Lagos, Kano, and 10 other states have finalized plans to begin producing electricity in their own states in line with the Electricity Act 2023.
The PUNCH learned on Thursday that some of these states have created their own laws for electricity markets and are waiting for approval from the Nigerian Electricity Regulatory Commission to have separate regulatory bodies from the NERC owned by the Federal Government.
As the states intensify efforts to generate electricity, the Federal Government's 240 per cent increase in power tariffs for Band A consumers with 20-hour electricity sparked more criticisms on Thursday.
Various groups, including the Petroleum and Natural Gas Senior Staff Associations of Nigeria, civil society organizations and the Nigeria Electricity Consumer Advocacy Network, cautioned that the hike would worsen the situation for Nigerians.
The subsidy on electricity has been fully removed from the tariff paid by power consumers in the Band A category, who make up about 15 per cent of the total number of power users across the country.
The government, through the NERC, announced the increase in the electricity bill on Wednesday, stating that those affected will now pay a tariff of N225 per kilowatt-hour, up from the previous rate of N68/kWh, an increase of about 240 percent.
Nevertheless, there are strong indications that many states are leveraging the new Electricity Act to establish their own electricity generation companies.
In June 2023, President Bola Tinubu signed a new Electricity Act into law, responding to the calls of Nigerians for reforms in the power sector and its removal from the exclusive list, to empower states to generate, transmit, and distribute electricity within their jurisdiction. This, Nigerians believe, would help provide lasting solutions to the electricity problems in Nigeria.
The PUNCH reports that the new law replaces the 2005 Electricity and Power Sector Reform Act as it aims to encourage private sector investments in the power sector. It provides for a comprehensive integrated resource plan and policy that acknowledges all sources for the generation, transmission, and distribution of electricity.
Electricity Act
The new act allows the state electricity board or any state authority, by any name, to issue licenses for mini-grids and establish the framework for the operation of such licensees. With this, the Federal Government has successfully removed electricity from the exclusive list, enabling states and private individuals to invest in the sector.
Although a state can regulate its electricity market by granting licenses to private investors to operate mini-grids and power plants within the state, the act specifies that until a state has enacted its electricity market laws, the NERC will continue to regulate electricity businesses in such states.
Internal sources at the NERC informed The PUNCH that at least 12 of the 36 Nigerian states were poised to have their own independent electricity regulatory commissions following the enactment of the 2023 Electricity Act.
It was reliably gathered that the states had requested from the NERC to have independence in regulating their electricity markets without the involvement of the Federal Government commission.
The NERC official, who spoke on the condition of anonymity due to not being allowed to speak on the issue, suggested that the NERC, presently in charge of regulating the Nigerian electricity market, must shift regulatory responsibilities from itself to state regulators once they are established.
“This means that, until a state has passed its electricity market laws, NERC will continue to regulate electricity businesses in such states. 12 states have applied to have their regulatory commissions and once the necessary things are done, the NERC will no longer regulate electricity in those states.
The states will be on their own. That will allow them to produce, send, and distribute power within their states only. Some of them who have been generating power before the act can now commercialise it and even grant licences to investors to invest in their states,” the source said anonymously.
Another source said, “I can confirm that 12 states have applied to have their regulatory bodies. But I can’t give you the details. Our legal team is still working on the requests by the states.”
Similarly, a source close to the Minister of Power, Adebayo Adelabu, confided in one of our correspondents that 12 states were ready to start generating electricity in their states, saying more states should follow suit to solve the nation’s electricity challenges.
The PUNCH reports that Nigerians have continued to suffer under a worsening power sector overseen by the Federal Government for many years. On many occasions, the national power grid keeps collapsing, causing blackouts and affecting businesses.
The power grid collapsed 46 times in six years, according to a report by the International Energy Agency.
As a way of ending the power problems in their areas, some states seem to be doing everything possible. As of February, checks with the Ministry of Power revealed that Lagos, Edo, Kaduna, Enugu, and Oyo have signed their electricity laws.
Ekiti project
Ekiti State Commissioner for Information, Taiwo Olatunbosun, said that the state government had enacted the Electricity Law, stating that it had been generating and transmitting electricity through the Independent Power Project.
Olatunbosun said, “We have enacted the Electricity Law here in Ekiti State. The IPP that we have is doing well. The state government plans to upgrade it to 5MW and from there, we improve and establish some other areas.
