independent Power Producers FME – Federal Ministry of Energy REA – Rural Electrification Agency ECN – Energy Commission of Nigeria

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Outline Background Timeline of Major Industry Development Make up of the Nigerian Power Sector Need for Reform of the Nigerian Electricity Industry Role, Functions and Structure of NERC under EPSR Act 2005 NERC Regulatory Instruments Other Regulatory Instruments NERC Institutional Autonomy NERC Financial Autonomy Relationship amongst NERC and important partners Current Regulatory Landscape Challenges Conclusion

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Background Electricity era started in Nigeria in 1896. Power Corporation of Nigeria (ECN) was built up as a focal body in charge of power supply in 1951 and the initial 132KV line was developed in 1962 connecting Ijora Power to Ibadan Power station. Niger Dams Authority (NDA) was set up in 1962 with a command to create hydro control stations. ECN and NDA were converged in 1972 to frame the Nigeria Electric Power Authority (NEPA) by excellence of the NEPA Act. NEPA had imposing business model of era, transmission and conveyance until 2005 when EPSR act revoked the NEPA Act and PHCN was shaped from NEPA to serve as a momentary holding organization preceding the unbundling of the Sector. The Act promote accommodated the making of Successor Companies from PHCN and 18 SCs involving eleven circulation Companies, six era Companies and one transmission Company has since been made

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Time line of Major Industry Development: Installed Capacity 6,000MW 1,030MW 20MW 1972 Formation of NEPA, Abolition of ECN, NDA 2005 Unbundling, NEPA TO PHCN Before 1950

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Makeup of the Nigerian Power Sector Generation: Installed Capacity* (name plate) 6,300MW PHCN Available helpful capacity 4,250MW Current Generation (11/7/2008) 2,526MW Peak Generation (Aug 2005) 3,774MW Transmission: 330KV Lines 5,000km 132KV Lines 6,000km Distribution: 33KV, 11KV, 415KV, 220KV 60,000km NATIONAL DEMAND (evaluate) 10,000MW NATIONAL GENERATION DEFICIT 5,750MW * Include PHCN and IPPs establishments Source: PHCN

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Need for Reform Nigeria Population – assessed at 140 million Installed producing limit - 6,300MW Available Useful limit - around 4,250MW National request – around 10,000MW Requirements: About 5 Billion Dollars to raise accessible ability to 6,000MW in eighteen months Government plans to build control supply to 10,000MW by year 2011 with cost gauge at around 80 Billion Dollars This illuminates the change program of government in the power segment, as the Nigerian treasury can\'t finance this colossal necessity Need to pull in considerable private part venture.

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OBJECTIVES OF THE POWER SECTOR REFORM Program The Nigerian Electric Power Policy (NEPP) was embraced in 2002 in light of the desperate deficiency of electric power and the requirement for critical change of the area. The NEPP accommodates : Drafting of another Electricity law to give the legitimate structure to the change Agenda Establishment of an autonomous administrative organization Development of a discount power advertise Establishment of a shopper help store to guarantee the productive and focused on utilization of sponsorships to less favored Nigerians Establishment of a Rural Electrification Agency (REA) to deal with the provincial jolt subsidize and guarantee a different yet similarly engaged use of appropriations for the proficiency conveyance of scanty assets in contending rustic zap ventures.

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Reform of the Nigerian Electricity Industry EPSR Act accommodates two phases of market advancement viz: pre-privatization stage and post privatization organize. Pre-Privatization otherwise called move period Pre-move phase of the power segment change in Nigeria has notwithstanding approach detailing included: Restructuring NEPA to give more elevated amount self-rule to its 7 producing stations, the transmission/dispatch segment and the 11 dissemination zones Legal and administrative structure survey prompting the proclamation of the new segment change law (Electric Power Sector Act) in March 2005 EPSR Act additionally accommodates formation of a free segment controller (NERC) introduced October 31, 2005

