Part 9: Resolving Disputes in the Power Sector- the ‘New Kid on the Block’
The Making and Evolution of an Electricity Market: Unpacking the Nigerian Electricity Bill, 2021
In the eight part of the multi-part series that unpacks the Electricity Bill, 2021, the industry developments within the Bill relating to tariffs, subsidies, distribution franchising, electricity theft, etc., were highlighted alongside the implications for the industry.
In this ninth part and final part of the multi-part series, the innovative dispute resolution mechanisms as contained within the Bill are highlighted alongside the implications for the industry, in a bid to educate readers on the process, evolution and dynamics of electricity markets.[1]
The Bill establishes the Electricity Appeals Tribunal to be set up on a zonal basis by the Minister, with membership consisting of judicial and technical members. Judicial members are to be legal practitioners, while technical members are to be electrical/electronic engineers licensed by the Council for the Regulation of Engineering in Nigeria (COREN) and members of the Nigerian Society of Engineers or related disciplines as determined by the Minister.
The jurisdiction of the Tribunal as ascribed within the Bill permits the Tribunal to hear and determine any question of law or dispute relating to any decision or determination of the Commission regarding its operation and application of the Bill. This is a commendable development as the current provisions in the Electric Power Sector Reform Act (2005), gives the Commission the discretion to refer questions of law to the High Court as it relates to its orders or decisions. Although such questions of law are now to be referred to the Tribunal based on the provisions of the Bill, the discretionary powers vested on the Commission remain and should be made compulsory, in so far as the Tribunal possesses the institutional capacity and relevant know-how to handle the issues as referred.
The Chilean experience offers a workable model/case study reference for Nigeria. In Chile, following the amendment of the Chilean Electricity Law in 2004, a permanent ‘expert panel’ was established to resolve disputes between the regulator and the regulated companies (the panel also considers disputes arising between companies). A permanent panel was established rather than an ad-hoc one to ensure greater independence, consistency, and specialisation over time.
By the provisions of the Electricity Bill, aggrieved persons can appeal against decisions of the Commission within the stipulated timeframe and depending on the aggrieved person’s classification, whether as a consumer, licensee, non-licensed entity, Ministry, the Commission, or any other stakeholder in the industry, etc. The Tribunal can determine matters of law or both laws and facts referred to it for determination by any of the parties with a right to appeal ascribed within the Bill.
Commendably the Bill allows for remote/virtual hearings by the Tribunal. This requires robust technological tools and applications for seamless hearings and appeal processes.
The final decision of the Tribunal is enforceable as though it were a judgment of the Federal High Court following registration with the Chief Registrar of the Federal High Court by the enforcing party. Dissatisfied parties with the decision of the Tribunal can appeal to the Federal High Court on points of law.
The Tribunal is however to encourage parties appearing before it to explore the settlement of disputes through alternative dispute resolution mechanisms such as arbitration, mediation, negotiation, etc., as prescribed under the Market Rules and the Tribunal is to take a minimalist or non-interventionist approach based on any decisions reached stemming from the dispute resolution mechanisms within the Market Rules.
The Tribunal is empowered to make rules regulating its procedures and is empowered by the Bill to review its decisions and set aside its decisions or orders; thus, becoming an umpire in its own case; which is reminiscent of the much criticised powers currently ascribed to the Commission within the provisions of EPSRA. The Minister on the other hand is empowered to approve rules prescribing the procedure to be followed in the conduct of appeals before the Tribunal as proposed by members of the Tribunal.
Concluding Remarks
The successful resolution of disputes will reduce the high regulatory risks currently deterring investment in the power sector and will in effect pave the way for private sector involvement in the sector. An unbiased and stable regulatory regime is essential for attracting the much needed investment into the sector as was the case in Chile. Overall, the reform process in Chile can be termed as successful since it allowed infrastructure supply to keep up with rapid economic growth primarily based on private investment. Success could be attributed to several causes, including macroeconomic and political stability, existence of clear rules, solid institutions, and sound regulations. The mechanisms used to solve regulatory disputes also played a role in reducing regulatory risk and hence in making it more attractive for domestic and foreign investors to participate in the infrastructure sectors.
However, in the Nigerian context, for such panels or tribunals to function effectively, there is an urgent need for a judicial review of the laws and regulations within the Nigerian Electricity Supply Industry (NESI), which the Electricity Bill affords a golden opportunity.
Key Takeaways
Ø Whilst the creation of the Tribunal is commendable, adequate institutional capacity with a high level of autonomy is essential to resolve disputes within the power sector. The level of influence by the Minister must be intentionally minimised for fair and balanced resolution of disputes.
Ø Ideally, the Tribunal should be either an ad hoc or permanent entity affiliated with neither the government nor the sector regulator and should be constituted/called on to provide a decision or opinion on a dispute. The Chilean experience affords useful lessons that Nigeria can adopt as ‘expert panels’ in Chile appear to have been effective in resolving regulatory conflicts and other forms of disputes. Chile established expert panels as part of its regulatory regime to promote private sector participation in several of its regulated industries including power. The Chilean Electricity Law was amended in 2004, partly to modernise the mechanism for resolving regulatory disputes. It is worthy to note that the decisions of the panel are binding, thus strengthening its power of conflict resolution.
Ø Remote/Virtual hearings as proposed by the Bill; though commendable, requires robust technological tools and applications for seamless hearings and appeal processes.
Ø Alternative Dispute Resolution mechanisms should be encouraged by the Tribunal for speedy dispensation and settlement of issues, with hearings by the Tribunal as a fall back option in the event parties are unable to resolve disputes amicably.
Ø For the attainment of fairness, the Tribunal should not be the final arbiter in its own case by reviewing its decisions and/or setting aside its decisions/orders.
Ø For expert panels or tribunals to function effectively in the Nigerian context, there is an urgent need for a judicial review of the laws and regulations within the NESI, which the Electricity Bill affords a golden opportunity.
[1] Electricity markets in the context of this brief speaks to the sector view as a whole, as opposed to the trading of electricity which exists as an activity within the sector.