8 November 2012

Southern Africa: More Support for Energy Regulation? - SADC Urges Member States

Windhoek — The Southern Africa Development Community (SADC) Secretariat is urging governments in the region to provide political support for electricity and energy regulation, while allowing regulators to operate as independently as practically possible.

The remarks were made at the meeting of the Regional Electricity Regulators Association of Southern Africa (RERA), currently taking place in Windhoek. RERA is celebrating its 10th anniversary this year.

According to Odala Matupa, who represented the SADC Secretariat, SADC recognises that regulation in its nature is a government responsibility and that regulators have a delegated responsibility from their respective governments. "SADC also recognises that regulatory independence is complex and that there is a delicate balance to be achieved to ensure independence from regulated service providers, independence from consumers, and independence from political influence in decision-making and financing of the regulator," Matupa told the ten RERA members states.

According to Matupa, experience has shown that independence from the political process is the most difficult to achieve and that commitment of governments to the independence of regulatory agencies is the single most important factor in determining the ability of agencies to maintain credibility and objectivity.

"As the saying goes: the regulator can only be as independent as the government wants them to be," the representative added. He said one of the challenges in attracting investments in the electricity sector is the inability of electricity tariffs to provide the right signals for promoting new investments and encouraging efficient use of electricity.

To address this challenge, SADC adopted the principle of cost reflective tariffs in 2004 and reaffirmed them in 2008. The SADC Council of Ministers urged member states to move towards cost reflective tariffs within a period of five years (by 2013). RERA has also been tasked to track this migration and to report progress.

In the meantime, Matupa said, the SADC Secretariat would continue making sustained efforts to sensitise governments on the value and benefits of an approach to tariff adjustment that is in the best interest of the countries in the region in the long term. I

n addition, Matupa said, SADC has noted the paradigm shift in the institutional design of electricity regulation in the region and beyond.

SADC member states are migrating from regulating electricity alone to sector-wide energy regulation or even further, to become multi-sector regulators.

"This is so to achieve economies of scope and to ensure efficiency and effectiveness in regulation of the affected industries," he added.

Matupa said another dimension of the shift, which needs to be explored further is whether RERA should transform into a regional regulator. "To avoid overlaps, to prevent creating a plethora of SADC subsidiary organisations and for efficiency and effectiveness, SADC would support any changes in the philosophy of RERA with a view to broaden its scope in the most effective manner," Matupa pledged.

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