Lagos, Kano, and Other States to Generate Power as Tariff Hike Sparks Outrage
In adherence to the Electricity Act of 2023, twelve states, including Lagos and Kano, are finalizing plans to generate electricity within their respective territories.
These states have taken steps to establish their own electricity market regulations and are awaiting approval from the Nigerian Electricity Regulatory Commission (NERC) to establish independent regulatory bodies separate from the federal government-owned NERC.
As these states intensify their efforts to generate electricity, the recent 240% tariff increase imposed by the federal government on Band A consumers, who enjoy 20 hours of electricity daily, has drawn widespread condemnation. Various groups, including the Petroleum and Natural Gas Senior Staff Association of Nigeria, civil society organizations, and the Nigeria Electricity Consumer Advocacy Network, have expressed concerns that the tariff hike will exacerbate the challenges faced by Nigerians.
The subsidy on electricity for Band A consumers, which accounts for approximately 15% of the country’s total power users, has been completely withdrawn. The NERC announced the tariff hike on Wednesday, raising the rate from the previous N68/kWh to N225 per kilowatt-hour, marking a significant 240% increase.
Meanwhile, it appears that several states are capitalizing on the opportunities presented by the new Electricity Act to establish their own electricity generation companies. The Act, signed into law by President Bola Tinubu in June 2023, grants states the authority to generate, transmit, and distribute electricity within their jurisdictions, thereby addressing Nigeria’s longstanding power challenges.
The new law, which replaces the 2005 Electricity and Power Sector Reform Act, aims to promote private sector investments in the power sector and encompasses a comprehensive integrated resource plan and policy that recognizes various sources for electricity generation, transmission, and distribution.
Under the Electricity Act, state electricity boards or relevant state authorities are empowered to grant licenses for mini-grids and establish frameworks for their operation. Consequently, the federal government has effectively decentralized power generation, allowing states and private individuals to invest in the sector.
However, until a state passes its own electricity market regulations, the NERC will continue to regulate electricity businesses within that state. According to anonymous sources within the NERC, at least twelve out of the thirty-six Nigerian states have expressed interest in establishing their independent electricity regulatory commissions following the enactment of the 2023 Electricity Act.
These states have already submitted applications to the NERC, seeking autonomy in regulating their electricity markets without federal government interference. Once the necessary procedures are completed, the NERC will no longer regulate electricity in those states, granting them the authority to generate, transmit, and distribute power exclusively within their territories. Some states, which had already been generating power before the Act’s implementation, can now commercialize their electricity and grant licenses to investors interested in their states.
Although specific details of the states’ applications are yet to be disclosed, a source associated with the Minister of Power, Adebayo Adelabu, revealed that twelve states are ready to commence electricity generation within their respective territories, emphasizing the need for more states to follow suit in resolving the nation’s electricity challenges.
The Nigerian power sector has long been plagued by persistent issues, with frequent collapses of the national power grid resulting in widespread blackouts and adverse effects on businesses. According to a report by the International Energy Agency, the power grid has collapsed on 46 occasions in the past six years.
Various states are now taking proactive measures to address these challenges. For instance, the Nasarawa State Government has entered into a partnership with the Nigeria Off-Grid Market Acceleration Programme (NOMAP) to fast-track the development and implementation of energy projects in the state, as part of its broader power and sustainability agenda.
Similarly, the Governor of Kebbi State, Dr. Nasir Idris, has expressed commitment to creating an enabling environment for Fadel International Holding Group to generate solar power, recognizing the significance of reliable electricity in driving economic growth.
In Kano State, the independent power project, initiated over a decade ago during Senator Rabiu Kwankwaso’s second tenure, is nearing completion. The ongoing projects at Tiga and Challawa Goje Dams are reported to be 90% complete, with over $40 million available in the project’s account to facilitate its timely completion and launch.
As more states embrace the opportunity to generate power independently and the tariff hike controversy persists, the nation is witnessing a significant shift towards resolving the long-standing electricity challenges faced by Nigerians.
Osun State: The Osun State government has begun work to generate and distribute energy following the enactment of the new Electricity Act.
Zamfara State: The Zamfara State government is exploring the possibility of establishing an electricity generating company due to persistent power failures in the state. A survey has been conducted on generating electricity from the Bakalori dam.
Sokoto State: The Sokoto State government is intensifying efforts to improve electricity supply through its independent power project (IPP). The project, initiated during the Wamakko-led administration, is at a 90% completion stage. Governor Ahmed Aliyu sought the support of the Federal Government to ensure its successful implementation.
The passage also includes reactions to the tariff hike:
Adeniran’s Statement: Adeniran, a critic of the tariff hike, described it as an ill-timed oppressive policy. He criticized the classification of consumers into different bands and argued that if there was an improvement in electricity supply, the tariff hike would be more understandable.
Trade Union Congress (TUC): The TUC strongly condemned the tariff hike and considered it a recipe for industrial unrest. The TUC’s deputy president, Tommy Etim, expressed dissatisfaction with the increase, citing the removal of fuel subsidy without corresponding remedies as an additional burden on citizens.
Rule of Law Accountability and Advocacy Centre: Okechukwu Nwaguma, the Executive Director of the center, criticized the government’s decision to remove subsidies on electricity when there is no improvement in supply. He argued that it adds to the suffering of the people and suggested that the government must decide whether it wants to serve or punish the citizens.