Regulators must champion resilience in utility sector – AfDB Director

The Director for Energy Financial Solutions, Policy and Regulation at the African Development Bank (AfDB), Wale Shonibare has called for effective regulations to help utility providers successfully navigate the current economic turbulence and energy transition process.

He explained that the utility sector, particularly the power industry, was saddled with numerous challenges including inefficient revenue collection or revenue losses and rising energy sector debt. 

He revealed this at the second regulatory conversation organised by the Public Utilities Regulatory Commission (PURC) in Accra themed: “The regulator in an era of economic turbulence and the energy transition: Lessons from the past and a guide for the future.”
 
He explained that the PURC in its oversight role over firms in the power generation, electricity distribution and transmission value chain, as well as water utilities needed to pursue far-sighted and effective regulations which promote business sustainability during the ongoing global economic shocks. 
 
He stated that prudent and strong regulations could lay sound foundations for players within the sector to be competitive, agile and profitable.
 
“The relevance of regulators and their role in sustaining the energy sector, particularly in difficult times, was underlined during the COVID-19 pandemic and associated economic challenges. Regulators are to champion the building of resilience in the sector to withstand some of these shocks, and one sure way to do that is to take charge of the energy transition agenda. Strong regulatory support is required for a smooth energy transition,” he stressed. 
 
On the role of strong regulators and prudent regulations in helping Ghana and the African continent achieve a just and equitable energy, he said “Energy transition pathways are country-specific and should be driven by country-specific policy and regulatory interventions. Countries should identify optimal pathways and reflect this in their energy transition plans, and not adopt a one model fit-for-all approach as happened in the standard model for power sector reforms.”
 
Speaking on tariffs, he stated that the PURC ought to ensure efficiency and innovation without restricting itself to the point of discouraging the adoption of new business models and technologies.

On strategies to improve the regulatory governance framework of the PURC, he called for the amendment of the Public Utilities Regulatory Act 1997 (Act 538), to prevent Commissioners or Executive Secretaries from being appointed and to reduce the level of financial influence from the government on regulators.
 
“This can be achieved by amending laws to remove them from government budgets and assigning levies and fees with levels approved by parliament as the source of funds for the regulatory authority. We should also establish an independent governance structure for the regulatory authority in the sector, rather than attaching them to energy ministries.,” he advocated."