12 States Plan Power Projects After Electricity Increment

12 states have power projects planned after the FG raised the price of electricity from N66 to N225 per kilowatt.

In compliance with the Electricity Act of 2023, 12 states—including Lagos and Kano—have completed their preparations to begin producing electricity in their respective states.

Some of these states reportedly passed legislation governing the power market while awaiting clearance from the Federal Government-owned Nigerian power Regulatory Commission, or NERC, to establish autonomous regulatory bodies distinct from the NERC.

More criticism was leveled 24 hours after the federal government's 240 percent increase in power tariffs for Band A customers who receive 20 hours of electricity on Wednesday, April 3.

Civil society organizations, the Nigeria Electricity Consumer Advocacy Network, PENGASSAN, the Petroleum and Natural Gas Senior Staff Associations of Nigeria, and other groups issued warnings that the raise will make things worse for Nigerians.

The Band A group of power consumers, which makes up around 15% of all power users nationwide, no longer has to pay the electricity subsidy as part of their bill.

On Wednesday, April 3, the government, acting through the NERC, declared the rise in the energy bill. It further stated that the affected individuals would now pay a tariff of N225 per kilowatt-hour, up from the previous rate of N68/kWh, or almost a 240 percent increase.

However, there are compelling signs that some states are utilizing the new Electricity Act to launch their own power producing companies.

President Bola Tinubu signed the new Electricity Act into law in June 2023 in response to the demands of Nigerians for reforms in the power industry, including removing it off the exclusive list and granting states the authority to produce, transfer, and distribute electricity within their borders. Nigerians think that this will contribute to delivering long-term answers to the country's electrical difficulties.

The goal of the new law is to encourage private sector investments in the power sector, and it supersedes the 2005 Electricity and Power Sector Reform Act. In order to generate, transmit, and distribute power, it offers a comprehensive integrated resource plan and policy that takes into account all available sources.

The new law gives the State Electricity Board, or any other state entity with the appropriate title, the right to license mini-grids and establish the regulations that will govern how these licensees will operate. By doing this, the federal government was able to take electricity off the list of exclusive commodities, making it possible for states and private citizens to make investments in the industry.

The act states that the NERC will continue to regulate electricity businesses in states that have not passed their own electricity market laws, even though a state may regulate its electricity market by granting licenses to private investors who can run mini-grids and power plants within the state.

The 2023 power Act was expected to establish independent commissions for the regulation of power in at least 12 states in Nigeria, according to insider information obtained by the NERC.

Read Also: We Are Yet To Fully Remove Subsidy On ELECTRICITY — FG

According to credible reports, the states submitted applications to the NERC in an effort to control their electricity markets independently of the Federal Government commission.

The NERC official intimated that if state regulators are established, the NERC, which is now in charge of overseeing the Nigerian power market, will have to transfer its regulatory duties to them. He talked under pseudonymity because he was not permitted to discuss the matter.

“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 generate, transmit, and distribute power within their states only. Some of them who have been generating power before the act can now commercialize 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.”

According to a source close to Adebayo Adelabu, the minister of power, twelve states were prepared to begin producing electricity in their states and suggested that other states should do the same in order to address the country's electrical problems.

For many years, Nigerians have suffered under the Federal Government's supervision of a failing electricity sector. The country's electrical grid frequently collapses, causing blackouts that disrupt companies and sending the country into chaos.

A study published in 2006 by the International Energy Agency stated that there were 46 power grid collapses during that time.

The Federal Government has been criticized by PENGASSAN, CSOs, and the Nigeria Electricity Consumer Advocacy Network for permitting the 240 percent pricing hike to be implemented, irrespective of the consumer class that will be impacted.

Festus Osifo, the president of PENGASSAN, stated that the increase in tariffs will make Nigeria even more dangerous during remarks he made outside the organization's National Executive Council meeting in Abuja.

“Jumping from N68/kWh to N225/kWh is enormous. We think that the government should exist for the purpose of serving the people. Adding that to the perilous nature of the society today, the currency floatation that has put us in this mess that we are in today, and the fuel subsidy removal, I think it is quite drastic. So, we will interrogate the process and take a formal position about it,” Osifo stated.

According to Uket Obonga, National Secretary of the Nigeria Electricity Consumer Advocacy Network, the Discos would not fulfill the target and could not deliver a 20-hour supply; instead, they would charge customers the increased rate.

“This is not the first time they are talking about delivering a minimum of 20 hours supply. It is becoming clear that the regulator is making money from the DisCos and it is now dancing to the tune of the Discos,” Obonga alleged.

As a response, Debo Adeniran, the chairman of the Center for Anti-Corruption and Open Leadership, called the raise a “ill-timed oppressive policy” and mentioned that it would force businesses out of business.

“It is an ill-timed oppressive policy, and of course, there is no basis for the classification of consumers into all of those bands that they're talking about,” Adeniran declared.

He remarked that the fee increase would have been reasonable in the event that the electrical supply had improved.

“It is a shameful thing for the electricity regulators to accede to the claim that the whole of Nigeria cannot be serviced with 24-hour electricity,” he said.