Anger Spreads Over Tariff Hike
Lagos, Kano, and 10 other states have concluded plans to start generating power in their respective states in conformity with the Electricity Act 2023.
The PUNCH gathered on Thursday that some of these states had established their electricity market laws and were waiting for the approval of the Nigerian Electricity Regulatory Commission to have independent regulatory bodies different from the NERC owned by the Federal Government.
As the states stepped up efforts to generate electricity, the Federal Government’s 240 per cent power tariff hike for consumers in Band A enjoying 20-hour electricity attracted more condemnations on Thursday.
Groups including the Petroleum and Natural Gas Senior Staff Associations of Nigeria, civil society organisations and the Nigeria Electricity Consumer Advocacy Network warned that the hike would worsen the plight of Nigerians.
The subsidy on electricity has been withdrawn completely from the tariff payable by power consumers in the Band A category, who constitute about 15 per cent of the total number of power users across the country.
The government, through the NERC, announced the hike in the electricity bill on Wednesday, adding that those affected would now pay a tariff of N225 per kilowatt-hour, up from the previous rate of N68/kWh, representing about 240 per cent increase.
However, there are strong indications that many states are taking advantage of the new Electricity Act to establish their electricity generation firms.
In June 2023, President Bola Tinubu signed a new Electricity Act into law, heeding the calls of Nigerians that the power sector be reformed and removed from the exclusive list, to give states the power to generate, transmit and distribute electricity within their jurisdiction. This, Nigerians believe, would help in proffering lasting solutions to the electricity problems in Nigeria.
The PUNCH reports that the new law replaces the 2005 Electricity and Power Sector Reform Act as it seeks to promote private sector investments in the power sector. It provides for a holistic integrated resource plan and policy that recognises all sources for the generation, transmission, and distribution of electricity.
Electricity Act
The new act permits the state electricity board or any state authority by whatever appellation, to grant licence for mini-grids and provide the framework for the operation of such licensees. With this, the Federal Government has succeeded in removing electricity from the exclusive list, allowing states and private individuals to invest in the sector.
Though a state can regulate its electricity market by issuing licences to private investors who can operate mini-grids and power plants within the state, the act, however, says that until a state has passed its electricity market laws, the NERC will continue to regulate electricity businesses in such states.
Inner sources at the NERC told The PUNCH that at least, 12 of the 36 Nigerian states were set to have their own independent electricity regulatory commissions following the enactment of the 2023 Electricity Act.
It was reliably gathered that the states had applied to the NERC, seeking independence in regulating their electricity markets without the interference of the Federal Government commission.
The NERC official, who spoke on the condition of anonymity because he was not allowed to speak on the issue, hinted that the NERC, which is presently regulating the Nigerian electricity market, must transition regulatory responsibilities from itself to state regulators when they are established.
“This means that, until a state has passed its electricity market laws, NERC will continue to regulate electricity businesses in such states. 12 states have applied to have their regulatory commissions and once the necessary things are done, the NERC will no longer regulate electricity in those states.
The states will be on their own. That will allow them to generate, transmit and distribute power within their states only. Some of them who have been generating power before the act can now commercialise it and even grant licences to investors to invest in their states,” the source said anonymously.
Another source said, “I can confirm that 12 states have applied to have their regulatory bodies. But I can’t give you the details. Our legal team is still working on the requests by the states.”
Similarly, a source close to the Minister of Power, Adebayo Adelabu, confided in one of our correspondents that 12 states were ready to start generating electricity in their states, saying more states should follow suit to solve the nation’s electricity challenges.
The PUNCH reports that Nigerians have continued to languish under a deteriorating power sector supervised by the Federal Government for many years. On many occasions, the national power grid keeps collapsing, plunging the nation into blackouts while affecting businesses.
The power grid collapsed 46 times in six years, according to a report by the International Energy Agency.
As a way of ending the power problems in their domains, some states appear to be leaving no stone unturned. As of February, checks with the Ministry of Power revealed that Lagos, Edo, Kaduna, Enugu, and Oyo have signed their electricity laws.
Ekiti project
Ekiti State Commissioner for Information, Taiwo Olatunbosun, said that the state government had domesticated the Electricity Law, stating that it had been generating and transmitting electricity through the Independent Power Project.
Olatunbosun said, “We have domesticated the Electricity Law here in Ekiti State. The IPP that we have is doing well. The state government plans to upgrade it to 5MW and from there, we improve and establish some other areas.
