From Isaac Anumihe, Abuja
Following the seemingly intractable and irreconcilable crisis in the power distribution value chain in Nigeria, the two chambers of the National Assembly on March 1, 2022, passed a bill to allow states generate, transmit and distribute electricity in areas covered by the national grid.
The “Bill for an Act to alter the provision of the Constitution of the Federal Republic of Nigeria 1999 to allow states generate, transmit and distribute electricity in areas covered by the national grid; and for related matters,” was presented for debate at both chambers of the parliament.
Ninety senators and 298 members of the House of Representatives voted in support of the bill at the two chambers. But two members of the House of Representatives voted against the proposal.
However, Section 5(b) of the electricity bill stated that the Minister of Power would supervise the operations of the agencies and commissions that may be created from the bill.
The bill said: “The Minister shall be responsible for the determination, formulation and monitoring of government policy for the Nigerian Electricity Supply Industry (NESI) and perform the following functions, including other functions assigned to him under this bill and other acts of the National Assembly.”
The bill added that the Minister of Power shall exercise general supervision over the affairs and operations of the commission and agencies established under the bill.
“And for this purpose give general and specific policy direction, including directions on overall system planning and co-ordination to the commission or agencies established under this bill, which the commission or the agencies shall take into consideration in discharging their respective functions.” the bill specified.
But the snag here, and which the state governors, under the auspices of the Nigerian Governors Forum (NGF), pointed out, is that the bill tends to limit the powers of the governors to build generation plants, transmission and distribution lines only in areas not covered by the national grid.
This, they argued, shrinks the powers of the states to make laws for electricity within their jurisdictions.
Having considered the injurious nature of the bill they, therefore, recommended that the National Assembly set up a National Economic Council (NEC), to work with the National Assembly leadership on the way forward for the electricity sector.
“The governors recommend the constitution of a working group, spearheaded by the state governors under the auspices of the National Economic Council (NEC), to work with the NASS leadership on the way forward for the electricity sector” the chairman of the governors forum, Dr Kayode Fayemi, said.
However, the stakeholders in the industry have argued that all the states have potentials to generate and transmit power because gas deposits are in the states and states who have rivers can build dams.
The power that is generated can be transmitted through alternative routes other than the national grid.
However, where the national grid is inevitable, the states can use the grid and share the revenue with the Transmission Company of Nigeria (TCN).
President, Consumer Protection Network and member, National Technical Investigative Panel on Power System Collapses, Kola Olubiyo said that the business of generating, transmitting and distributing electricity should be moved from the Exclusive List because states have the capacity to handle these responsibilities.
“This is to make sure that states be alive to their responsibility. We are saying that this should be moved from the Exclusive List. It is not the business of Federal Government to be involved in generating, transmitting, distributing power. It was imposed on us by the military government. States can generate and transmit. They can set their own structure. Every river that does not dry throughout the year can generate power,” he said.
As for transmission, Olubiyo said that there are alternative routes outside the national grid, wondering why it is taking Nigeria so much time to find a solution to power crisis.
“In three, four years, Egypt was able to ramp up their power. The same thing with South Africa. For 10 years we have not been able to go beyond 4,000 megawatts. Even when they brought Siemens they were proposing 7,000, 13,000, 25,000mw. What about evacuation?
“You can take Siemens mobile transformers to different zones or different economic clusters and jobs will be created. If you give shoemakers in Aba one mobile track transformer and create a grid like what Bath Nnaji is doing they will have electricity and everybody will be busy.
“For transmission, there are alternative routes you can take. As we speak, there are gas pipelines that people are giving to industrial areas. There are Ajaokuta-Kogi-Kano (AKK) pipelines. If they finish it, it will link up with West Africa gas pipeline.
“They will create different verves where companies will just connect. Those Siemens mobile transformers are like what you have in Julius Berger. It’s not going to be those transmission big lines.
“So, if you have a diesel and you have a turbine, you can start generating. Are those cement companies connected to transmission stations?
“In the public hearing some of these things would be raised. This law (electricity law) will take precedence over any other law in existence,” he said.
The consumer protection president picked hole in the power privatisation, saying that it was done with mischief.
