Key stakeholders in the electricity industry have predicted an enhanced inclusive growth, economic competitive indexes after President Muhammadu Buhari assented to 16 constitution alteration bills.
The signed bills include devolving more power to state governments, especially granting them autonomy to generate electricity, a move that will break the monopoly of the federal government in power generation, transmission and distribution.
Speaking exclusively with LEADERSHIP, former ministers of power, Professor Barth Nnaji and Dr. Olu Agunloye, said the country would now begin to see huge investment in power generation and the much anticipated competition in the industry.
Nnaji said that states like Lagos, Rivers and Akwa Ibom that had spearheaded the drive for autonomous power structures would substantively create better opportunities and environment that will drive economic growth.
The former minister said states would no longer apply for licences to generate own power and they would now have the latitude to regulate generation, distribution and transmission, adding that they would now have the opportunity to create end-to-end alternative power transmission lines.
He, however, stated that states that are not liquid enough will have challenges raising the required capital to invest in the sector, stating that it will cost about $150-$200 million to develop a 100 Megawatts power generation plant.
Nnaji did not see conflict in regulations, as he said the Nigerian Electricity Regulatory Commission, NERC, would oversee the national grid system while the state's electricity regulatory bodies will regulate activities at the state level.
This, he said, will enable interswitch opportunities that will reduce outages frequently triggered by grid system collapse.
On his part, Dr. Agunloye applauded the move, saying it will help liberalise the industry.
Agunloye said that while he was minister, he pursued the policy of throwing the market open but the system did not allow devolution of power to states.
He said what the nation had yearned to implement when the late former minister of power, Bola Ige, and Segun Agagu, took up the responsibility to drive privatisation is now about to thrive.
On his part, the president, Nigeria Consumer Protection Network, Kunle Kola Olubiyo, described the constitutional alterations as unprecedentedly a bold and right step in the right direction.
Olubiyo, former member, Presidential Ad-hoc Committee on Review of Electricity Tariff in Nigeria, pointed out that the over concentration of power and management of natural resources cum economic activities in the hand of the federal government, particularly in areas where the 36 states could do better, had over the years stifled competition.
He said, "The recent development would no doubt enhance inclusive growth, upscale global economic competitive indexes, break the monopoly of the federal government in power generation, transmission and distribution, rail transport system, upstakes end users customers right to choices/ alternatives while at the same time strengthen cash inflow from foreign direct investment (FDIs)."
He also said it will also partly fulfill the aspirations and yearnings of the quest for resource control and true federalism.
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Our correspondent reports that, last week, President Muhammadu Buhari assented to 16 constitution alteration bills. The signed bills include devolving more power to Nigerian states, empowering them to take charge of their growth and granting them autonomy in major areas like electricity, railways, and the judiciary.
Since Nigeria transitioned into a democratic government, there have been efforts to move these items from the exclusive list, which puts them solely under the aegis of the federal government, to the concurrent list, which grants states autonomy over them. But all efforts had proven abortive.
The new bill is expected to significantly promote local economic growth and development across all identified quarters, but one which stands out is the anticipated transformation in the power sector. The fifth alteration bill no. 33, Devolution of Powers (National Grid System), allows Nigeria's 36 states to generate, transmit, and distribute electricity in areas covered by the national grid.
Nigeria is reportedly power-deficient country, yet it is endowed with large oil, gas, hydro and solar resources, and it has the potential to generate 12,522 MW of electric power from existing plants.
According to the World Bank, about 85 million Nigerians (43 per cent of the population) do not have access to grid electricity, making it the country with the largest energy access deficit globally.
Despite the privatisation of the power sector in 2013, expected to herald a positive transformation, it continues to perform abysmally. Ten years after, the "Giant of Africa" is yet to generate up to 6,000MW for its over 200 million citizens.
As the states now have been granted autonomy for power generation, there are high hopes that the power sector, which has suffered long-standing problems related to inadequate infrastructure, unreliable electricity supply, and a lack of investment, would be revived.
Lagos, the commercial nerve centre of Nigeria, has been optimistic about the bill before now and had launched an electricity policy, published its off-grid strategy, presented its Integrated Resource Plan and drafted a law to establish what it calls the Lagos Electricity Market (LEM). States have always had the legal right to distribute electricity but were limited to areas off the national grid. And this is why, although Lagos pioneered electricity sector reform on the continent by unbundling its single state-owned electricity company starting in 2001, the LEM did not materialise majorly because of regulatory constraints.
Between 1999 and 2000 Lagos state, under former Governor Bola Ahmed Tinubu, struck an $800 million deal with Enron Power - a US power company - to solve the electricity problem in the state. The controversial project was slated for completion in two phases, with the 1st phase generating 90 megawatts (MW) of electricity and the second involving the building of a new 5609-MW gas turbine power plant.
However, this plan was aborted during former President Olusegun Obasanjo's administration because Lagos did not have constitutional backing to embark on such a power project, which was then an item on the exclusive list.
Today, the state's electricity needs are met by approximately 16,000MW of electrical capacity comprising 1000MW from the grid (and in turn, this is supplied 25% by hydroelectric and 75% by natural gas thermal plants). On the other hand, the 15,000MW - the off-grid generator fleet that Lagos is dependent on is powered almost entirely by distillate fuels, and a small percentage is generated by renewables and an even smaller percentage by natural gas. As Lagos' population continues to increase, so are the needs of the state. So the idea of a LEM is critical to the economy.
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The state government said it is committed to achieving 1GW of solar energy in Lagos by 2030 with an engagement with the World Bank for suitable funding. With the creation of the Lagos Electricity Market, the state hopes to fulfil its potential as Africa's model mega city. Similarly, some other states are on a quest to generate reliable power for their people.
Interestingly, this bill could pave the path for a more inclusive, sustainable and diverse power sector. As earlier stated, Nigeria is a country with diverse underexplored renewable energy resources, and different regions of the country have varying strengths in terms of renewable energy sources.
For example, the northern part of Nigeria, particularly the northeast and northwest regions, has abundant solar energy resources, as the region receives high levels of solar radiation throughout the year, making solar power a viable and cost-effective source of energy. Not just that, it also has a good potential for wind energy, and biomass, particularly from agricultural waste.
On the other hand, the South-south and Southeast regions are blessed with abundant oil and gas reserves, which can be used to generate thermal power. Their significant potential for biomass energy can also be derived, particularly in the form of palm oil waste. Being home to several large rivers, including the Niger and Ogun Rivers, the southwest region of Nigeria has significant potential for hydroelectric power generation.
Stakeholders are optimistic that the new bill will result in a reliable and stable power supply in the country.