“The places and businesses the IPP is presently servicing include the Government House, government offices, State Secretariat, Ekiti State University Teaching Hospital and we are extending to Ekiti State University as well. It is equally servicing some conglomerates and other people who are already requesting for it”.
The commissioner said that the present administration in the state would continue to provide strategic interventions in electricity and other infrastructural development “to make Ekiti a destination for investors and uplifting the social life of our people and others promoting their business without any form of challenges that power generation may cause now and in the nearest future.”
According to him, the present IPP structure was built to accommodate future expansion to about 5mw from its present 3.6mw capacity.
The Commissioner for Information and Strategy, Gbenga Omotosho, in an interview with our correspondent on Thursday said following the passage of the Electricity Act, Lagos had been at the forefront of championing independent power generation.
Omotosho said, “Lagos has been at the forefront of unbundling power generation and power distribution systems. Lagos was the very first to start an independent power project in the days of Asiwaju Bola Tinubu as governor, who is now our President.”
He said although the project could not fly then due to some constraints, Lagos did not give up.
“For Lagos State, everything is being put in place to ensure that our people can enjoy stable electricity. We are all for it because it’s about our people.
“We’re having discussions with so many entities in the private sector on how Lagos can generate its electricity, and people have been showing interest,” Omotosho stated.
The Benue State Government disclosed that it had put efforts in top gear to establish its electricity firm.
The state Commissioner for Power and Transport, Omale Omale, who spoke to one of our correspondents on Thursday stated that the state had begun its transmission programme and policy in the power sector.
According to him, the state government has started working on the legal framework that will give electricity law which will help articulate how the power sector in the state would be run.
He said, “Our power market is opening up with investors and our power market is end-to-end where the state will create a market for the private sector to come in, to transmit and distribute.
Omale added that already the state government has had intensive stakeholders’ interactions with the Jos Electricity Distribution, the Transmission Company of Nigeria, customers as well as other critical stakeholders.
He expressed assurance that by the end of the second quarter of this year, the legal framework and policy in the power sector would have been concluded.
Nasarawa partners firm
The Nasarawa State Government said it had entered into a partnership with the Nigeria Off-Grid Market Acceleration Programme to ensure the rapid development and implementation of the state’s energy projects, and to enhance its power and sustainability agenda.
Speaking with journalists in Lafia on Thursday, the Managing Director of the state’s Investment and Development Agency, Ibrahim Abdullahi, said the partnership was a step towards bringing the Nasarawa State vision of becoming one of the top three most competitive economies in Nigeria to actualisation.
He explained that the collaboration, which was formalised with the signing of a Memorandum of Understanding between the state government and NOMAP, was carried out by the Agency, and the Nasarawa Electricity Power Agency as the technical lead.
Also, the Governor of Kebbi State, Dr Nasir Idris, has assured people of the readiness of his administration to create an enabling environment for Fadel International Holding Group to generate solar power for the state.
The Chief Press Secretary to the governor, Ahmed Idris, said “Electricity is one critical area that touches the lives of many. “We don’t have power, but coming of this independent power company is going to help us and help our businessmen and women to grow,” he said.
On its part, the Kano State Government said its independent power project was almost completed, saying it established the power company more than 10 years ago during the second tenure of Senator Rabiu Kwankwaso.
The Director General of the Media and Publicity, Sanusi Tofa, said the two ongoing independent power projects in Tiga and Challawa Goje Dams were at 90 per cent completion, saying there was over $40m in the company’s account to ensure the completion and take-off of the project in no distant time.
“This was established when the new law was not even anticipated. Unfortunately, the money was misappropriated, and the projects were abandoned for eight years,” he said, adding that the projects were completed and tested in January 2024.
Speaking with one of our correspondents, the Osun State Commissioner for Energy, Mr. Festus Adeyemo, said the state had commenced work to generate and distribute energy.
Adeyemo, however, identified funding as a major setback against the plan, adding that the state was relying on support from the World Bank and private investors that have been showing willingness to partner the state.
He said, “We are interested, and we are going to start work on it very soon. We have been working on it, but there some basic things we need to do before going into the real project. We want to have a solid foundation. We are looking at the technical aspect of it.
“The major of challenge is that of funding, but we are getting over it because we have the backing of World Bank. There are some little technical aspects of the project too. We have reached out to the Federal Ministry of Power and we have been given the go ahead. There are some paperwork that we need to do at the federal level before we can commence work on the project”.
The Ondo State Government said it was the first state that domesticated the electricity law in the country even before it was signed it to law.
