President Bola Tinubu’s assent, the other day, to the electricity bill passed in July 2022 seeking to repeal the Electricity and Power Sector Reform Act, 2005 is a welcome development. But it is just the beginning of a road that is certain to be rough and winding toward meeting the country’s electricity requirement. First is the need to generate power supply much beyond the dismal 4,500 megawatts that Nigeria has produced on average over the past 30 or so years. Next is to distribute the power generated seamlessly to the areas that need them. It is sad that even the little amount now produced is often so poorly distributed and wasted, due to poor distribution machinery. Beyond this, a whole lot of infrastructure is required nationwide for the generation, transmission, and distribution of electricity.
There is optimism that the new bill would improve the beleaguered electricity sub-sector if the sub-national authorities, companies, and capable individuals take advantage of the new law to install functional power-generating systems. Forward-looking Nigerians have long advocated this. The law now becomes the Electricity Act, 2023 which consolidates all legislations dealing with the electricity supply industry to provide an omnibus and ideal institutional framework to guide the post-privatisation phase of the Nigerian Electricity Supply Industry (NESI) and encourage private sector investments in the sector.
The primary aim of the bill is to create a comprehensive legal and institutional framework to guide NESI, de-monopolise the generation, transmission, and distribution of electricity at the national level, and empower states, companies, and individuals to generate, transmit and distribute electricity. States would also be able to issue licenses to private investors who have the ability to operate mini-grids and power plants within the state, but such state licenses are not to extend to inter-state or transnational distribution of electricity.
Nigeria’s constitution, as amended, provides for shared power between the federal and state governments in terms of making laws for electricity, but this has not been the practice on account of the Electricity Reform Act, which empowers NERC to carry out regulation across the country. The Electricity Act empowers NERC to regulate within Nigeria, without prejudice to the powers of the states to make laws and create electricity markets within those states, and to regulate those markets. It mandates how NERC transits regulatory responsibilities from itself to state regulators when they are established. Until that happens, NERC will continue to regulate electricity business exclusively carried out in those states.
Under the law, lawmakers are granted the power to carry out oversight responsibilities and function over the national electricity supply industry through its respective committees on power in the Senate and House of Representatives. This is to be carried out notwithstanding the supervisory powers of any government ministry over government-owned enterprises or other entities operating in the Nigerian electricity supply industry in which the government has not divested its equity holdings, irrespective of the ministry where such entities are placed for administrative supervision.
Under the Nigeria Electricity Bill, electricity generation licensees are obligated to meet renewable generation obligations as may be prescribed by NERC. As such, electricity-generating companies will be mandated to generate power from renewable energy sources, purchase power generated from renewable energy or procure any instrument representing renewable energy generation.
The Electricity Act also mandates the imposition of renewable purchase obligations on distribution or supply licensees. It states that anyone may construct, own or operate an undertaking for generating electricity not exceeding one megawatt (MW) in aggregate at a site or an undertaking for the distribution of electricity with a capacity not exceeding 100 kilowatts (KW) in aggregate at a site, or such other capacity as the Commission may determine from time to time, without a licence. Without a doubt, the Electricity Act is comprehensive in its provisions to make a difference between what obtains now and the ideal power supply situation in Nigeria. The challenge for the Tinubu administration, and of course the state governors, is to harness these provisions and leverage them to make the country’s electricity dream come true.
Nigeria’s journey to this current status started first with clarifying the position of the constitution that recognises joint regulatory powers leading to the constitutional amendment assented to in March by former President Muhammadu Buhari. The constitutional amendment seeks to decentralise electricity distribution, which many believe will lead to significant improvements in access to electricity across the country.
The amendment proposes that states can generate, distribute, and transmit power within their respective borders, which means that state governments will have more control over power generation and distribution in their states, thus making it easier to identify and address the challenges that have inhibited progress towards reliable electricity supply. Nigeria, with a population of over 200 million people, has been plagued by inadequate power supply for decades. According to the World Bank, the country has an installed generation capacity of over 13,000 MW but generates an average of 4,500 MW, which is grossly inadequate.
The new Act, it is believed, will help address the problem of grid instability, which has led to frequent blackouts. With a more decentralised power supply, states that are not connected to the national grid will have a better chance of generating their own power and connecting with neighbouring states. The move towards decentralised power supply is expected to have a significant impact on job creation. It is expected that decentralisation will create jobs in the production, distribution, and maintenance of power facilities, as well as in the development of new renewable energy sources.
Certainly, the new law provides the impetus for realisation of a dream whereby the country boasts of uninterrupted power supply nationwide. What the authorities should aim at is not just to make electricity abundant, but cheap and affordable to Nigerians who have always complained of being forced to pay for services not rendered. Therefore, one key assignment of government is to ensure that everyone is duly metered to ensure services and bills that are mutually commensurate. The current estimated billing system should be scrapped as it has no place in modern-day supply of electricity, and sources of waste in the supply of power should be identified and plugged in. Beyond these, there is a necessity to explore fully the potential of solar, wind, water, and other sources of electricity with a view to getting what is most applicable, suitable, and affordable for Nigeria. The success of the electricity supply will determine the extent of the country’s economic prosperity.
The Guardian