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Reform of the Nigerian Electricity Industry Transformation of NEPA into : An underlying holding organization, PHCN Creation of various successor organizations (presently 18 - 6 era, a transmission & 11 appropriation organizations) to which the advantages and liabilities of PHCN are to be exchanged Creation of the Nigerian Electricity Liability Management Company (NELMCO) The improvement of an aggressive power advertise for Nigeria with different administrators and constrained passage obstructions Successor organizations alongside the brief mass buy & resale licensee and IPPs will work in the market amid the move time frame Full rivalry will trail privatization of SCs and announcement by Minister (upon NERC\'s recommendation) that the market is prepared for full rivalry

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LEGAL FRAMEWORK Establishment of NERC was set up under Electric Power Sector Reform Act, 2005 Officially initiated on October 31, 2005 Established as Independent Regulator to drive the power part change program of FGN through: -guaranteeing reasonableness, straightforwardness & level playing ground for all speculators -advancing strategies to draw in private venture from Nigeria and globally -advancement and upgrade of indigenous limit in the power segment

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Role, Function and Structure of NERC Role of NERC in the rebuilt business Provide a formal autonomous administrative structure for the power business Ensure maintainable development, advancement and strength of the segment Boost financial specialist certainty while securing the premiums of purchasers Promote rivalry inside the business Set and uphold quality benchmarks Enforce shopper benefit commitments Provide all vital administrative capacities for the power business

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Role, Function and Structure of NERC (cont.) Functions of NERC Create, advance and protect proficient industry and market structures and guarantee ideal usage of power assets Maximize access to power administrations, by advancing and encouraging buyer associations with dispersion frameworks in both country and urban ranges Ensure that a sufficient supply of power is accessible to buyers Price direction Ensure that control is reasonable and adjusted for licensees, buyers; financial specialists, and different partners

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Role, Function and Structure of NERC (cont.) License and manage people occupied with the era, transmission, framework operation, circulation, and exchanging of power Approve revisions to the market rules Monitor the operation of the power showcase Set up and oversee a reserve to be utilized to finance underprivileged power buyers as indicated by the Minister Support the readiness of the RE Strategy and Plan, issue the licenses for rustic jolt, manage the provincial frameworks, decide the commitment rates to be sent to the Rural Electrification Fund Undertake such different exercises which are essential or helpful for the better completing of or offering impact to the objects of the Commission

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Structure of NERC 7 full-time Commissioners Chairman – 5 years Commissioners – 4 years Body of Commissioners - Chairman\'s Office Divisions with key capacities:- - Engineering, wellbeing & Standards - Legal, Licensing & Enforcement - Market Competition & Rates - Finance & Management Services - Research & Development - Government & Consumer Affairs Regulatory Office

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NERC REGULATORY INSTRUMENTS Effective Regulation is the way to compelling change of the power business As area controller, NERC attempts specialized and monetary control of the segment The real instruments of administrative control received by NERC in doing its administrative capacities include: Primary and backup Legislations licenses, value direction, Industry Codes, Rules and Orders of the Commission

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NERC Regulatory Instruments (cont.) Primary Instrument – The EPSR Act No.6 2005 Secondary Instruments:- Subsidiary Legislations (Rules &Regulations) S.96 of the EPSR Act accommodates drafting of the accompanying Regulations: -Administration of undertakings of the Commission** -Rights, commitments and obligations of Licensees** -License application, alteration and cancelation procedures** -Standards** -Information required from Licensees -Tariffs assurance procedures** -Fees, demands and different charges payable by Licensees**

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NERC Regulatory Instruments (cont.) (Regulations) - Allowable Licensee resources, properties and speculations -Customer-related matters** -Licensee mergers, procurement, offshoot connections -Procedures for market control checking -Terms and states of framework access by Licensees to different elements -Fines and punishments payable by Licensees -Such different directions as might be required ** Regulations as of now instituted by NERC

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NERC Regulatory Instruments Cont\'d (Regulations) Regulations Process of Rulemaking Prepare draft Regulations/Consultation Paper Send to real partners and distribute

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