His words: “The way the distribution companies (DisCos) were given to us, was as if wools were put on our eyes. How can somebody be an investor without putting a dime on the table? The DisCos were not even making remittance. You go and borrow money from the bank and you say that you’re not making money. You see what came out from Ibadan DisCo. Some will put themselves on $200,000 a month, $500,000 a month. Who’s being paid that anywhere?
“The framework of the privatisation was done with mischief and the government was misguided and what we have now is that there is no economy that can grow with monopoly. The bill will give the populace and country an alternative and choice. If you have a market and there is no alternative the consumer will be alienated. We are being strangulated. So, if the states now have the licence to generate, transmit and distribute, then they (DisCos) don’t have anybody to blame.
“Bath Nnaji is paying Enugu DisCo money that they do not earn because they claim that they have the franchise. So, if we don’t break that monopoly the economy cannot grow? It will enhance competition. By 2023, the licence of the DisCos is expected to expire. The privatisation created a lot of booby traps. It was as if the politicians were on the payroll of the so-called investors.”
In his own submission, a mini-grid developer, Folusho Alabi, an engineer, suggested that states can still use the existing infrastructure (either distribution or transmission channels) for a fee if they cannot develop their own infrastructure.
“It is almost illegal to generate power within the franchise of a distribution company.
It is not yet a law. It is a bill, but if the bill becomes a law, the entity generating the power will rely on the distribution line or distribution infrastructure of the incumbent to transmit its power. They (states) must still use the existing infrastructure on ground and then share revenue based on agreed tariff and then sell their power.
“The infrastructure available belongs to the Transmission Company of Nigeria (TCN). However, there’s a fee to be paid for using the infrastructure. On the tariff side, once the revenue starts to come in you all (states and TCN) will share the revenue.
“Although the consumers will pay high tariff, the essence is regular supply power. This is on a willing buyer, willing seller module. If you want power steadily, are you ready to pay for it? There are some places in Lagos they are paying N180 per kilowatts per hour and they are not complaining,” he said.
On whether the services of the distribution companies will no longer be available, the engineer noted that they will still remain in operation, saying that state police and federal police can still work together.
“So, it depends on what you want.
If states have police, for example, the federal police should not be disbanded.
They cannot have a parallel distribution line. It won’t work,” he asserted.
President, Renewable Energy Association of Nigeria (REAN), Dr Segun Adaju, maintained that the new law cannot force the DisCos out of business. Rather it would create a variety of choices for the consumer.
Hear him: “It’s good that the government wants to give states power to generate power. I think that’s what states like Lagos State has been trying to do for many years starting with Tinubu’s era when he tried to bring in Enron Power.
“I think the focus should be on a lot of distributed power. What we call ‘captive’ power. For example, Lagos State has a couple of Independent Power Plants (IPPs) it has developed. There’s one located around Marina. There’s one at Alausa that can power the whole facility. So, without even talking of distribution yet, they can generate ‘captive’ power for some location or what we call ‘distributed’ power. So, we can generate and consume close to site.”
Adaju disclosed that although the DisCos will not shut down operations, their performance will be enhanced.
“The DisCos will not fizzle out. There are several models of power generation. There’s the one we call captive. There’s distributed and there’s embedded power. It is not only the grid and the DisCos that can supply all the powers that we need. The way it is now, the DisCos and the generation companies (GenCos) have not been able to meet the power need of Nigeria.
“So, they won’t fizzle out. They will still be in business. The state can say that okay, I am powering with Ikeja DisCo. I have seen such models in Germany, South Africa and it is working,” he said.
President-General, Coalition of South East Youth Leaders (COSEYL), Honourable Goodluck Egwu Ibem hailed the electricity bill, noting that the liberalisation of the power sector will bring the needed sanity in the industry.
“If the National Assembly will pass the bill giving the states the authority to generate power it shouldn’t stop at that. There should be a liberalisation of the power sector in such a way that even the private persons and companies can venture into the business. This is the same thing we have in telecommunications. If there is competition we will have the best service and we will have the best power. This is because every company or agency will work to satisfy its customers.
“Given the right to generate power, each state can also build dams and generate power for itself. It should be a total liberation whereby they can have capacity to build dams. It is wrong for a country as big as Nigeria to depend on one dam to generate power. There’s no way it can work. It’s wrong for one dam to generate power for 36 states. It cannot work. The states should be given the power to build dams and generate power for themselves,” the president-general explained.