Devolution of ‘power’: States get right to generate own power
In a move that will provide variant options for energy-starved Nigerians, Nigerian lawmakers have voted overwhelmingly in support of a constitutional amendment bill aimed at allowing state governments to generate and transmit their own electricity.
The developments are expected to excite business leaders in Nigeria states most especially Lagos, Nigeria’s commercial hub, who play hosts to over 2,000 industries and about 65 percent of the country’s commercial activities.
During Tuesday’s plenary session where the lawmakers voted on multiple bills, BusinessDay gathered that the lawmakers unanimously voted against a plan by the Senate and Ministry of power to stop states from activating innovative solutions to solve Nigeria’s power problem, through the proposed electricity bill.
For instance, in the House of Representative 298 lawmakers voted in support of the Bill for an Act to alter the provision of the Constitution of the Federal Republic of Nigeria, 1999 to allow States generate, transmit and distribute electricity in areas covered by the national grid; and for related matters.
“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) tweeted on Tuesday.
At the Senate, 92 senators also voted in support of the same bill, a development that will boost Lagos Electricity Market plan and provide the learning curve to other states in need of 24 hours electricity supply for their industrial and commercial needs especially states like Ogun, Oyo, Kaduna, Kano, Akwa Ibom, Rivers, Anambra and Delta.
In the meantime, the bill would have to receive support from state lawmakers across Nigeria’s 36 states, before it would be sent to President Muhammadu Buhari for his assent.
If and when President Buhari signs the bill into law, it is expected to break the monopoly of the Federal Government of Nigeria to generate and distribute electricity in Africa’s most populous country.
“If the new bill comes into limelight, it should reduce the cost of doing business in Lagos, improve employment figures and inextricably increase commercial activities and reduce crimes,” said Ayodele Oni, energy lawyer, and partner at Bloomfield law firm.
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 (ISO) 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 (GDP).
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.
In Edo State, there is a capacity to produce 600- 700 MegaWatts of Electricity. However, Governor Godwin Obaseki has been embroiled in a tussle with the Benin Electricity distribution Company (BEDC) that has culminated in the Power Purchase Agreement (PPA) with the Ossiomo Power plant.
“BEDC has been an obstacle all the way. They will not allow you to provide electricity and will not allow you to get alternative sources of power.” He says.
An estimated 22 million small-unit generators are in use by Nigerians, and they plug a vital gap in a country that ranks 171 out of 190 nations in terms of access to electricity, according to the World Bank.
Nigeria’s grid has an installed capacity of roughly 12,522 megawatts, but due to poor infrastructure, it is only able to deliver around 4,000 megawatts most days, according to the US Agency for International Development.
To bridge the gap between supply and demand, Nigerians are forced to generate power in small units from off-grid sources, usually fossil fuel-powered generators.