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Wednesday 16 January 2019
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Namibian, Uganda lead the way

This first-ever Electricity Regulatory Index has ranked Namibia as one of the countries with the most developed electricity regulatory sectors on the African continent.
The Report, released on the side-lines of the 2018 Africa Energy Forum (AEF) in Mauritius, measures the level of development of regulatory frameworks in 15 African countries and examines their impact on the performance of their respective electricity sectors. ERI also identifies areas in which improvement is most needed in Cameroon, Cote d’Ivoire, Gambia, Ghana, Kenya, Lesotho, Malawi, Namibia, Nigeria, Senegal, South Africa, Tanzania, Togo, Uganda, and Zimbabwe.
The index provides regulators a tool with which they may begin assessing current progress compared to their peers as well as against international best practice. For other stakeholders, it serves as a useful tool to better understand the context within which they are working or investing.
According to the report, the results highlight that well developed electricity regulatory systems exist in a majority of the 15 sample countries.
“This is largely due to the fact that almost all countries in the sample have instituted legal and regulatory frameworks establishing electricity sector regulators. Generally, however, the capacity to more effectively carry out their required mandates and make the maximum impact on the electricity sector is what separated the top performers from the rest.”
Uganda and Namibia, the report states, achieved the highest ERI scores because the actions and decisions of their regulators had a positive influence on the utilities’ performance.
It stated that weaknesses were identified in the moderate to low performing countries with respect to the effectiveness and impact of regulatory actions.
Critical areas of improvement include decision making in tariff setting, technical regulation, development of appropriate licensing framework to support off-grid systems, and commercial regulations.
“The main goal with the ERI is to incite key stakeholders in the African power sector to address regulatory performance and the gaps identified in the study,” said Amadou Hott, Vice President, Power, Energy Climate and Green Growth Complex at the African Development Bank.
The ERI is expected to become a benchmarking tool that will track progress made by African countries as they align the regulatory frameworks governing their electricity sectors with international standards and best practices.
The African Forum for Utilities Regulators (AFUR) described the Index as a useful tool for improving electricity regulation and pledged to work with the bank to sustain the initiative.
Debbie Roets, Executive Secretary of AFUR said: “We are glad that the African Development Bank has indicated that it will produce new, updated Index results on an annual basis and will seek to encourage more countries to participate in subsequent editions. AFUR will provide the needed support.”
The Index pointed to how the past two decades had witnessed a transformation of the electricity market in Africa following the gradual opening, liberalisation, and reform of national electricity markets.
It was observed that regulators have a fundamental role in attracting private investment into national energy and power assets. Investors seek transparency, predictability and good governance in sectors in which they operate, all of which well-developed regulators are expected to provide.
Periodic evaluation of regulators as practiced in many developed countries is important as it enables early identification of problems or gaps so that corrective actions can be implemented as soon as possible.
“Significant progress has been made in each of the areas covered by the study. However, more efforts are required to facilitate the type of environment in which private sector actors would feel comfortable investing. The African Development Bank will work together with its partners in regional member countries to provide the support, advice and assistance required to align regulation in the energy sector to international best practice,” said Wale Shonibare, the Bank’s Director, Energy Financial Solutions, Policy and Regulation Department.
The Report noted: “On average, well developed electricity regulatory governance systems exist in all fifteen sample countries. However, there is room for improvement with respect to accountability and independence to align with international best practices often necessary to attract future investment into the sector.
“Although many sample countries had established the legal and institutional frameworks for electricity sector regulation, regulators are yet to build an adequate level of capacity and develop appropriate mechanisms to effectively carry out their mandates and make decisions under key aspects of regulatory substance.
“In spite of falling well short of international best practices, regulators in the sample countries have a moderately positive impact in the sector, especially when it comes to measures being instituted to promote energy access and enhance commercial quality of electricity to consumers; however on average, regulators faltered most with respect to instituting cost-reflective tariffs.”
This is despite the fact that on average regulators faltered most with respect to instituting cost-reflective tariffs.
The survey also examined the level of operational and financial (budgetary) independence of the regulators. In order to determine potential conflict of interest in terms of decision making, the survey sought information regarding provisions in the regulatory acts/laws that prohibit commissioners.
The Electricity Regulatory Index (ERI) is a composite index that aims to measure the level of development of an African country’s electricity regulatory sector based upon industry best practice. It is composed of three sub-indexes such as: regulatory governance index, regulatory substance index, and regulatory outcome index.
Continental regulatory bodies continue to see an increase in electricity demand, putting more pressure on regulators to ensure that electricity producers and suppliers do not abuse consumers.
The national results of the RGI for the eight main indicators show that 33% of the regulators recorded values in the green zone and 67% scored values in the yellow zone. Given that the majority of regulators fall within the yellow zone, there is still room for improvement, particularly on independence, accountability, participation and open access to information.
The report said regulators of the countries in which technical standards, codes, frameworks and mechanisms are not in place must take urgent steps to develop these fundamental technical regulation documents and also build the technical capacity of staff.
Mitigating regulatory capture to improve independence has also been highlighted in the report.
“Given the effects of the Independence indicator’s low score on the overall Regulatory Governance score, it is recommended that a two-step process be adopted. The first stage of this process involves ensuring that suitably qualified candidates are selected through a competitive process undertaken by the legislature instead of the sector minister. Any suitable candidate must then be nominated to the executive for appointment. This will help ensure that newly appointed commissioners are insulated from interference when fulfilling their mandate,” it said.




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