…As State Governors pursue Prosperity in Models for Electricity Market Development

By Abubakar Ismail
In a concerted effort to invigorate economic development and catalyze industrialization, the Federal Government (FG) has fervently encouraged State Governors to embark on visits to the recently inaugurated Aba Integrated Power Project (IPP) in Abia State.
This visitation serves as a pivotal juncture for in-depth deliberations on the plethora of models available for the establishment of robust and dynamic electricity markets across the vast expanse of the nation.
Geometric Power Limited (GP) is a pioneer power project developer in Nigeria. It has established a power generation facility in Aba, Nigeria, to provide high quality electric service to a limited number of large industrial and commercial clients.
Initially, the project consisted of the installation of a 141 MW gas-fired power plant in Phase 1, over 110km of 33 kV and 11kV sub-transmission lines, four new substations and capacitor banks for distribution of power to the large industrial and commercial consumers that had been receiving power from the Power Holding Company of Nigeria (PHCN).
Amidst the sprawling landscape of Nigeria’s developmental aspirations, analysts and experts alike have championed the cause of a decentralized power system as the most expedient pathway towards realizing the nation’s lofty ambitions of development and industrialization.
According to analysts, central to this vision lies the necessity for the seamless implementation of the Electricity Act 2023, as amended, which stands as a linchpin for any discerning State Government endeavoring to expedite economic growth within the precincts of its jurisdiction.
Furthermore, underscored within this discourse is the quintessential significance of exploring and meticulously evaluating the diverse gamut of State Electricity Market (SEM) models that beckon for discerning consideration and strategic implementation.
Cognizant of the myriad challenges that beset previous iterations of Integrated Power Projects (IPPs) in states such as Rivers, Edo, and Akwa-Ibom, analysts have keenly advocated for a judicious distillation of lessons learned, thereby fortifying states against the perils of past missteps. They adamantly stress the imperatives of adopting integrated systems wherein generation, distribution, and metering converge under the aegis of a singular entity, fostering synergistic efficiency and holistic operational efficacy.
Expounding upon the intricate tapestry of the amended Electricity Act, seasoned experts espouse the virtues of inter-state collaboration, positing regional power markets as the apotheosis of cooperative endeavor. They proffer the concept of regional power grids, meticulously woven along the intricate geopolitical contours of the nation, interlinked by the national grid to facilitate seamless inter-area power exchanges. Such visionary collaboration not only augurs well for states endowed with abundant energy resources but also extends a lifeline to those teetering on the precipice of energy scarcity, fostering economic development through symbiotic energy procurement agreements with neighboring states.
The mantle of oversight and regulatory stewardship over such intricate transactions firmly rests within the purview of the Federal Regulator (FR), calibrated and regulated by the venerable Nigerian Electricity Regulatory Commission (NERC). It is within this domain that the preeminence of Integrated Resource Planning (IRP) stands resolute, serving as the veritable lodestar guiding the strategic allocation of finite resources towards the burgeoning expanse of emerging SEM.
Given the onerous burden of capital-intensive investments inherent within the power infrastructure milieu, some analysts advocate for a pragmatic partnership paradigm with extant distribution companies (DisCos). They herald the advent of a Franchising Model, wherein DisCos judiciously bestow franchises upon third-party entities (Franchisees), and delineating specific roles encompassing panoply of operational functions ranging from electricity supply and procurement to meter management, billing, and network expansion.
Emphasizing the necessity of proper documentation and the assiduous crafting of mutually beneficial agreements, seasoned experts assert the importance of transparent processes to obviate the specter of future misunderstandings and protracted legal entanglements.
The potential salience of fostering a milieu conducive to full retail competition within the hallowed precincts of electricity markets is heralded as a watershed moment, ushering an epoch wherein consumers are bestowed with an array of choices spanning metering and an range of bespoke retail energy services. This transition to a competitive retail landscape not only engenders a fertile ecosystem of innovation but also galvanizes operational efficiency across the entire spectrum of service delivery.
While states retain the option of embracing a vertically integrated model, seasoned experts caution against the attendant vicissitudes and inherent challenges therein, advocating instead, for the ascendancy of private-sector-driven markets as the vanguard of progress. They posit the imperative of fostering strategic partnerships for the ubiquitous deployment of Integrated Power Utilities (IPUs) across the length and breadth of the nation, underpinned by the twin pillars of distributed generation and smart grid systems.
In the crucible of economic exigency and amidst scarce financial resources, governments at both the national and sub-national echelons are exhorted to pivot towards a regulatory rubric conducive to private capital investments within the venerable precincts of the power sector. Measures such as the proscription of estimated billing and the trenchant clampdown on electricity theft emerge as lodestars guiding the path towards operational efficiency and fiscal prudence within the sector.
Irrespective of the model chosen, some analysts underscore the exigent necessity for the crystalline formulation of investment criteria, ensuring the sacrosanct involvement of technically astute and financially solvent investors within the envisaged electricity market.