Collaboration between NERC, lawmakers seen fostering states’ electricity markets

The collaboration between the National Assembly of Nigeria and the Nigerian Electricity Regulatory Commission (NERC) will foster the growth and development of states’ electricity generation, transmission, and distribution, says Eyo Ekpo, chief executive officer, Excredite Consulting.

The former commissioner of the Commission said NASS and NERC should set up a framework and work with state governments to deepen their own electricity markets.

He made this known during a Twitter Space hosted by the Electricity Hub with the theme ‘Constitutional Amendment on Electricity: Implications and Opportunities for Existing Players in the NESI’ on Thursday.

“We do not know how things will unfold until states begin to pass laws for electricity matters carried on entirely within their state,” he said.

“However, the national assembly needs to make laws or a law that recognises the implication of what the constitution has done and sets in place a framework by which NERC can work with state governments that decide to set up their own market.”

On March 17, 2023, President Muhammadu Buhari signed a bill to amend the 1999 Constitution of the Federal Republic of Nigeria concerning the powers of the State House of Assembly on electricity matters.

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According to Part II, Section 4, Paragraph 14(b) of the Constitution, the House of Assembly could make laws regarding the generation, transmission, and distribution of electricity to areas “not covered by a national grid system within that state.

The amendment, however, eliminated the limitation on coverage area, allowing states to make laws for generating, transmitting, and distributing electricity to areas covered by the national grid.

“States can make laws for generation, transmission, and distribution within that state to any area that is covered by a national grid system,” Ekpo said.

“States can make laws for any part of their territory as long as generation, transmission, and distribution are entirely within the state. States are now clearly empowered to make laws solely and exclusively within their rights.”

For Chijioke Okwuokenye, vice president, engineering, at Konexa, the new bill creates a lot of opportunities and clears a lot of ambiguity that existed in the electricity market before now.

“It is going to allow investment to flow into the electricity sector. With this power sector reform act, most bottlenecks in the power sector have been removed, at least with regard to state government participation,” he said.

“It does not give the state government arbitrary powers to affect the industry. However, most of the solutions it has proposed allow for collaborative engagement and investments, both for federal, state, and private participants. The bill is futuristic and will really help us progress going forward.”

Rumundaka Wonondi, founder of ZKJ Energy Partners, said in the Twitter space that states can now make laws and regulate different sectors of the value chain.

“This act gives states the ability to issue licenses for generation and distribution that are within the grid level. The very next step is that we need to find a way to delineate how states should operate and where the federal government should be the primary regulator,” he said.

“It is all about regulation. To a large extent, this act opens up opportunities for people, but in the short term, it could also be a big headlamp in front of so many investors wondering which way to go.”

According to Wonondi, states can regulate distribution companies, and distribution companies can be part of the national electricity market.

“When it comes to generation and transmission, states can build them, but they must be controlled and dispatched as scheduled to form a national market that can be done from the center,” he said.

“The next government coming in needs to have a national council of power that will help the state and federal governments work.”

Eyo further said that Nigeria should be talking about how we can transmit responsibility for distribution. The state and federal authorities should make it clear when, how, and where prospective investors can invest in generation, transmission, or distribution.