New law paves way for states’ power markets

The newly approved constitutional amendment that empower sub-nationals to generate, transmit and distribute electricity in areas covered by the national grid can improve electricity access across the country and promote rapid industrialisation, analysts say.

State governments eager to develop their own electricity markets as well as private investors who wish to play in the electricity market have an opportunity to ramp up distribution and transmission infrastructure.

At a recent power sector conference, Sule Abdulaziz, the head of the Transmission Company of Nigeria, said poor funding presents the biggest obstacle to Nigeria’s ability to wheel power generated across the country.

A review of the power plans by the Lagos and Edo state governments, for example, ranks metering high on the priority lists as these state governments wishing to set up their electricity market have reached an understanding with various meter assemblies as part of their plans. The Lagos State government had even organised a competition to select the best metering ideas.

Private investors providing electricity in large estates that have chosen to set up hybrid systems with existing distribution companies and even off-grid energy market investors make metering, the most viable way to recoup their investments, a priority in their plans. Off-grid communities in rural northern Nigerian states have functional meters, even as poor metering capacity continues to expose the incompetence of the current utility managers at the distribution company and regulator levels.

In 2021, the Lagos State Ministry of Energy and Mineral Resources signed a Memorandum of Agreement with Ikeja Electric and Sahara Power Group to supply uninterrupted power to residents of the state. The agreement also includes the distribution of free prepaid meters to low-income areas, with the pilot phase of 20,000 meters to be distributed in Alimosho Local Government Area of the state.

At the signing of the agreement, Olalere Odusote, commissioner for energy and mineral resources, said the 20,000 meters had been procured by the state government and would be distributed free to low-income areas in Alimosho Local Government Area as the pilot phase.

Godwin Obaseki, governor of Edo State, sent an Electric Power Sector Reform Bill to the State House of Assembly in March 2022 and it was passed in September 2022. The law creates two statutory bodies – a regulatory commission to create a framework for a state electricity market with clear provisions on the role of metering in funding the plan and an electrification agency – to implement the State Electrification Fund in unserved and underserved areas.

In recent visits by BusinessDay to remote communities without grid connections in Abuja and Kaduna states, whose only access to electricity is through solar power, all the households connected to the local utility were metered. Most of them were equipped with smart meters to enable remote monitoring as the utilities are often located far away from where the mini grid serves the community.

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However, getting all grid connected customers functional meters has been a herculean task since 2013. Shortly after the privisation of the power sector, the Nigerian Electricity Regulatory Commission (NERC) started the Credited Advanced Payment for Metering Implementation scheme, which allowed customers to pay for their own meters after DisCos reneged on their obligations to meter their customers.

This was replaced by the Meter Asset Providers (MAP), a programme wherein third-party meter providers issue electricity customers meters for a fee. The programme ran into trouble when the Federal Government announced it was giving 6 million free meters in 2021 under the National Mass Metering Plan (NMMP).

Analysts raised concern about the government’s ability to finance the plan. “I don’t know how the government that is currently borrowing to finance basic obligations will pay for it,” said Ayodele Oni, an energy lawyer and partner at Bloomfield Law Practice.

The next phase of the plan was to develop 4 million meters but it has been dogged by challenges.

“As you all know, these meters have components that are largely imported and it takes time to ship, to clear through Customs and for the NMMP meters to be available.,” said Sanusi Garba, NERC chairman.

Metering still remains the biggest concern for electricity customers, accounting for over a quarter of all complaints in 2022, according to NERC’s data.