“The places and businesses the IPP is presently servicing include the Government House, government offices, State Secretariat, Ekiti State University Teaching Hospital and we are extending to Ekiti State University as well. It is equally servicing some conglomerates and other people who are already requesting for it”.
The commissioner said that the present administration in the state would continue to provide strategic interventions in electricity and other infrastructural development “to make Ekiti a destination for investors and uplifting the social life of our people and others promoting their business without any form of challenges that power generation may cause now and in the nearest future.”
He said the current IPP structure was designed to handle future expansion to about 5mw from its current 3.6mw capacity.
The Commissioner for Information and Strategy, Gbenga Omotosho, said in an interview on Thursday that Lagos had been leading in advocating independent power generation after the Electricity Act was passed.
Omotosho mentioned that Lagos had been at the forefront of separating power generation and distribution systems and was the first to begin an independent power project during the time of Asiwaju Bola Tinubu as governor, who is now the President.
He said that despite some limitations, the project did not give up.
“Lagos State is making every effort to ensure that our people can have stable electricity. We are fully committed because it’s for our people.
“We’re in talks with many private sector entities on how Lagos can generate its electricity, and there has been a lot of interest,” Omotosho stated.
The Benue State Government revealed that it had been working intensely to establish its electricity firm.
The state Commissioner for Power and Transport, Omale Omale, said that the state had started its transmission program and policy in the power sector.
He mentioned that the state government has begun developing the legal framework for the electricity law which will define how the power sector in the state will operate.
He stated, “Our power market is opening up to investors, and our power market is end-to-end, where the state will create a market for the private sector to participate in transmission and distribution.
Omale added that the state government has already engaged in extensive discussions with the Jos Electricity Distribution, the Transmission Company of Nigeria, customers, and other important stakeholders.
He expressed confidence that the legal framework and policy in the power sector would be completed by the end of the second quarter of this year.
Nasarawa partners firm
The Nasarawa State Government announced that it had partnered with the Nigeria Off-Grid Market Acceleration Programme to expedite the development and implementation of the state’s energy projects, in order to improve its power and sustainability agenda.
Speaking with journalists in Lafia on Thursday, Ibrahim Abdullahi, the Managing Director of the state’s Investment and Development Agency, stated that the partnership was a step towards realizing Nasarawa State's vision of becoming one of the top three most competitive economies in Nigeria.
He clarified that the collaboration, formalized with the signing of a Memorandum of Understanding between the state government and NOMAP, was carried out by the Agency, and the Nasarawa Electricity Power Agency as the technical lead.
Additionally, Governor Nasir Idris of Kebbi State has assured the public of his administration's readiness to create a favorable environment for Fadel International Holding Group to generate solar power for the state.
The governor's Chief Press Secretary, Ahmed Idris, stated that electricity is an important area that affects many people's lives. He mentioned that the arrival of the independent power company would assist in providing power, benefiting the business community.
The Kano State Government stated that its independent power project was nearly finished. It mentioned that the power company was established over 10 years ago during the second term of Senator Rabiu Kwankwaso.
The Director General of the Media and Publicity, Sanusi Tofa, mentioned that the two ongoing independent power projects in Tiga and Challawa Goje Dams were at 90 per cent completion. He also mentioned that there was over $40 million in the company’s account to ensure the completion and start of the project soon.
The establishment of this project happened when the new law was not expected. Regrettably, the money was misused and the projects were abandoned for eight years. He added that the projects were finished and tested in January 2024.
The Osun State Commissioner for Energy, Mr. Festus Adeyemo, mentioned that the state had started efforts to produce and distribute energy.
Adeyemo, however, pointed out that funding was a major obstacle to the plan. He added that the state was depending on support from the World Bank and private investors who were willing to partner the state.
He stated, “We are interested and will start work on it very soon. We have been working on it, but there are some basic things we need to do before entering the actual project. We aim to have a strong foundation and are focusing on the technical aspect.
The main challenge is funding, but they are overcoming it with the backing of the World Bank. There are also some technical aspects of the project. They have approached the Federal Ministry of Power and received approval. There is paperwork that needs to be completed at the federal level before commencing work on the project.
The Ondo State Government stated that it was the first state to adopt the electricity law in the country even before it was signed into law.
