The Lagos Sector Water Law 2004: A Critical Review

by by

Professor ‘Lanre Fagbohun, Professor ‘Lanre Fagbohun, Ph.DPh.D

Nigerian Institute of Advanced Legal StudiesNigerian Institute of Advanced Legal Studies

at the at the Retreat for Members of the Lagos State HouseRetreat for Members of the Lagos State House

of Assembly Committee on Environmentof Assembly Committee on Environment

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Structure of Water Sector LawPart I- The Lagos Water CorporationPart II- Regulatory CommissionPart II - Waste Water and Sewerage ServicesPart IV- Water Quality Standards and

Environmental IssuesPart V- State Water Sector Court and

Interpretation

144 sections and a Schedule

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Concept of Core Investor

“Core Investor” represents any person or Government that apply capital to the Corporation with controlling interest through money assets, shares, debentures …

– An investor is a person who allocates substantial capital with the expectation of a financial return.

Section 2.3 – The CEO and members of the Board shall be appointed by the Core Investor

—Need for a rethink of the provisions. In the last 10years it has assumed presence of a private investor.

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Tenure of Office of Members

Section 4 (2) – The CEO and other members of the Board shall hold office for a term of four years which may be renewable in accordance with the provisions of CAMA.

– CAMA operates by power of the general meeting to re-elect or reject directors and appoint new ones.

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Functions and Powers of the Corporation

Manage and regulate waste water and sewerage services in the State ___ Section 6 (e)

Control the sinking and operation of boreholes and the abstraction from underground water forming part of State water and making appropriate regulations relating thereto

– Section 7 (1)(m) Conflict of regulatory roles

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Concept of Wholly owned corporate subsidiary

Section 7 (4) _ The Corporation shall have power to assign any of its properties movable and immovable to a wholly owned corporate subsidiary for the purpose of carrying out any of its functions.

Section 83 listed all the subsidiaries - one of them is a company limited by guarantee, others are limited liability companies.

A wholly owned subsidiary is a company that is completely owned by another company (100% owned).

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The Group Managing Director

The CEO shall be the Chief Accounting officer of the Corporation and its subsidiaries and in the absence of a Board, he shall exercise all powers of the Board as contained in this Law …

Slippery slope provision that can be abused with ease.

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Recruitments Section 22 (5) – CEO is responsible for

personnel issues and personnel changes (appointments, recruitment, retrenchments) except for senior management which should be referred to the Board.

There is a widely accepted concept of Senior Management, but, in content it is not universal.

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Power to make regulations – Some Gaps

The Board may make regulations for …

a)fixing the rate and scale of charges payable for the water supplied by matter or otherwise within the State [subject to approval of the Commission] – S.26 (a)

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Responsibility of Board which Core Investor may perform

In the absence of a Board of Directors, and until such time that the Board of Directors under this Law is constituted the Core Investor … shall execute any document, exercise or perform any of the Board’s power excluding power to make regulations … -section 32.

This contradicts section 22(3) of the Law.

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Composition of Regulatory Commission

The Commission shall consist of five (5) voting members as follows:

(d) One member nominated by the regulatory advisor - Section 49 (d)

The functions of the Commission shall be to :

(f) Contract a qualified firm through competitive bidding procedures to act as regulator adviser to the Commission - Section 52 (1) (f)

The Regulatory Adviser shall be hired through a competitive and transparent bidding process at the discretion of the Commission - section 63 (2)

The Commissioner nominated by the Regulatory Adviser is prohibited from participating in any proceedings or decisions relating to the procurement of the Regulatory Adviser – section 63(4)

No clear distinction between the Commission and its Board; Unending confusion and complexities.

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Inconclusive Provisions

Section 74 – A determination of the Commission shall be made at the meeting constituted as required by section ???

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Offences and Penalties

The key task of a Regulatory Commission is to monitor the different Stakeholders operating in the Water Sector and ensure that they comply with all extant laws.

To carry out its functions effectively, it must have the ability to sanction for offences.

A glaring omission in this law is the lack of clear “Offences and Penalties” provision. There is a limit to “persuasion” and “barking”.

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Provisions Relating to Waste Water and Sewerage Services

The provisions of the law as is are totally not in tandem with the realities that the Regulatory Commission is constrained to contend with.

The governance framework and reporting lines must be clarified.

Regulatory Commission must be insulated from Ministerial politics, otherwise, it will never be able to act objectively.

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Need for Clear Distinction in Licences to be issued

Ground water abstraction:

– Water Corporation may issue licence for location, but, it should be the function of the Commission to regulate the activity.

This is the philosophy that should be properly clarified in the law for all the regulated entities.

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Water QualityThe quality of water to be delivered to the

public shall be required to be of World Health Organisation (WHO) recommended standards – Section 115(4).

This ought to be structured as a minimum standard in a way that will allow for the unique characteristics of Lagos local environment to indicate higher standards, if necessary.

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Offence of Supplying Water Unfit for Human Consumption

Subject to subsection (3) where the Corporation supplies water by means of pipes to any premises and that water is unfit for human consumption, the Corporation shall be guilty of an offence and liable on summary conviction to a fine not exceeding Five Hundred Thousand Naira only – section 124(1) – What is the goal of this fine??

– Where an individual is guilty of an offence by virtue of 124(1), the penalty shall be deemed to include imprisonment - (Not clear whether there is need for mens rea or it is strict liability) .

– Defences include that all reasonable steps and exercise of due diligence have been taken (section 124(3) ) – How is this to be proved/disproved?

Not likely to be effective.

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State Water Sector CourtSection 131(1) establishes a State Water

Court.

– The complexities as in the present instance where no such court exist ?

– Why not integrate with the regular court system?

– Training/Capacity Building for Judges in the area of Water Sector Law.

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Thank you

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