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THE JUDICIARY AND POWER

SECTOR REFORM
Hon. Justice Tijjani Abubakar
Judge, Federal High Court of Nigeria,
Port Harcourt.
Text of paper delivered at a seminar organised by Nigerian Electricity Regulatory
Commission in collaboration with the National Judicial Institute at Crystal
Gardens Hotel, Kaduna on 13th July, 2010
Genesis of Power and Energy Reform
• Incessant power failure and consumers
dissatisfaction arising generally from:
• Lack of Capital for Expansion;
• State monopoly of power and energy generation,
transmission, distribution and supply;
• Corruption and Mismanagement by the State’s
Power institutions such as ECN, NEPA.
• Increased Population and Energy Demand;
• Lack of Competitive Energy Law.
Highlights of the Reform
• Enactment of the Electricity Power Sector Reform Act.
• Establishment of PHCN – a special purpose state-
owned private company limited by shares presently
undertaking functions relating to the generation,
transmission, trading, distribution and bulk supply and
resale of electricity previously undertaken by NEPA.
• Establishment of Nigerian Electricity Regulatory
Commission.
• Licensing of Independent Power Generation,
Transmission, Distribution and Supply Companies.
• Multiple Regulations to regulate licensing,
transmission and distribution of power and energy.
Regulatory Models for Achieving Sustainable
Energy Production and Distribution
 Legal
 Command & Control Strategies
 Laws, Regulations and Guidelines
 Establishment of Institutions e.g. Courts, NERC,
Personnel & Provisions of infrastructures and
enabling environment
 Enforcement of Laws, Standards , Guidelines and
Regulations
 Review of Laws in line with dynamics of the energy
laws.

 Training and Education


 Endogenous Capacity building for the staff and personnel
of NERC, PHCH Staff, stakeholders, Regulated Entities,
Judicial Officers including judges, magistrates and law
officers.
 Provision of continuing trainings on power sector laws
and regulations
POWERS OF NERC
• Section 32(1) & 2 and 96 of the Act invests the Commission, as the sole
regulatory agency with wide powers, inter alia to:
• Create, promote and preserve efficient energy industry and market
structure;
• Promote competition in the industry and secure private sector
participation in power and energy generation, distribution and supply;
• Establish and enforce of fair and efficient energy codes, standards and
regulations;
• Monitoring and Inspectorate powers;
• License and Regulate operators in power generation, system operation,
distribution and trading of electricity;
• Protect Consumers in terms of fair tariffs, adequate supply of electricity
and connection of electricity to consumers.
• The Act created several offences under Section 93 and imposes several
penalties under section 94 of the Act.
Energy Regulations
• S.97 empower the Commission to make regulations on
expansive matters listed in section 97(2).
• Existing regulations include:
– Regulation for the Application for Licence (Generation,
Transmission, System Operations, Distribution and Trading
Regulation) 2010.
– Regulation for Captive Power (Generation) Regulation, 2008.
– Connection and Disconnection Procedures for Electricity
Services,
– Customers Service Standards for Performance for Distribution
Companies, 2007.
– Reporting Compliance Regulation, 2009.
– Draft Consultative Paper on Acquisition of Land And Access
Rights for Power Projects in Nigeria
Voluntary Compliance
• Voluntary Compliance
• Self-Regulation by Industry and Self-Evaluation
• Environmental Audits
• Cooperation
• Moratorium to comply with standards, codes,
regulations and laws made by the Commission.
• Promotion of Voluntary compliance strategies
• Encouragement of Private Entities to certify
compliance with regulations and laws
Regulation and Market Failure Theory
• Governmental intervention to correct market failure may take one of
the forms: regulation, self-regulation and economic instruments.
Regulation effectively vests the ownership of the resources in which
the energy is to be generated, transmitted, distributed and supplied
such as air, land or water, in the State. Section 44 199 Constitution,
EPSR Act. Activities that can catalyse the generation, transmission and
distribution of power could be controlled, through the instrumentality
of primary or secondary legislation, unless carried on with the
permission of the State. It may be in form of promulgation of a binding
set of rules (e.g. legislation or administrative regulation, executive
directives) to be applied by a statutory body, in this case NERC
empowered for this purpose or other modes of influence, for instance,
the supply of information or other techniques in order to promote and
protect both public and private interests. It is controlled by rules.
Self-Regulation Option
• Self-regulation leaves the control in the hands
of those carrying on the activities. State’s
management of the activities is achieved, not
by rules, but through persuasion, through
reliance on self-interest and by tertiary rules.
Tertiary rules, comprising circulars, codes of
practices and guidance notes, do not create
rights or duties that can be directly enforced
in the courts but, nonetheless, have enormous
influence on practice.
Voluntary Compliance
• Voluntary Compliance
• Self-Regulation by Industry and Self-Evaluation
• Environmental Audits
• Cooperation
• Moratorium to comply with standards, codes,
regulations and laws made by the Commission.
• Promotion of Voluntary compliance strategies
• Encouragement of Private Entities to certify
compliance with regulations and laws
Economic Incentives Option
• Economic incentives seek to encourage
desired behaviour by financial incentives such
as taxes, charges, subsidies or other market
mechanisms, rather than by legal compulsion.
All the three forms of intervention have the
same objective: to bring about behavioural
change so as to attain a socially acceptable
form of activity.
Potential Regulatory Imperfections That
Might Entail Judicial Intervention
Multiple Laws on Power and Energy:
Framework legislation on energy such as Power Sector
Reforms Act, several Regulations,
Under and over regulation
Multiple Regulatory Institutions :
 PHCN, Ministerial Oversight Power, NERC, Existing
Regulations under NEPA Act incorporated into the
energy laws,
Regulatory Imperfections
• Information Shortcoming
• Insufficient data and information on major energy and
power problems sought to be regulated.
• Insufficient information about the contemporary
methodologies for assessment, identification and
compliance by the regulated energy and power
regulations
• Misinterpretation of data and information of regulated
energy and power issues.

