With Nigeria’s power grid suffering at least 222 partial and total collapses in the last 12 years, operators have advocated the decentralisation of the grid to allow sub-national entities to generate and distribute electricity.
Over the past decades, successive governments have struggled to tackle the country’s energy deficit by maintaining a monopoly in power provision. But despite billions of naira spent annually on electricity, less than 4,000 megawatts is dispatched to the grid each day for its more than 200 million people.
Operators said the recent move by Nigerian lawmakers to pass a constitutional reform bill that will allow states to generate and distribute power could solve Nigeria’s energy woes by diversifying the sources of electricity supply in the West African nation, which suffers from perennial power shortages.
“Nigeria’s power sector has changed forever. Devolution of power starts with the power sector,” Eyo Ekpo Eyo, former commissioner at the Nigerian Electricity Regulatory Commission (NERC), told BusinessDay.
BusinessDay gathered the new electricity bill seeks to promote policies and regulatory measures that would ensure the expansion of power transmission networks in Nigeria in order to address any imbalance in the existing transmission infrastructure.
Unlike the current situation where any power generated must be put on the national grid for transmission and distribution, the new electricity bill also provides that any power generated below one megawatt does not require licence to distribute.
Ayodele Oni, energy lawyer, and partner at Bloomfield law firm, said the new electricity law would allow for energy federalism such that each state can use the energy source best suited to it and benefit from comparative advantage.
He said energy federalism would ensure each state or community uses the least-cost fuel to generate electricity in Nigeria.
“Lagos could, for example, make do with small hydro and wind, among others. Enugu may look to coal and clean coal technology could be an alternative, as the world appears to be realising that decarbonisation for now, especially in regions such as sub-Saharan Africa, is ambitious,” Oni said.
BusinessDay gathered that Lagos State is planning to have an autonomous regulatory body while its Lagos Electricity Market Plan is expected to be owned and operated substantially by the private sector with an Independent System Operator to manage new transmission.
Lagos accounts for over 53 percent of manufacturing employment in Nigeria, which alone contributes to 7 percent of the national gross domestic product.
Yet, it gets barely 25 percent or 1,000mw of electricity from the creaking national grid and depends on dirty generators to generate 15,000MW of electricity to power industries and homes.
The Lagos power plan seeks to use available energy sources in the state, mostly gas and renewable energy sources, to attain at least 18 hours of supply daily over five years, with growth in peak energy traded in the state from 12,000-15,000MWh daily in December 2022 to 81,000MWh by June 2028.
“Mini-grids and renewables will also be important in the conversations, especially in parts of the country, where even state grid extension is not viable,” Oni said. “States like Lagos, Edo, Rivers, Oyo and Ondo are already taking the initiative.”
Last month, the Edo State House of Assembly passed a bill to repeal the Rural Electricity Board Law of 1972 to re-enact a new law that makes provision for the generation, transmission and distribution of electricity for the residents of Edo State, paving the way for the establishment of an electricity market in the state.
The lawmakers unanimously adopted all six parts of the bill during a session of the committee of the whole on July 19, 2022. The Speaker, Marcus Onobun, directed the assembly’s clerk to forward clean copies of the bill for assent to Governor Godwin Obaseki.
Experts say the passed bill provides for the liberalisation of the electricity market in the state to allow for a more pragmatic approach to rural electrification and expansion of distribution infrastructure in the state.
Similarly, earlier this year, a bill to reform the Delta State electric power sector passed second reading at the state House of Assembly. The proposed legislation was sponsored by Anthony Elekeokwuri (Peoples Democratic Party (PDP)-Ika North East) and 26 other PDP lawmakers.
“Grid de-centralisation may not be the end-all panacea for Nigerian energy poverty, but it presents a valuable and feasible means to circumnavigate a clearly insufficient centralised grid system,” said Pelumi Olugbenga, a Master of International Development candidate at the University of Pittsburgh Graduate School of Public and International Affairs.