The Judiciary and Power Sector Reform

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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 RegulatoryCommission 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 presentlyundertaking functions relating to the generation,transmission, trading, distribution and bulk supply and

resa e o e ec r c y prev ous y un er a en y .• 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 andenabling environment

Enforcement of Laws, Standards , Guidelines and

Review of Laws in line with dynamics of the energylaws.

Training and Education

Endogenous Capacity building for the staff and personnelof NERC, PHCH Staff, stakeholders, Regulated Entities,Judicial Officers including judges, magistrates and lawofficers.

Provision of continuing trainings on power sector lawsand 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 marketstructure;

• Promote competition in the industry and secure private sectorparticipation in power and energy generation, distribution and supply;

• ,

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 TradingRe ulation 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 AccessRights 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,

. ,

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 NERCempowered 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’smanagement of the activities is achieved, notby 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 enforcedin the courts but, nonetheless, have enormousinfluence 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 suchas taxes, charges, subsidies or other market

, .

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 SectorReforms 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 andcompliance by the regulated energy and power regulations

• s n erpre a on o a a an n orma on o regu a e

energy and power issues.

• Influence of Interest Groups: Lobbyists ( Energyand Power Companies and major industrialoperators)

• 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 bysuch order should refer such question to the High Court.

• Jurisdiction: S. 49 gives jurisdiction to High Court but there is no definite provisiongranting exclusive jurisdiction to the Federal High Court. Does it mean that boththe state and federal high court have concurrent jurisdiction on the ElectricityReform 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 Challengeof Penalties.

• Challenge of Quasi-Judicial Functions under the Regulations. – e.g. power torehear 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 furtherenhanced by the inspectorate power of the NERC. Under

the Act, an official of the Commission is empowered tocarry out inspection and examination of books of theregulated companies. In furtherance of its investigative

ower, the Commission ma search, detain, examine books,

documents or other records found in the premises of acompany and confiscate items recovered from suspectwithout any warrant of arrest. The exercise of this powerwill necessitate the officials of the Commission to accessthe 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 wherethe 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 lawpurposively 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

.

certainly expand the role of the judiciary beyond the limitsset 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 easeprosecution 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 itsregulations strictly and boldly what happened

future in the energy sector.

• The judiciary must also recognise its role in

preserving and enforcing Energy Reform Lawpurposively for the benefit of all Nigerians.



Conclusion

• Thank you all for your attention.

The Judiciary and Power Sector Reform

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