• Influence of Interest Groups: Lobbyists ( Energy


and Power Companies and major industrial
operators)
• Nature of Penalties
• Bureaucracy and Corruption
• Lack of Political Will to prosecute Offenders
Institutional Disconnect
Manpower Constraints
 Insufficient Legal and Judicial officers experienced in energy law;
Energy Experts

• Finance
• Corruption
Role of Judiciary in Energy and Power
Sector Reform, Act.
• Interpretation of the Act, Regulations, Standards and Code. section 49 which
requires the questions of law arising from an order or decision of the Commission,
the Commission, suo motu or at the request of any person directly affected by
such order should refer such question to the High Court.
• Jurisdiction: S. 49 gives jurisdiction to High Court but there is no definite provision
granting exclusive jurisdiction to the Federal High Court. Does it mean that both
the state and federal high court have concurrent jurisdiction on the Electricity
Reform Act and regulation made thereof?
• Cases bordering on Grant, Refusal and Revocation of Permits
• Non Disclosure of Material Information.
• Investigative and Inspectorate Powers.
• Enforcement of Penalties – Problem of Proof and Evidential Matters and Challenge
of Penalties.
• Challenge of Quasi-Judicial Functions under the Regulations. – e.g. power to
rehear appeal over decision to grant, refusal or revoke permits.
• Adjudicative power under section 6(6) of the 1999 Constitution.
• Power of the Court under ICPC and EFCC Acts.
Investigative and Inspectorate Powers
• The regulatory oversight over electricity power is further
enhanced by the inspectorate power of the NERC. Under
the Act, an official of the Commission is empowered to
carry out inspection and examination of books of the
regulated companies. In furtherance of its investigative
power, the Commission may search, detain, examine books,
documents or other records found in the premises of a
company and confiscate items recovered from suspect
without any warrant of arrest. The exercise of this power
will necessitate the officials of the Commission to access
the premises of the suspect without notification. In most
cases, key evidence will include the analysis of a sample of
items taken by the Commission from the premises where
the offensive items are kept.
Way Forward
 Capturing of data for regulatory and enforcement
purposes.
 Monitoring and Evaluation of Policies and Laws
 Tracking violators of the energy laws .
 Regular follow-up actions on
 Corporate Energy Audits
 Promotion of Renewable Energy
 Applying Polluter Pay Principle
 Reforms of Energy Law
 Reappraisal of Energy Law Compliance Strategies
 Prompt, effective and efficient prosecution of
defaulters.
Way Forward
 Judicial involvement can make a unique contribution by
ensuring compliance with our energy and power law.
Consequently, judicial interpretation of our energy law
purposively would not amount to the usurpation of
legislative or executive roles; nor would it force a court
invariably to give in to the demands of regulated entities and
consumers allowing it to be captured by them. It would
certainly expand the role of the judiciary beyond the limits
set by those who seek to restrict it to the consideration of
the procedural rationality of decisions or to policy
implementation rather than formulation and to secure
harmonious and efficient implementation of the law for
overall benefit of the citizens and nation at large.
Way forward
• Reducing the level of corruption.
• Appointment and Training of Competent and Relevant
professionals in energy and power sector.
• Acquisition of modern technology to assess power
consumption such as Prepaid Meters.
• Provision of Enabling Infrastructure.
• Continuous training of legal and judicial officers for ease
prosecution of violators of energy and power laws.
Way Forward
 Integrating energy and power conservation values into
the psyche of Nigerian through:
 Social mobilisation and public participation.
 Education and Seminars
 Public Participation – Agenda 21
 Right to participate in decision making, e.g.
Public hearing
 Right to Know
 Proper dissemination of energy and power
regulations and information, rules and
guidelines particularly in their local languages,
energy and power educational programs on
radio and television.
Conclusion
• It must be noted, however, that unless the
NERC takes proactive steps to enforce its
regulations strictly and boldly what happened
in the banking sector may occur in the nearest
future in the energy sector.
• The judiciary must also recognise its role in
preserving and enforcing Energy Reform Law
purposively for the benefit of all Nigerians.
Conclusion
• Thank you all for your attention.