Governors Direct State Commissions to Address Poor Power Supply

Governors Direct State Commissions to Address Poor Power Supply
The Independent Electricity Distribution Network and distribution franchisee models developed by the Federal Government through the Nigerian Electricity Regulatory Commission have not been effective, state governors have said.

As a result, the governors suggested that State Electricity Regulatory Commissions should develop new models to open the retail electricity market to competition and address the nationwide power supply issues.

On January 16, 2024, The NIGERIA NEWS 247 reported that the Federal Government, through NERC, issued 13 new licences for off-grid and embedded power generation, independent electricity distribution, and electricity trading. These new licences were issued in the third quarter of 2023, including one for Independent Electricity Distribution Network, one for trading, three for off-grid generation, one for embedded generation, and one IEDN licence.

In October 2023, it was reported that NERC had licensed 17 Independent Electricity Distribution Network providers by the end of 2022. According to NERC’s ‘2022 Market Competition Report,’ 10 of these networks were operational by the end of that year. The IEDNs were intended to foster competition and operational efficiency by operating independently of the 11 major power distribution companies.

Power sector needs urgent overhaul

However, in a recent document titled ‘Development of the National Integrated Electricity Policy and Strategic Implementation Plan Policy Recommendations by State Governments,’ submitted to the Federal Ministry of Power, the state governors expressed that the IEDNs were ineffective. This document was put together by the Nigeria Governors’ Forum.

State governments have now been empowered under the Electricity Act 2023 to operate and regulate their own electricity markets, independent of the Nigerian Electricity Regulatory Commission.

The governors criticized the IEDNs and distribution franchisee models as outdated, stating, “The Independent Electricity Distribution Network and Distribution Franchisee models developed by NERC have not been effective, hence the need for SERCs (State Electricity Regulatory Commissions) to evolve new retail and supply licenses, and business and commercial models which would open the retail electricity space to new companies that would compete to address the poor power situation within their states.

“Retail supply licensees will also improve revenue assurance in the state electricity market and the NESI (Nigeria Electricity Supply Industry) in general. States also advocate for the disaggregation of existing successor distribution licences into a ‘wires only’ license and a ‘supply’ license where either feasible or market conditions are favorable for such license disaggregation.”

The governors also recommended establishing electricity cooperatives to improve access and supply reliability for end-users, particularly in underserved and unserved rural and peri-urban communities.