By Sam Amadi
One of the observable gaps in the current electricity market in Nigeria is the absence of knowledgeable, credible, and broad-based advocacy for electricity consumers. This is not to say there are no geographical or occupational clusters of electricity consumers, or even non-governmental organisations advocating for their own interests or the interests of their members or the interests of aggrieved consumers that contact them. Of course, such groups exist. The fact is that consumer voice is under-represented in the emergent electricity market.
The reasons for this deficit of consumer voice and power are that the individual consumers and consumer groups are too dispersed and too fragmented and their levels of engagement too superficial, too adversarial and too episodic to have the desired impact on outcomes in the sector.
Contrast the state of disempowerment of consumers with the powerful position of the service providers – generation, distribution and transmission companies in the electricity market, highly funded and organised.
As operators, they have the incentives to gain better understanding of the technicalities of the industry, and they could afford the best of intellectual support to shore up their knowledge base and negotiation power. They are also better acquainted with the issues and the processes of the sector and have greater access to the decision-making process.
The sum of all these is that when compared to the consumers, the operators have a greater share of voice and better positioned to protect their interests and shape outcomes in the post-privatisation electricity market in Nigeria. Therefore, there is a deficit democracy in the electricity market when the ordinary processes of governance of an institution or system creates and reinforces the disempowerment of a critical stakeholder of that institution or system. In this case, the system is the Nigerian electricity market and the critical stakeholder disempowered is the consumer.
Ironically, the supposed beneficiary of the regulatory regime is the consumer as the law mandates the Nigerian Electricity Regulatory Commission, NERC, to protect the consumer’s access to adequate, safe, reliable and affordable electricity. In reality, democracy deficit is cured though redefining and redesigning the institutions so that the disempowered stakeholder is better mainstreamed in the service delivery and offered a platform to negotiate a better bargain.
The democracy deficit in the emergent electricity market in Nigeria post-privatization is the possibility of the loss of consumer voice in crafting the bargains that will define access and security of electricity supply in Nigeria. These bargains may take the form of technical, regulatory or financial arrangements for supply of electrical services in Nigeria.
The market rules, as presently designed, have empowered the operators of the Nigerian electricity market by giving them a ring-side ticket to all the governance institutions in the market. They have opportunity and resources to shape rules and decisions to their advantage. The consumers are not on the ring-side and are only to be affected by the decision.
This asymmetry does not protect the balance of power in the electricity market, which the regulator is to promote. Asymmetry of power also undermines the transparency and accountability that underline a fairly regulated electricity market. This democracy deficit is prevalent in many other emergent privatized electricity market where private firms have come and regulatory regime has not developed to minimize or moderate their power.
Curing this democracy deficit through consumer empowerment is becoming increasingly necessary to meet the interconnected challenges of energy security, pricing and sustainability. There is a pressing and urgent challenge to institutionalize consumer power, and by so doing create a balance of power in the Nigerian electricity market in other to ensure a smooth and orderly transition to a competitive and efficient electricity market. Today, such a transition requires peaceful cooperation between various stakeholders in the market.
As expected in every system, there will conflict of interests in this new market. As long as stakeholders are pursuing apparently divergent interests, order and progress will require a strong and legitimate conflict management system.
Although the interests of operators and consumers are not eternally incommensurable, they are significantly divergent. Whilst the operators are more or else interested in reducing cost and increasing profit, consumers want better quality at lower costs.
But from a regulatory perspective, these diverse interests are converged at the point of providing more and better electrical services to consumers.
Therefore, the Electric Power Sector Reform Act, 2005 mandates NERC to both ensure full cost recovery for efficient operators and allow consumer access to affordable electricity. So, cost recovery should be part of an affordable and fair electricity market. This dualism immediately sets off conflicts that require fair resolution. When operators demand for increase in tariff, consumers are expected to be worried.
The regulator ought to anticipate such tension and ensure that all interests have opportunity to engage in the ensuring deliberation. This is how democracy actually works in real life. It is all about deliberation and exercise of power. People congregate around clear interests and try to influence the institutions of the state to protect or promote those interests. This excites contestation from those who have divergent interests who seek for access to make their own case.
Dr. Amadi, the Chairman of NERC, spoke at the inaugural meeting of the Nigerian Electricity Consumer Advocacy Network, NECAN, in Abuja.