DEVOLUTION IN ELECTRICITY REGULATION
It is a welcome development for the power sector
In a historic move, the Nigerian Electricity Regulatory Commission (NERC) recently gave fillip to the long agitation for the decentralisation of the power sector. From last Wednesday, the regulatory oversight of the Enugu electricity market has been transferred to the state government vide the Enugu State Electricity Regulatory Commission (EERC). This was sequel to the recent constitutional amendment devolving the power sector from the Exclusive List to the Concurrent List by the 9th National Assembly and the consequent Electricity Act 2023. Both effectively empower the 36 states to take their fate in their own hands in the management and regulation of electricity markets within their jurisdictions.
It is instructive to note that the directive covers all spheres of the electricity sector: From power generation to transmission and distribution. NERC also explained that with this transfer, EERC now holds the exclusive power to set and adopt end-user electricity tariffs within Enugu State, suiting charges to local circumstances and requirements. We hope this transfer will ignite and encourage investment in the Enugu electricity market since the state regulatory agency is now able to issue licenses for electricity generation, transmission, and distribution.
That Enugu became the first state to benefit from these laws is consequent upon the initiation, passage, and signing of the state electricity law by Governor Peter Mbah in September 2023 as well as the constitution of the EERC in March 2024. We commend Mbah for his forward-thinking. But Enugu is no longer alone on this journey. It has been joined by the Ekiti State Electricity Regulatory Bureau and the Ondo State Electricity Regulatory Bureau, following the transfer of regulatory oversight of the electricity markets in their respective states to them. This is the much-touted restructuring in action and a very welcome development for the Nigerian power sector, especially for a country that is writhing in the pains of power poverty.
Despite the huge resources poured into the sector by successive administrations over many decades, a nation of well over 200 million people is still struggling to break the 4,000MW jinx. Not even the muddled privatisation of the sector has helped matter, as the nation continues to struggle with power generation and distribution, limited distribution and transmission networks and capacity, and an outlandish metering gap. These have all combined to cripple attempts at industrialisation, economic growth, and social development. Businesses have been forced to fold, while many have relocated to neighbouring and rival African countries to produce and ship back to Nigeria’s large market.
It is significant that the federal government is finally coming to terms with the reality that it cannot continue to bite more than it can chew. Bestriding virtually every sector of national life can only sink the country further into social, economic, and political doldrums. However, now that Abuja is relinquishing its stranglehold on electricity generation, and distribution, the onus is on the governors to reinvent the power sector in their states. It is not enough to ask for more powers to be devolved to them, they should also show capacity in leveraging such devolutions as they come.
As we urge the remaining 33 states in the country to follow the examples of Enugu, Ondo and Ekiti states, it is also important to understand the significance of what NERC has done, including last week’s deregulation of meter prices for those deployed under the Meter Asset Provider Scheme. It is based on the realisation that you cannot continue to do the same thing and expect different outcomes. When complemented with mechanism for improving accountability, restructuring critical aspects of our national life that inhibit growth and development has the potential for strengthening good governance and human development in Nigeria. We hope the ongoing reforms in the electricity sector will prove that.
