Electricity Bill 2022: States, FG disagree

By Haruna Salami

State governors under aegis of Nigeria Governors’ Forum, NGF have vehemently opposed the new “Electricity Bill, 2022” before the Senate describing it as  unconstitutional and an unjustifiable act.

In a memorandum presented by Kayode Fayemi, Governor of Ekiti state and Chairman NGF at a public hearing organised by the Senate Committee on Power Monday on Electricity Bill 2022, the governors pointed out that “electricity is not an exclusive federal matter”.

The memorandum titled “Re: The Senate Electricity Bill” NGF recalled that past efforts of States to establish and sustain electricity markets of their own have been stifled by the Federal Government.

“We believe that the reality of the States as key partners in the achievement of universal electricity access by all Nigerians must not only be accepted by the Federal Government but must be legislated by the National Assembly. States like Lagos, Edo Ekiti, Ondo and Kaduna have already taken the initiative to enact policy statements and laws for the electricity sectors in their States. Similarly, the 19 States of Northern Nigeria have come together to establish a common platform for realising the benefits of the extensive renewable energy resources that their region is blessed with.

Fayemi said “it would be unconstitutional and an unjustifiable act of overreach for the Senate to consider and pass a Bill that continues to treat the Federation as one single electricity jurisdiction or sector.

“While a single Electric Power Sector Reform Act may have been useful as a catalyst for the sector in the early years of the Fourth Republic, the States have all come of age, literally and metaphorically, and the arrangements must change in a way that accepts and respects the maturity of the States in electricity matters; a reality that this Senate Electricity Bill does not recognise and take account of, but at best only pays the most cursory lip service.

“After 71 years of sole and unchallenged central control of the electricity sector, we live with an electricity sector divided into two parts. One part is the FG-controlled and regulated national electricity market that today is insolvent, bankrupt and delivers no more than approximately 4,000MW/96,000MWh daily to 220m Nigerians, or an average of 18w/432watt-hours daily, barely enough to power two (2) 10-watt light bulbs a day. The other part of Nigeria’s electricity sector is the alternative/back-up market, whose estimated capacity is approximately 40,000MWso much so that Nigerian citizens are their own electricity providers in their homes, factories, schools, hospitals and places of worship.

“Our calculations indicate that if the 40,000MW of electrical back-up capacity owned and operated by Nigerians were to be delivered to them by licensed private IPPs and distribution companies through organised public electricity markets, Nigerian citizens and governments would have saved up to =N=17tm in 2021.

Instead, this much money was burnt up via diesel and petrol generator operating/maintenance costs, instead of being saved and invested by private citizens and businesses and some of it captured by the States and Federal Government as tax revenues and levies. This has been the norm for decades and has worsened each year even as it seems set to continue in 2022 and beyond. Unfortunately, the reform and privatisation programme that was started in 2001 with the National Electric Power Policy, expanded in 2005 with the Electric Power Sector Reform Act, recharged in 2010 with the Roadmap to Power Sector Reform and consolidated in 2013 via the privatisation of the generation and distribution has come to a most regrettable halt with a privatised FG-controlled market that has remained incapable of meeting national aspiration since 2013.

“Today, the Nigerian electricity sector is insolvent and has been dependent on the Central Bank of Nigeria and Direct Foreign Investments for regular infusions of cash to keep it afloat since 2013, building up liabilities that now stand at over =N=3 trillion. It is not clear how the Nigerian electricity sector can settle these liabilities and the Electricity Bill does not offer a way forward on the issue. In 2020, the National Economic Council (NEC) conducted a thorough analysis of the entire sector since the 2013 privatisation. The ensuing NEC Report established that the sector is in dire crisis and the privatised national electricity market has not turned out as planned for various reasons, including:

Some incorrect assumptions made by the Federal Government pre-privatisation; according to NGF include “lack of adequate due diligence by bidders for available electricity assets; failure to set economic tariffs; non-compliance with commercial contracts and NERC regulations”.

Others are “absence of effective power purchase agreements thus encouraging load rejection by Discos; misaligned and poorly-timed infrastructure investments by the Federal Ministry of Power, TCN, REA, etc often without consultations with Discos and/or State Government”.

The NEC Report went on to make three key recollections aimed at tackling these identified challenges and placing the national electricity market on the right footing:

“Return to a contract and rules-based that promotes the orderly evolution of the sector under Market Rules and implement the EPSRA that enable different tariff methodologies to be applied to the peculiar characteristics in States;

“Shareholders (FG, core investors other private sector capital providers) must recapitalize the Discos and bring in both new capital and ownership/management;

“Implement effective governance at both governmental (policy and regulation) and private sector (board and management) levels”.

Unfortunately, the NGF said two years later none of these recommendations has been implemented and the sector is even more imperiled than ever before.

“For the first time since 2013, the Federal Government is implementing the obligation of the Discos to pay up on their bills 100% and the Discos cannot cope. Instead, in order to avoid paying on bills the phenomenon of load rejection, whereby Discos refuse to receive energy for delivery to customers, has become far worse and more widespread than ever .

“Perhaps the most egregious feature that runs throughout the Bill Is the establishment of a single Federal Government appointee, the Minister of Power, as the de facto head and statutory supervisor of all the key FG electricity sector MDAs, including the Nigerian Electricity Regulatory Commission (NERC), in a supposedly privatised electricity sector. Interestingly, the Minister’s extensive powers over the sector are shared with the National Assembly through the mechanism of legislative oversight responsibilities.

“The Nigeria Governors’ Forum does not support this Electricity Bill in the version currently before the Senate, except these amendments are reflected. This is because it is unconstitutional and maintains the policy of Federal Government overreach in the electricity sector that has not yielded development to the country. We state in very clear terms that this Electricity Bill is not a solution to the pressing challenges summarised above. It is also premature in that it does not follow from a comprehensive national dialogue on a completely revised national electricity policy. We doubt that a private member’s Bill such as this can deal with such a complex national security issue without the benefit of extensive research, analysis and prior consultation before a comprehensive Bill is drafted.

“We strongly 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. From this should emerge a new National Electricity Policy and the foundations of a new Act of the National Assembly that, for the first time, will have the full buy-in of the States. Electricity is a vital matter of national security that, by virtue of the 1999 Constitution, is in the concurrent list and should, therefore, be made into law only with the collaboration and concurrence of the States of the Federation”, NGF said.

The NGF memorandum was copied to  Senate President and the Speaker of the House of Representatives.

Chairman Senate Committee on Power, Senator Gabriel Suswam assured all stakeholders that their memoranda would be thoroughly considered in the over all interest of the power sector.

Governor Fayemi was represented at the public hearing by  Mr. Odion Omonfomwan.