How new bill plans radical changes for power sector | Dailytrust

How new bill plans radical changes for power sector

Senate President Ahmad Lawan  and Power minister Engr. Abubakar Aliyu
Senate President Ahmad Lawan and Power minister Engr. Abubakar Aliyu

A new Electricity Bill 2021 is being considered by the National Assembly for an act that will repeal the Electric Power Sector Reform Act (EPSRA) 2005 and consolidate the laws relating to the Nigerian Electricity Supply Industry (NESI).

The 146-pages with 21 sections bill, could become the Electricity Act 2021 if it scales through the parliamentary hurdles. 

Public hearing on the bill has been slated for today and tomorrow where operators in the Nigerian power sector, civil society organisations as well as electricity consumers will converge at the National Assembly to deliberate on sections of the bill being promoted by Senator Gabriel Suswam from Benue North East and the Senate Committee on Power.

New tribunal, policy, other reforms underway

If enacted, it will provide a comprehensive legal and institutional framework for the post-privatization phase of the power sector in the country in the generation, transmission, distribution, supply, trading and use of electricity.

It also focuses on regulatory measures conducive to a phase-wide development of the Nigerian electricity supply industry across the transitional and medium and long term market stages while protecting the interest of consumers; and ensuring stable supply of electricity to all areas of the country by promoting cost-reflective and service reflective tariffs.

The bill also considers the controversial issue of cross-subsidy for electricity payment where industries and commercial consumers are made to subsidise power for the rural poor. 

Thus, the bill seeks to ensure a gradual elimination of cross-subsidies within a specified timeframe, and stimulate the contribution of renewable energy to Nigeria’s energy mix.

Since the power sector reform started in 2005 with the EPSRA, only the Nigerian Electricity Management Services Agency (NEMSA) has an independent act separate from the EPSRA. The rest, including the regulator – the Nigerian Electricity Regulatory Commission (NERC) – are established based on the EPSRA which is nearly 17 years old.

The new bill also seeks to establish NERC, the Rural Electrification and Renewable Energy Agency (REREA) which is presently known as the Nigerian Rural Electrification Agency (REA), and to also establish NEMSA.

The first tribunal for the power sector, the Electricity Disputes Appeal Tribunal (EDAT) will also be established if the bill becomes an act. This is to enhance the quick resolution of disputes in the electricity industry and for related matters. 

Although NERC has an existing alternative dispute resolution mechanism, the promoters of the bill believe the new tribunal will ensure a dispute resolution mechanism that conforms to the requirements of fair hearing whilst maintaining the independence of NERC and its mechanisms.

Another issue bugging the power sector is the role states play in it. This is because states are required to apply to NERC for licensing to build power plants that would connect to the national grid and also follow all market rules in the Nigerian Electricity Market (NEM). 

However, the new bill, if enacted, seeks to clarify the constitutional role of states and local governments in electricity generation, transmission, and distribution alongside the role of the federal government in rural electrification.

Another highlight of the bill is that once enacted, the Federal Ministry of Power is to within one year from the commencement of the act, prepare and publish in a federal gazette, an Integrated National Integrated Electricity Policy and Strategic Implementation Plan (INIEPSIP) to guide the overall development of the electric power sector in the country.

It will focus on the development of the electric power sector based on optimal utilization of resources such as coal, natural gas, nuclear substances and materials as well as renewable energy sources such as solar, wind, hydro, hydrogen among others; mini-grids or stand-alone system in rural areas, rural electrification and for bulk purchase of power and local power distribution; public-private partnerships; policies including waivers and subsidies to promote renewable energy, among others.

This policy will be reviewed along with stakeholders every five years or at any time determined by the power minister, the bill stated.

The bill will also empower the minister to declare the medium and long term electricity market which NERC shall establish. This is to ensure that all transactions are strictly governed by contractual agreements with sanctions for default. 

Experts believe this electricity market stage will enhance fiscal discipline among operators unlike the present Transitional Electricity Market (TEM) which started in 2015 and still has DisCos remitting below 30 per cent of their monthly energy collections due to inefficiencies.  

The Transmission Company of Nigeria (TCN) will also be made to relinquish its System Operation (SO) role and licence and focus on the Transmission Service Provider (TSP) licence from NERC for efficiency. 

TCN will incorporate the Independent System Operator (ISO) at the Corporate Affairs Commission (CAC) with shares and ownership determined by NERC and transfer roles of market and system operations, its license and terms and conditions to ISO.

Stricter anti-energy theft, task force

The new bill also strengthens sanctions against energy theft as any culprit shall on conviction be punishable with imprisonment for a term of more than three years or with a fine or with both imprisonment and fine. 

If the theft exceeds 10 kilowatts, the fine imposed on the first conviction is three times what was stolen and if it’s the second conviction, the fine is over six times. If the quantum stolen exceeds 10kW, the fine is three times more and or six months to three years imprisonment.

Vandalism or illegal removal of electrical materials and meters attracts N500,000 or three to five years jail term. A second time offender attracts five years’ jail and a fine of above N1 million. Receivers of stolen electrical materials and meters get 3-year jail or N500,000 fine or both, and a N10,000 daily fine for every continuing day of the offence.

Negligence on the part of consumers and operators that damage electrical materials bridging supply attracts N300,000 upon conviction and would be made to restore the damaged material or line while malicious damage of streetlights attracts up to N200,000.

The bill also seeks to establish the Federal Power Task Force (FPTF) to perform the functions and powers assigned to it relating to the prevention and enforcement of offences. 

This is a whole new dimension away from the Presidential Task Force on Power (PTFP) that operated from 2010 up to 2015, causing interventions and resolutions on gas and other issues that could slow grid operations.

Remove impediments, influences – FG urged

Commenting on some of the salient issues, President of the Nigeria Consumer Protection Network (NCPN), Kunle Olubiyo, stated that artificial impediments and influence towards implementation of reform of regulatory framework should be removed if the act is meant to work in the power sector.

“Those impediments to investments need to be removed if we must make progress. As good as it is, self-preservation of the federal government influences the centrally-controlled governance structure of the power sector and some other factors may influence the final outcome of the bill,” stated Olubiyo.

Commenting on empowering states to also make laws on electricity for the national grid based on the concurrent list, Joseph Okoh, a public sector analyst said that may not go down well with the regulation of the power sector.

Okoh said: “Since it is a national grid, NERC should continue to be the sole regulator across the grid which cuts across the states. The states are already empowered to do things that are off-grid and it should be that way.”

He, however, noted that as good as the bill could be, government influences must be stepped down. “We know the problem in Nigeria; even the current EPSRA is not short of what the power sector needs but the influence from various quarters, how are we sure this will not continue?”

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