After much debate on the deregulation of electricity in Nigeria, the Nigerian Electricity Regulatory Commission (NERC) has issued regulations enabling investors, communities and local governments to generate and distribute electricity within their areas. The laws enable state governments with investments in infrastructure for power generation and distribution to now begin distributing electricity. Also, local governments with enough financial capability can now take advantage of the regulation to provide adequate power for their constituents.
Two regulations were issued by the NERC on Wednesday March 7, 2012. One of them titled “NERC Regulation on Embedded Generation 2012” permits investors, communities, states and local governments to generate and distribute electricity for their exclusive consumption using facilities of existing electricity distribution companies or independent electricity distribution network operators. The second one titled “NERC Regulation for Independent Electricity Distribution” permits communities, local and state governments to invest in electricity distribution networks in areas without access to the grid or distribution network or areas poorly serviced.
For most Nigerians, including myself, these regulations are taken with mixed feelings.
Electricity supply and distribution in Nigeria has been fraught with many challenges. The erratic power supply experienced has been a source of concern for individuals, businesses and investors and has hampered the economic growth of the nation in diverse ways. In most urban areas, power supply is a privilege that should be enjoyed when available but should not be expected to last for long. While in some rural areas and new communities, power supply is completely non-existent and cannot be hoped for even with more than a pinch of salt.
These regulations present some challenges to the state and local governments. It is not news that most local and state governments don’t have the necessary infrastructure or financial ability to generate electricity supply for their communities. Lagos state made a bold step last year with the launch of the first truly independent 10 Megawatts bi-fuel power generating plant to cater for some consumers on the Lagos Island. Though commendable, it is hardly enough to cater for the hundreds of industries and thousands of homes the state boasts of. Street lights in Lagos are still being powered by generating sets which consume an enormous quantity of fuel daily.
If it was left to foreign private investors, the question of affordability now arises. Most Nigerians are still groaning under the current electricity tariff that is being charged by the Power Holding Company of Nigeria. With the estimated billing system used by most homes and businesses especially under the post-paid method, people are still being faced with exorbitant bills for electricity that they did not consume. If electric supply is now left in the hands of private investors, how affordable would it be? Would residents have the opportunity to choose which source of electric supply they would want based on where they live or will they be forced to get their electricity from sources they are not comfortable with?
The NERC had recently warned electricity distribution companies not to charge their customers increased rates outside what is approved by it. However, with the huge investments private and government bodies would have to make to generate power for residents, it is wondered whether this part of the law would be upheld.
It might take some years before any private investor, state or local government starts generating electricity for its residents, but in preparation for that, Nigerians are skeptical on how it would be integrated.
So, what do you think about the new regulation? Would electricity supply be better with the power invested in the hands of private investors, state and local governments? Would this bring the much needed expansion in the generation of electricity in the country? Is Nigeria prepared for private electricity generation? Please share your thoughts.
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