The Electricity Act in Nigeria refers to the legislation that governs the generation, transmission, distribution, and sale of electricity in the country. Over the years, Nigeria has implemented various reforms in the power sector intending to improve efficiency, increase generation capacity, and attract private sector investments.
Some of the key reforms include:
1. Electric Power Sector Reform Act (EPSRA) 2005: This act initiated the liberalization of the power sector and created the legal framework for the unbundling of the National Electric Power Authority (NEPA) into various entities. It established the Nigerian Electricity Regulatory Commission (NERC) to regulate the sector and established the Nigerian Bulk Electricity Trading (NBET) Plc to facilitate the purchase and sale of electricity.
2. Privatization of Generation and Distribution Companies: Under the reform process, the government of Nigeria divested its ownership in 11 distribution companies (DISCOs) and six generation companies (GENCOs). This was done through a competitive bidding process, and private investors took over the operations of these entities. This move aimed to increase private sector participation, encourage competition, and improve service delivery.
3. Power Sector Recovery Program (PSRP): Launched in 2017, the PSRP is a policy program aimed at addressing the challenges facing the power sector and improving its performance. It focuses on financial sustainability, improving service delivery, and increasing power generation capacity.
4. Market Transition Electricity Trading (TEM): The TEM is a framework designed to facilitate the transition from a government-controlled sector to a more market-oriented structure. It introduces competition in the wholesale electricity market and promotes market-based pricing.
5. Mini-Grid Regulations: In 2017, the Nigerian Electricity Regulatory Commission (NERC) introduced regulations to govern the operation of mini-grids, which are small-scale electricity systems that serve localized communities. These regulations aim to encourage investment in decentralized renewable energy solutions and improve access to electricity in remote areas.
6. Capacity expansion: Efforts have been made to increase Nigeria’s power generation capacity through the construction of new power plants, rehabilitation of existing plants, and diversification of the energy mix. This includes investments in gas-fired plants, renewable energy projects (solar, wind, hydro), and improving transmission infrastructure.
7. Rural electrification: The Nigerian government has also prioritized initiatives to improve access to electricity in rural areas. Programs such as the Rural Electrification Agency (REA) aim to connect more remote communities to the grid and encourage off-grid solutions through mini-grids and standalone systems.
Electricity and power reforms in Nigeria have been ongoing for several years to address the challenges and inefficiencies in the country’s power sector. The goal of these reforms is to improve access to electricity, attract private investment, increase generation capacity, and enhance the overall efficiency and reliability of the power sector.
NEW REFORMS Nigeria's electricity costs will now rise to approximately N170,000 per month, a significant increase from the previous average of N50,000. Starting from April 2024, 'Band A' power customers will experience a 240% tariff increase, from N66 per kilowatt hour (KwH) to N225/KwH. The Nigerian Electricity Regulatory Commission (NERC) has approved the rate increase for all distribution companies (DisCos) in the country, raising the payment per Kwh of electricity from about N66 to N225. Vice chairman of NERC, Musliu Oseni, clarified that only customers who enjoy 20-hour power supply and above will be affected by the tariff increase. Customers in Bands B, C, D, and E who consume less than 20 hours of electricity per day will not be affected.
NERC also noted that the tariff adjustment will impact a limited number of DisCo feeders, specifically fewer than 481 out of over 3,000 feeders. These impacted feeders account for approximately 15% of the Nigerian Electricity Supply Industrys (NESI) 12 million electricity customers.
Nigeria has made progress through recent reforms in its power sector. However, some key challenges remain, such as Insufficient natural gas supply to power plants, Bottlenecks in the electricity transmission infrastructure, High rates of electricity losses, and Issues with revenue collection The government is actively working to address these challenges. It continues to collaborate with various stakeholders to achieve a more efficient and reliable electricity supply for Nigeria's growing population and economy. These reform efforts are part of Nigeria's broader strategy to tackle longstanding problems in its power sector. The goal is to create an environment that attracts private sector investments to boost electricity generation and supply across the country.
While challenges persist, Nigeria is demonstrating its commitment to strengthening its power infrastructure and services through these comprehensive reform initiatives.