A top government official told our correspondent that the electricity bill was passed and signed into law during the tenure of late Governor Rotimi Akeredolu.
He stated, “The state government was planning to license some companies to generate and distribute electricity in the state, but the process was interrupted due to the illness and death of the former governor.”
The governor's Chief Press Secretary, Mr. Ebenezer Adeniyan, confirmed the development and said, “We were the first to adopt the electricity law during the late Governor Rotimi Akeredolu.
In Zamfara, the state government is considering the establishment of an electricity generating company due to ongoing power outages in the state.
The Special Assistant to Governor Dauda Lawal on Media and Communications, Mustafa Kaura, mentioned that the state government had conducted a survey on how to generate electricity from Bakalori dam.
Kaura said that the work on generating electricity in the state had begun during the leadership of former President Goodluck Jonathan. He added that the work will continue under Gov Lawal's administration.
In Sokoto State, the government stated that it had increased efforts to enhance electricity supply through its independent power project.
Governor Ahmed Aliyu recently requested the support of the Federal Government for the project during a courtesy visit to the Government House, Sokoto.
The State IPP, which is at 90 per cent completion stage, was initiated by the Wamakko-led administration to boost socio-economic activities in the state, according to him.
The governor mentioned that the project is almost completed and they require the support of the Federal Government to ensure its commencement.
Anger grows
The PENGASSAN, CSOs, and the Nigeria Electricity Consumer Advocacy Network criticized the Federal Government for allowing the implementation of the 240 per cent tariff hike affecting various customer classes.
PENGASSAN’s President, Festus Osifo, expressed concerns that the tariff increase would worsen the already challenging situation in Nigeria during the National Executive Council meeting of the association in Abuja.
Osifo stated that the substantial jump in tariff is significant and needs to be addressed. He suggested that the government should focus on serving the people and evaluate the process to formalize their position.
The National Secretary of Nigeria Electricity Consumer Advocacy Network, Uket Obonga, indicated that the Discos did not have the capacity to deliver 20 hours of supply and would bill consumers based on the new rate.
Obonga alleged that the regulator appeared to be favoring the DisCos due to the inconsistency in their promises to deliver a minimum of 20 hours supply.
In response, the Chairman of the Centre for Anti-Corruption and Open Leadership, Debo Adeniran, criticized the tariff hike as an oppressive policy that would drive industries out of business.
Adeniran declared the hike as oppressive and unjustified, questioning the basis for classifying consumers into different bands.
He mentioned that if there had been an improvement in electricity supply, the tariff hike would be reasonable.
He found it appalling that the electricity regulators agreed that the entire Nigeria cannot be provided with 24-hour electricity.
The TUC emphasized on Thursday that the increase would lead to industrial unrest in the country and condemned the tariff hike on Wednesday.
The TUC’s deputy president, Tommy Etim, stated in an interview with The PUNCH that the electricity tariff hike for those receiving 20 hours of electricity daily is completely unacceptable and could lead to industrial unrest.
“ Today, we are still struggling with the removal of fuel subsidy without any corresponding solution and yet the increase in the electricity tariff without even the supply of electricity. I think the government should know that they were not voted into office for the oppression of the citizens but to protect and improve the situation of the masses. This is an indication that the poor can no longer breathe,” Etim said.
Similarly, the Executive Director of the Rule of Law Accountability and Advocacy Centre, Okechukwu Nwaguma, said the government must decide whether it wants to serve or punish the people, adding that the policy marks an addition to the suffering of the citizens.
“This is an addition to the suffering and deprivation of the people. It seems to me that this government is out to punish Nigerians. We were expecting that policies will be put in place to actually lessen the effect of the removal of fuel subsidy.
“But to further remove subsidy on electricity, even when the electricity is not available, people are being made to pay for services that are not provided, it simply shows that this government is out to punish Nigerians.
“If there was improvement in the supply of electricity and this increase comes, it would be understandable, on the contrary, there is no improvement. I think the new government should decide whether they want to serve the people or punish the people,” he said.
- Additional reports: Nnodim Okechukwu, Deborah Tolu-Kolawole, Nathaniel Shaibu, Abiodun Nejo, Gbenga Oloniniran, John Charles, Collins Agwam, Bola Bamigbola, Peter Dada, Olasunkami Akinlotan and, Maiharaji Altine