A top government functionary told one of our correspondents that the electricity bill was passed and signed into law during the administration of late Governor Rotimi Akeredolu .
He said, “The state government was planning to license some companies to generate and distribute electricity in the state, but the process was stalled as a result of the sickness and death of the former governor.”
The Chief Press Secretary to the governor, Mr Ebenezer Adeniyan confirmed the development as he said, “We are the first to domesticate the electricity law during the late Governor Rotimi Akeredolu. “
In Zamfara, the state government is looking into the possibility of establishing an electricity generating company following persistent power failure in the state.
The Special Assistant to Governor Dauda Lawal on Media and Communications, Mustafa Kaura said the state government had conducted a survey on how to generate electricity from Bakalori dam.
According to Kaura, the work on electricity generation had started in the state during the administration of former President Goodluck Jonathan, adding that, “the work will continue by the administration of Gov Lawal”.
In Sokoto State, the government said it had intensified efforts to improve on electricity supply through its independent power project.
Governor Ahmed Aliyu begged the Minister of Power, Adebayo Adelabu, recently on a courtesy visit to the Government House, Sokoto, for the support of the Federal Government on the project.
According to him, the State IPP, which is at 90 per cent stage of completion was initiated by the Wamakko-led administration to boost socio-economic activities in the state.
“The project is almost completed, so, we need the support of the Federal Government to ensure its take-off,” the governor said.
Anger grows
Meanwhile, the PENGASSAN, CSOs , and the Nigeria Electricity Consumer Advocacy Network have lambasted the Federal Government for allowing the implementation of the 240 per cent tariff hike regardless of the class of customers being affected.
Speaking on the sidelines of the National Executive Council meeting of the association in Abuja, PENGASSAN’s President, Festus Osifo, said the tariff hike would compound the perilous nature in Nigeria.
“Jumping from N68/kWh to N225/kWh is enormous. We think that the government should exist for the purpose of serving the people. Adding that to the perilous nature of the society today, the currency floatation that has put us in this mess that we are in today, and the fuel subsidy removal, I think it is quite drastic. So, we will interrogate the process and take a formal position about it,” Osifo stated.
The National Secretary of Nigeria Electricity Consumer Advocacy Network, Uket Obonga, said the Discos lacked the capacity to provide 20- hours supply and would not meet the target, but would bill consumers based on the new rate.
“This is not the first time they are talking about delivering a minimum of 20 hours supply. It is becoming clear that the regulator is making money from the DisCos and it is now dancing to the tune of the Discos,” Obonga alleged.
In his reaction, the Chairman of the Centre for Anti-Corruption and Open Leadership, Debo Adeniran, described the hike as an “ill-timed oppressive policy”, noting that the hike would drive industries out of business.
“It is an ill-timed oppressive policy, and of course, there is no basis for the classification of consumers into all of those bands that they’re talking about,” Adeniran declared.
He said if there had been an improvement in the supply of electricity, the tariff hike would be understandable.
“It is a shameful thing for the electricity regulators to accede to the claim that the whole of Nigeria cannot be serviced with 24-hour electricity,” he said.
The TUC insisted on Thursday that the hike was a recipe for industrial unrest in the country. The union had on Wednesday condemned the tariff hike.
On Thursday, the TUC’s deputy president, Tommy Etim, in an interview with The PUNCH, said“The hike in electricity tariff for those who enjoy electricity for 20 hours daily is totally unacceptable and a recipe for industrial unrest.
“ Today, we are still battling with the fuel subsidy removal without any corresponding remedy and yet the increase in the electricity tariff without even the supply of electricity. I think the government should know that they were not voted into office for the enslavement of the citizens but to protect and better the lots of the masses. This is an indication that the poor can no longer breathe,” Etim said.
Similarly, the Executive Director of the Rule of Law Accountability and Advocacy Centre, Okechukwu Nwaguma, said the government must decide whether it wants to serve or punish the people, adding that the policy marks an addition to the pains of the citizens.
“This is an addition to the pains and deprivation of the people. It seems to me that this government is out to punish Nigerians. We were expecting that policies will be put in place to actually cushion the effect of the removal of fuel subsidy.
“But to further remove subsidy on electricity, even when the electricity is not available, people are being made to pay for services that are not provided, it simply shows that this government is out to punish Nigerians.
“If there was improvement in the supply of electricity and this increase comes, it would be understandable, on the contrary, there is no improvement. I think the new government should decide whether they want to serve the people or punish the people,” he said.