PwC Cautions State Govts against Hasty Implementation of 2023 Electricity Act

•Says having vastly different electricity laws across states would be chaotic

Dike Onwuamaeze

The PwC has advised state governments to carry out proper planning and thorough feasibility studies before embarking on the implementation of the 2023 Electricity Act in order to avert efforts that would end up in futility.

The PwC stated this in a report it released yesterday, which stated that the Electricity Act 2023, was not cheap but involved substantial financial investments.

The PwC noted: “Adopting the Act involves substantial financial investments as engaging legal and commercial expertise, developing and establishing state-level regulatory bodies come at a significant cost, competing for limited state resources.

“Therefore, thorough due diligence and feasibility studies are crucial to ensure efficient resource allocation and project viability.”

According to the report, “the Act is not intended to become a political dividend for the populace. Therefore, simply ‘setting-up’ laws without a deep understanding of the local electricity market and adequate preparation can be futile.

“States must perform proper assessments and due diligence to ensure genuine commitment and successful implementation.”

It added: “Having vastly different electricity laws across states would be detrimental, creating market distortions and unfair competition.

“There is a need to ensure that regulation of electricity across the federation is fairly consistent and avoid regulatory capture.”

The report recalled that the Act empowered state governments to participate in areas previously reserved for the federal government, particularly transmission and distribution.

The Act also defined how states can participate, with different state Houses of Assembly playing a vital role. However, it envisaged that successful state implementation would require significant support and close collaboration with the Nigerian Electricity Regulatory Commission (NERC).

The PwC, therefore, noted that, “the Act emphasises close collaboration between the NERC and state-level SERCs to ensure coordinated oversight, smooth transitions, and consistent regulatory standards.

“Partnerships between state governments and utilities are encouraged, fostering a united front for sector development and improved service delivery.”

The PwC noted that the involvement of state governments is expected to improve access to electricity for Nigerians in remote communities, especially with the involvement of the Rural Electrification Agency in collaboration with the local government.

“The Act is vital to planning the country’s infrastructure needs in a coordinated manner. It also acknowledges the importance of collaborating with neighbouring countries within the West African Power Pool (WAPP).

“The Act embraces a diverse range of renewable energy sources, including hydrogen, coal-based renewables, wind, and others, thereby helping to foster a cleaner and more sustainable energy future. It also encourages adoption and the development of a framework for widespread acceptance,” the report said.

It added: “The Act prioritises renewable energy through several initiatives. Feed-in tariffs offer financial incentives for renewable power generation, while local content development requirements and tax breaks encourage domestic participation in the sector.”

The PwC clarified that the NERC still retained its position as the apex regulator of the power sector.

It said: “NERC retains its role as the apex regulator until individual states adopt the Electricity Act 2023. They continue to oversee interstate transactions and generation-to-distribution connections, working in coordination with states to ensure a smooth transition.”

The Act also defined offences and associated penalties, promoting accountability within the sector. In addition, the states have increased autonomy, working with their legislature, to enact laws that strengthen their enforcement capabilities.

The Commissioner for Energy and Mineral Resources, Ondo State Government, Mr. Razaq Obe, said the Act has given state governments the power to shape their electricity landscape, demand accountability and responsiveness from DisCos, adding that solving the electricity issue is crucial for Nigeria’s economic growth and overall development.

Obe said: “The failures of past governments are attributable to their inability to address this fundamental problem.

“The Electricity Act 2023 is a turning point, a watershed moment, and a chance to break free from past struggles. Without the previous bottlenecks, and with sub-nationals empowered, we welcome the decentralised state-level approach towards finding potential solutions.”

According to him, the Act has empowered Ondo State to take the initiative and engage with the distribution companies (DisCos).