The African Development Bank (AfDB) Group is advocating for the creation of structures that would make Energy Sector Regulatory institutions autonomous instead of their current status which gives room for interference by some stakeholders.
Speaking in Accra, capital of Ghana, last Thursday, at the 2nd Regulatory Conversation organised by the Public Utilities Regulatory Commission (PURC), Mr. Wale Shonibare, Director for Energy Financial Solutions, Policy & Regulations at African Development Bank Group noted that regulators in Africa are susceptible to influence from governments and infiltration from stakeholders, especially dominant state-owned vertical utilities that have, in most cases, existed years before the establishment of their regulatory institution.
He said these stakeholders often influence the decisions and actions of regulators.
“This influence on regulators originates from situations where the government appoints (or dismisses) commissioners and CEOs of regulatory entities and allocates or approves budgets to fund regulatory operations.
“In about 95% of countries assessed by the Electricity Regulatory Index, the government appoints (and dismisses) CEOs and Board members of regulatory agencies, in some cases, with no clear term of office, thus, exposing them to the vagaries of the political cycle. This gives room for regulatory interference by the government,” he said.
He continued that in over 70 per cent of ERI countries surveyed, there are no laws in the primary legislation that prohibit the commissioners or CEOs of regulatory institutions from accepting employment in the regulated utility company immediately after the end of their term in office (not even with cooling off periods).
To address the issue, Mr. Wale Shonibare said efforts should be directed at harnessing the synergies between regulators and policymakers while safeguarding the decision-making independence of the regulator through appropriate legislation.
He said sustainable funding source for regulatory activities (such as licence fees and regulatory levies) is also fundamental to regulatory independence to ensure that regulators do not have to rely too much on government subvention.
Mr Shonibare commended PURC for the tremendous progress it has made in the regulatory landscape of Ghana and Africa.
He said AfDB is proud to have PURC as one of its key partners and commits to continue collaborating with PURC on regulatory initiatives and dialogue.
According to him, the Bank has been following with keen interest, in regulatory developments and trends in Ghana and acknowledged some important initiatives by PURC that are pushing the frontiers of good regulatory practice.
He said these initiatives include the recent establishment of the Centre of Excellence for Electricity Regulation in collaboration with the Ghana Institute of Management and Public Administration (GIMPA), the publication of the rationale behind tariff setting, the publication of the utility performance index and the Publication of the PPA register among others.
Source: https://energynewsafrica.com