Before leaving office in 2023, former President Muhammadu Buhari signed into law the Fifth Constitution Alteration Bills, which among others, transferred electricity from the Exclusive Legislative List to the Concurrent Legislative List, so that state governments could also invest in generation, transmission and distribution electricity in areas covered by the national grid.
While this may render the Federal Government-owned Nigeria Rural Electrification Agency (REA), that has been providing electricity to some rural (and urban) areas redundant, it should enable states government to provide energy to their constituents, the same way they provide water for them.
Seye Opeleye, Director General of Development Agenda for Western Nigeria (DAWN) Commission enthused that “No legislation, since 1999, has excited Nigerian development stakeholders as this.”
With the devolution of the running of the country’s power sector, state governors no longer have a place to hide, but to be more audacious in the establishment and operation of their own electricity companies, or get private organizations to establish the same within their states.
President Bola Tinubu has taken the matter one more notch beyond what President Buhari did. He has signed the Electricity Amendment Bill, 2023 that enables state governments to regulate electricity, in addition to its generation, transmission and distribution within their states.
Tinubu’s small step is a giant leap that should further decentralize the electricity sector, grant states more control over their energy infrastructure, encourage private investment in the sector, and improve regularity of electricity supply throughout the country.
Already, seven states – Edo, Ekiti, Enugu, Imo, Kogi, Ondo and Oyo – control their electricity markets. Lagos, Niger, Ogun and Plateau States are expected to complete their own transitions before September 2025.
Of course, wet blanket naysayers are already finding faults with the development. Strangely, the Nigerian Electricity Regulatory Commission (NERC) officials are expressing reservations about the ability of some states to manage their markets while some so-called industry experts also seem to have rather pessimistic view of the whole thing.
But the more positive observers emphasise the importance of capacity building for the staff and the agencies, regulatory coordination between NERC and the states and the financial readiness of the latter to invest adequately.
While we dare to hope that the Niger Dam power facility can be handed over to the Niger State government under agreed payment protocols, we recall with warm nostalgia the audacity of former Governor Tinubu to establish a power plant in Lagos State.
In an $800 million deal, he brought Enron to run an Independent Power Plant to supply 90 megawatt, in the first phase, and another 5409 megawatts thermal plant on the long-term basis. But this glorious attempt was scuttled by Olusegun Obasanjo, whose military orientation got in the way of what was expected of him as a democratically-elected President of Nigeria.
While Governor Tinubu wanted to provide regular electricity for the citizens and industries domiciled in Lagos State, President Obasanjo’s centralized approach scuppered the efforts.
The President’s latest moves, however, have put state governors on the spot. With the increased allocation they now receive from the Federal Accounts Allocation Committee after the removal of petrol subsidy, they may have no explanations for failing to establish or expand electricity infrastructure within their states.
The most immediate advantage of the expansion of state capacity in producing electricity is the generation of employment. Then, of course, there will be an increase in Internally Generated Revenue that will eventually accrue to the states as a result of increased economic activities.
The electricity sector, which was partially privatized under the President Goodluck Jonathan administration, is not doing so well because of the template that separates generation, transmission and distribution into silos. There is also glaring financial, managerial and technical incompetence of investors who bought the legacy electricity companies.
To advance the operationalization of the new law, it should be possible for each market to have one company that generates, transmits and distributes its own electricity.
States should pool resources to supply regular electricity within their geo-political zones. For instance, Southwestern states could take advantage of economies of scale by pooling resources to establish a giant electricity company.
We enjoin civil society groups and the media to pay close attention to the implementation of the new electricity policies and hold the state governments also responsible for the provision of power supply.
SOURCE: independent.ng