Models and International Best Practices in Regulatory & Anti-corruption Compliance Monitoring in Nigeria

Dr. Sam Amadi Chairman & CEO Nigerian Electricity Regulatory Commission (NERC)

Presentation outlay
• • • • • • • • • PART 1 Corruption: intro Causes of corruption Ease of capital flight International Angle: Tax Havens The great Nigerian Silence The facts Effects of corruption on Nigeria This government is trying, but must be supported

Introduction • Oldest and complicated phenomenon • A kind of:  bribery  Fraud  Nepotism (partiality)  Need driven  Greed driven  Cronyism  Collaborative (it takes two) .

• • • • • • • • • • Causes of corruption Lack of transparency (inflow & outflow of money) Silence Poverty Greed Illiteracy Unmet expectations Low public sector wages Increasing rate of taxation Increasing inflation rate Increasing rate of competition .

Ease of capital flight from Nigeria .Ease of capital flight • The ease with which Nigerians can siphon & take huge capital out of the country is our bane.

receive & keep looted fund with ease.Tax Havens as Nigerian Scourge • Small countries like Switzerland. Angola. Liechtenstein. . • They also have zero or very low income tax • They ask no questions on the source of monies deposited in their banks. Bermuda etc. • They keep all banking records secret and offer little cooperation to International anti-graft agencies.

politicians & the corporate community fuels a huge black economy • At least. $70-80 billion is believed to be lost annually to black economy • Nigerian should have been developing in leap and bounds where it not bedraggled by black economy • .The black economy • Unholy relations between nefarious bureaucrats.

Effect of corruption • • • • • • • Struggle to overcome infrastructural deficit Inadequate healthcare provision Unsatisfactory educational facilities Less employment opportunities Lack of welfare provision Loss of a large chunk of GDP per year Top ten oil producer. not translating to top ten economy .

Effect of corruption contd… • Lack of transparent & technological efficient economic system • We should have been in the league of countries like South Africa. etc. China. Malaysia. • Our generation is primarily:  consumption driven  Occasioned by corruption induced high cost of production . Korea. in terms of production vis-à-vis consumption. Hong Kong. S. Brazil.

this administration has been cleansing our public institutions • The FOI was introduced to throw open the annals of government . best Practice procurement procedures.This govt is acting. pointed to the fact that Nigerian must reject corruption. but Nigerians must take up the challenge • In his most recent press briefing. by ceasing to worship it proceeds. President Goodluck Jonathan. • Through stringent & Int.

• A national agenda against all ramifications of corruption.We must adopt & enforce Int best practices in anti-corruption • We must develop a societal attitude that rejects corruption in all its manifest. and a strong will to enforce same must be drawn. • We must ensure Nigeria friendly global antisecret banking rules • Fight capital flight to a complete stop .

• Corruption is a major constraint that is hindering  Economic  political and  Social development Hence we must jointly view it vas a problem requiring urgent attention. deploy & effectively enforce anti-corruption laws that differentiate between a develop and perennially developing country. . however.In conclusion • Corruption is universal • It threatens Both developed & developing countries. it is the ability to develop.

Part 2 • Models & international Best Practices in Regulation and Anti-Competition Compliance Monitoring in Nigeria .

and influence of actions of business by government to promote public interest and welfare • Regulation could be both restrictive & facilitative .Regulation • An all encompassing public policy term which is a direct result of the society’s concept of the role of government • Connotes control. direction & guidance.

which are deemed strategic to government. gas. price and wage controls • Covers sectors of the economy such as electricity. .Economic regulation • Takes the overt barriers to entry and exit. licensing and tariff laws.. etc.

Command & Control Regulation • The exercise of government influence or control by imposing standards backed by serious sanctions • Uses carrots and sticks in reining over industries Cost of service or ROR Regime • Establishes a “satisfactory ” or “normal” profit or rate of return on the firm’s regulated asset base. . after allowing for efficient capital and operating costs.

transmission and Distribution of electricity. This was a vertically integrated State run system. • This nationalization period occurred between 1896 -2005 Regulatory periods in Nigeria . NEPA era. Electricity Commission of Nigeria (ECN). all as a single administrative unit under a monopoly module. national Electricity power authority. which were characterized by State involvement in the generation.• The Electricity Board (EB).

i.e. NEPP. into Holding entities.. • This era started with the drawing up of the 2001 National Electricity Power Policy. • The pursuance of NEPP lead to the enactment of EPSRA 2005 • It moved on to the unbundling of NEPA.The regulatory periods • Opening up/ restructuring period • From 2005 to present. & establishment of NERC . since the establishment of an independent regulator to oversee a competitive but controlled market.

and thus.Regulatory periods contd… • The post EPSRA electricity era is distinguished by the determination. efforts of the State to open the NESI for competition and involve private sector and other stakeholders in the provision and regulation of electricity .

Philosophy of reforms • • • • De-macrosification Privatization Deregulation Liberalization re-engineering/re-tooling/re-inventing • Governance • International best practice • Fiscal self sustenance .

Regulatory & anti competition • The private sector has been drafted in to perform the task of providing adequate. safe and reliable electricity. simultaneously ended the monopoly of NEPA in power generation • Opened the sub-sector to private sector participation . which the State over time has proven itself as been incapable of providing • The advent of NERC the Regulator via the Statutory instrument of EPSRA.

so as to oxygenate this critical segment with international best practice. NERC licenses & oversees every participant in the market The government has retained the Transmission end of the industry. but contracted its management out. The TCN however is now licensed & regulated by NERC .• • • • Regulatory & anti competition contd… Gave rise to NERC licensed IPPs Now onwards.

thus ending the FMPs politically tinged tariff setting era.Regulatory & anti competition contd… • The EPSRA of 2005 transferred the powers to set electricity tariff to NERC. has been sold to the private sector in a percentage ratio determined by the NCP and implemented by the BPE . • Erstwhile NEPA privatized assets under the Holding Company name of PHCN.

licensing of NBET .NERC Regulation & anticompetition • Open access in Transmission and Distribution • Creation of the wholesale electricity spot market • Licensing of market settlement duo of SO & MO • Given the current fiscally deficiency of the market.

NERC anti-Competition rules • Market safeguards • Cross ownership prohibition • No generation company. distribution utility or stockholder/director thereof shall be allowed to hold share in the Transmission company or its concessionaire and vice versa • Fit & proper persons test for directors & management .

more than 50% of its total demand from its affiliate in generation. .NERC Regulation & anticompetition • Concentration of ownership limits • No company can own or control more than 30%of the installed capacity of a grid and/or 25% of the national installed capacity • Bilateral supply contracts • No distribution utility shall be allowed to source from bilateral power supply contracts.

innovations were envisioned to be introduced. so as to wean the NESI off bulk trading payment .finally • With the EPSRA 2005. segregation of sub-sectors • Provisions to safeguard competition will not be automatic or instantaneous. • Increase fiscal generally & confidence.g. • Hence the Transition Electricity Market (TEM) which is now been introduced • There are outstanding issues such as • How to effectively fund NELMCO.. e.

Off Shehu Shagari E-mail: info@nercng.THANK YOU Contact us at: Adamawa Plaza.nercng. Plot 1099 First Electricity on Demand . Central Business District. Abuja Website/info: www.

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