In this interview with Chineme Okafor, the new chair of the Nigerian Electricity Regulatory Commission (NERC), Prof. James Momoh, who is reputed to be a first class electricity engineer with years of practice across the different value chains of the electricity industry across the world, states his optimism and resolve to help find solutions to some of the regulatory challenges of Nigeria’s power market. Excerpts.
What did you meet here at the NERC when you resumed?
I met a lot of good people and staff, as well as an energised commission that was very happy to receive me as its chair. I was very happy that I found myself at home where people were looking for a leader with commitment and vision to work and lead a change in the sector. I also met of course a commission that wants to make a difference in the affairs of the industry and people who are anxious to make a change on the issue of affordability and reliability of power. I found people who have been longing to make a difference and needed a leader to drive this, I met my equals and I think coming here isn’t a waste of time.
What then are you bringing on board, you talked about vision and leadership?
As a world class expert in power engineering, I bring discipline, integrity, innovation, and ability to think out of the box, formulate problems and know all the constraints and what it takes to solve them. Knowing that Nigeria as a whole needs reliable and secured power supply, I bring my skills on how to work with Discos, Gencos and transmission company, as well as leading the regulator help them achieve the mandate we have so that we can find a win-win solution. I also bring on board the fact that I have worked in the power industry as a researcher, professor, policy maker and administrator. My exposure cuts across the utility industry and research organisations. This allows me to know the different energy sources, how to manage demands, how to calculate costs, how to optimise the networks, how to ensure that we create an efficient power supply either on utility or small consumption points.
I also have the ability to think ahead on what can go wrong and this very serious because I am talking about foresights and how to anticipate and prevent rather than running around and correcting things.
I have designed things, I am one of the pioneers on smart micro grid systems and I was one of the first few authors to write a book on smart grid in America and I have developed pioneering books and tools on how to optimise networks, and developed artificial intelligence systems. I actually know how to move my works and not just talking but talking and doing. I am at home and coming to NERC is to me coming to bring my experience to contribute my quota to the development of the sector.
Two issues have continued to upset this sector: lack of a cost efficient tariff and seeming lack of independence of the regulator, do you agree with these and do they bother you?
Between 2015 and 2017, there was no commission, we had a commission but no commissioners and therefore no leadership to contribute to the debate. Now we have a commission and a chairman, we are going to engage, even though my colleagues have been engaging in terms of providing leadership to the industry, to make sure that the cost of power is understood and made clear to the customers, Gencos, Discos and TCN. We need to understand if it means, do I have to pay the actual price of power that accounts for losses, guarantee efficiency and reliability because we have to be on both sides of the coin. The question is at what cost? You have to make it cheap, reliable so that people will buy your service otherwise if it is too expensive people will not buy. We have to balance the equation – what am I willing to pay, how are you going to sell? It cannot be a one-sided market, we have to agree in a forum where the customers of different classes, Gencos, and Discos will be assembled and we will discuss what it costs to generate power in Nigeria given our incomes, GDP, the population we have and resources. I don’t want customers to go back to candles and diesel, I want everyone to use electricity and that is why I will appeal to everybody to talk straight about losses and how to reduce them. I don’t want to pay for losses, what we call ATC&C losses, we need to minimise our leakages. If we reduce leakages, find cheaper sources of energy and open up competition, hopefully everybody will come in and at that point you will be forced to minimise wastes and leakages as a service provider.
So, this cost reflective tariff is a big statement that has not been defined well in Nigeria and I want to define it one more time in Nigeria. I have put together four engineers in NERC and they are calculating very quickly what it costs to generate (for instance) one kilowatts of power to 180 million people if we all use it, what will it cost for 50 million people to use it and the mathematics will unfold the truth. We are going to bear in mind that there is a constant we will add and that is we don’t want operators to be out of business, we want them to make money at the end of the day but don’t make so much money that you will be out of business or I will not patronise you again, and don’t put all your energy in trying to collect money from small customers who are just turning on their lightbulbs and watching television only. Let’s encourage big businesses and manufacturing companies that will be happy to pay more and will turn the energy into money.
So this cost reflective tariff is an ongoing discussion and we will like to be a regulator that mediates between the customers and operators so that Nigeria’s power sector will be patronised. Again, we might ask for subsidy from the government to the market to make sure that nobody is left out. My comment is very clear, and that is, as a commission we will be the bridge between the customer and the operators.
There are three timescales for doing this. There are things we will do in a hurry to make sure the MYTO changes. I am not sure we are going to encourage a big change that will get the economy of the country in tumble or crisis and customers will be upset. No, I don’t think that will be what we will recommend, we are going to look at it properly and in timescale, maybe do a little change which is just so small so that everybody will be happy. Then we will ask for targets, we will ask Discos to increase their efficiencies, reliability and invest more in technology, and we as a commission will encourage new markets so that we won’t rely more on the Discos; embedded generation, mini grids, eligible markets, are the things we will encourage. We will divide our solutions in different timescales, maybe in the current timescale we will still rely on the Discos, but we will begin to encourage new businesses to come on board so the stress will not be on Discos, and over a long time, maybe the market will become competitive. We will also invest in new technologies that will reduce losses and encourage customers to use electricity efficiently, and at the end of the day it will balance out. It will not be a one-day event, there will be a systematic improvement in the system and investors will be asked to come in and more manufacturing companies will be in the country and overtime, targets will be reached.
Are all these dovetailing to November when you are expected to review the performance of the privatised power entities?
I don’t think we are waiting till November, we have committees set up since I have been here and that is parts of the things I met on ground that needs to be done. We have set up different studies to look at the cost of inefficiency both in collection and technical losses.
We have a group people also looking at customer care, who are worrying about waste also in different stations. We also have set up opportunity for us to respond to crisis very quickly in case of emergencies and loss of power in the country. Hopefully, with all these put together, we will be able to develop new indices that will allow us to compute reliability and efficiency. We will probably be able to make some recommendations to all our Discos, Gencos and TCN, that this is what we expect you to do, and we will give them targets that will measure their performance. We will also come up with intelligent measures that will reduce wastages especially at the consumers’ end, to make sure that the causes of poor power quality is minimised.
What will be your plan to get NERC up to date with the regulation of the market?
I made it very clear that if you work in NERC, you must be productive, engaged and continue to learn to be informed of technology and commercial changes. Trainings and workshops will be organised. Experts from abroad will be brought here to share knowledge with us. My network is very strong in this area, and I plan to very quickly propose workshops and knowledge exchanges. Our universities will be involved because we have good ideas that will solve the market problems and this is not going to be by the engineers and investors talking, the academia has to be engaged.
There is always a partnership between the academia and industry in America, so, I plan on that, and I will talk to a lot of my colleagues here to proffer solutions to the problems of the power market. We will work with the economists in Nigeria. It is my hope that the capacity will be improved to help solve the problems of the sector, we want to recommend how to solve future problems.
Are you optimistic about this industry?
There is big hope that if we work together as a country, investors and operators, there is hope in Nigeria. I am here and willing to encourage people to come here because we are ready to serve.