As per Thursday’s reports, some states have enacted their electricity market laws, awaiting approval from the Nigerian Electricity Regulatory Commission (NERC) for independent regulatory bodies, separate from the federal NERC.
The 240% power tariff hike for Band A consumers enjoying 20-hour electricity faced severe criticism from various groups, including the Petroleum and Natural Gas Senior Staff Associations of Nigeria and civil society organizations. They warned of exacerbating the plight of Nigerians.
The subsidy on electricity has been entirely removed from the tariff payable by Band A consumers, constituting about 15% of total power users nationwide.
The NERC announced the tariff hike, with affected consumers now paying N225 per kilowatt-hour, up from N68/kWh, representing a 240% increase.
Numerous states are leveraging the new Electricity Act to establish their electricity generation firms.
In June 2023, President Bola Tinubu signed the Electricity Act into law, responding to calls for power sector reform and decentralization from Nigerians. This move aims to provide lasting solutions to Nigeria’s electricity problems.
The new law replaces the 2005 Electricity and Power Sector Reform Act, promoting private sector investments in the power sector and recognizing all sources for electricity generation, transmission, and distribution.
The state electricity boards or authorities can grant licenses for mini-grids and outline their operations under the new act. This decentralization allows states and private individuals to invest in the sector.
Although states can regulate their electricity markets by issuing licenses to private investors for mini-grids and power plants, the NERC will continue regulating electricity businesses in states until they enact their electricity market laws.
At least 12 of the 36 states are set to establish their independent electricity regulatory commissions, according to insider sources at the NERC. These states have applied to the NERC for independence in regulating their electricity markets.
The states’ move towards independent regulation aligns with the new Electricity Act, empowering them to generate, transmit, and distribute electricity within their jurisdictions.
Several states have taken steps towards power generation within their territories. Lagos, Edo, Kaduna, Enugu, and Oyo have signed their electricity laws. Ekiti State has domesticated the Electricity Law and is actively generating and transmitting electricity through its Independent Power Project.
In conclusion, states are seizing the opportunity provided by the Electricity Act to address Nigeria’s electricity challenges by establishing their electricity generation firms and embracing decentralized power generation and distribution.
