LET’S LECTURE: The Politics of the New Electricity Law

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On Thursday, September 24, 2015, the House of Representatives passed the 2015 Electricity Law of Liberia, following passage of the same bill by the Liberian Senate exactly the week before. The good news is that a law has been passed essentially opening the Liberian electricity market to private investors, breaking a 40 plus year monopoly enjoyed by the state-owned electricity company, the Liberia Electricity Corporation (LEC), and providing an avenue to solve Liberia’s two decades chronic electricity shortage.

That is the good news. Brescelco, an NGO founded by me in December 2014, has achieved in 9 months of robust public advocacy what the Sirleaf Administration has failed to accomplish in 9 years, with all the might of state and donor resources behind it. Our achievement was possible because of strong public support from the Liberian people and equally strong support from the US government, which laid down a game-changing ultimatum to the Liberian government in the waning days of this marathon campaign. It essentially told GOL that it would not disburse a US$250 million grant that was to come its way upon signature in October of the country’s first Millenium Challenge Compact unless electricity reform legislation was passed.

This is no rumour. Speaker Alex Tyler himself told me this in a meeting about a month ago. I of course knew about Uncle Sam’s conditionality but I acted like it was all news to me. Speaker Tyler went on to tell me that if it meant extending their session (the Legislature was supposed to have gone on recess on September 1st), they would in order to pass the necessary legislation so as not to lose the US$250 million. Thank you, Uncle Sam!

The bad news is that the law passed suffers from several defects, which the Legislature was told about in a 2-page Brescelco petition addressed to Speaker Tyler following a citizens’ march on the Capitol on September 22nd.

The most serious defect is that the powers of the independent regulator are placed in the hands of the Ministry of Lands, Mines & Energy. Apologists for this piece of tomfoolery justify it as a temporary measure, a two-year transition during which time capacity building and other good things will be put in place while the regulator is being “incubated” in the ministry.

The problem with that logic is that the ministry does not have single person with expertise or experience in electricity regulation. Senator Albert Chie, chairman of the Senate energy committee, made that observation during the August 26th hearing on the Brescelco bill (submitted to the Senate in May) and the Administration’s bill (submitted in July) before he somersaulted just before passage of the Administration’s version on September 17th.

Moreover, the ministry has no money in its budget to support the independent regulator. The funding is reportedly coming from a US$30 million grant that the European Union and Norwegian government will be making available to support the regulator over 5 years. So, the expertise for capacity building will be coming from the donors and the money for the regulator will be coming from the donors. So, exactly what value does the ministry bring to the table? The answer is “none”.

President Sirleaf and her gang just want to get their hands on that donor money. If the regulator is on its own, with its own offices, staff and own identity from Day 1, as it should be, the donor money will flow directly to the regulator, with little chance for chopping. If, however, the regulator is “warehoused” in the ministry, then the donor money will necessarily flow through the ministry, and who knows what shenanigans the Administration will be able to get up to. The two-year transitional period they have asked for has a suspicious coincidence to the 2017 election calendar.

The second reason why it is a bad idea for the ministry to serve as regulator, even for an interim period, is that the Liberian Government, through its ownership of LEC, will be placed in the enviable position of being referee and player at the same time.

The regulator (the referee), at all times, is supposed to be independent of the government and of the electricity companies.

The next 12 months will tell whether this interim arrangement will work. It is entirely possible that some private sector investors will decide that they do not want to play in a game in which the referee is also a player. I hope we skeptics will be proven wrong and investors will come. Otherwise, this whole exercise will have been a waste of time.

If investors come forward and apply for licenses to produce and sell electricity and are awarded licences, then all is well and good. But if the ministry denies them, then this matter may have to be settled in court. Under our system of government, the Legislature may pass all the laws it wants. But it is left to our Judiciary to decide whether or not those laws pass constitutional muster. The Legislature has no say in that matter. Thank God for separation of powers!

The writer is a certified public accountant and a businessman. He can be reached at ([email protected]).

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