The Minister of Power, Chief Adebayo Adelabu has said that creating multiple and unsynchronized markets with conflicting regulations in the sector posed serious risks that could confuse investors and strand power.
Adelabu, who expressed the concerns, while speaking on Thursday at the technical session to mark the 20th anniversary of the Nigerian Electricity Regulatory Commission, NERC, held at Transcorp Hilton Hotel, Abuja, advised industry players must be mindful of such risks.
The Minister also cautioned that the fragile national grid requires careful management to prevent fragmentation that could leave some regions behind.
He recalled that since the enactment of the Electric Power Sector Reform Act in 2005, NERC has been at the center of Nigeria’s transition from a state-run utility to a liberalized, private-sector-driven electricity market.
“Over these two decades, the Commission has laid the foundations of market stability – developing tariff frameworks, consumer protection sector’s evolution. mechanisms, and regulatory guidelines that have shaped our power
“This shift arrived with the Electricity Act of 2023, a landmark legislation signed by His Excellency, President Bola Tinubu, on the 6th of June 2023. This Act, coupled with the prior constitutional alteration, represents the most profound change in our sector’s history.
“It effectively bifurcates constitutional responsibilities, demonopolizing the electricity market and empowering State governments not just to markets is a game-changer. generate, transmit, and distribute electricity within their territories, but to regulate their individual State Electricity Markets. This move from a single national grid to potentially multiple, integrated sub-national
“Opportunities, which we must strategically harness. The new structure presents a paradigm shift with immense
Unlocking sub-National potential, he noted “The Act is a powerful tool for energy security. It allows states, many of which are larger than some neighbouring countries, to take charge of their energy economic and social needs. destinies.
“The States can now leverage on their unique resources – be it solar, hydro, or wind, to build grids that serve their specific. Driving investment and competition: By opening the value chain to states and private investors, while fostering competition, which innovative pricing for consumers. will ultimately lead to more options, better services, and achieving Incremental Progress: Some have proposed a strategic, city-by-city approach to achieving steady power, starting with state capitals by 2030.
“This pragmatic model allows for measurable progress and demonstrates the tangible benefits expansion. of reform, building confidence for further investment.
“However, this promising path also demands careful navigation. We must be mindful of the risks, including the potential for creating multiple, unsynchronized markets with conflicting regulations, which could confuse investors and strand power.
He said that the fragile national grid requires careful management to prevent fragmentation that could leave some regions behind. He urged stakeholders to embrace a collaborative framework built on four key pillars:
On strengthening the entire value chain, he said, the focus must be balanced such that while implementing reforms to strengthen the financial and operational capacity of Distribution Companies (DisCos) including considering minimum capital requirements during licence renewal, generation and transmission must not neglected.
“We are also advancing the Presidential Power Initiative (the Siemens Project) and have sustained generation capacity at an average of 5,300MW in 2024, up from 4,200MW in 2023..
“Ultimately, the success of these reforms will be measured by their impact on the Nigerian people.
“This means transparent tariff-setting, enhanced metering through initiatives like the Presidential Metering Initiative, and holding all operators accountable for service delivery.
“States are now empowered to challenge DisCos and the Transmission Company of Nigeria (TCN) to better serve their people,” he said.
In his address, the Vice Chairman of Nigerian Electricity Regulatory Commission, NERC, Musiliu O. Oseni, promised the Commission will continuously strive to provide regulatory oversights to ensure improved reliability of supply.
He said, “To build and nurturing an institution that sustains for 20years is not easy. The Commission has had a fair share of challenges and often opposition from stakeholders in the course of delivering on its constitutional mandates.
“Despite the challenges, the Commission has recorded significant achievements in its two decade of existence. The Commission oversaw the privatisation and unbundling of the hitherto state owned vertically integrated monopoly.
“We have developed standard regulatory instruments to strengthen the electricity market, improve reliability of supply and enhance consumer protection. Relative to 20years ago, not less than 30% of the electricity consumers have experienced significant improvement in their electricity services.”
He noted that, through effective regulation, the Commission has saved the Federal Government several trillion of naira in subsidies thereby contributing to improved fiscal position of the FGN.
“As we continuously strive to provide regulatory oversights to ensure improved reliability of supply, the Commission shall focus more attention on unlocking private investments especially in the transmission segment of the value chain. Our transmission networks require significant investments.
” However, our fiscal realities have shown that the government alone cannot fund it. Necessary regulatory framework will go a long way in attracting private investments. We have commenced the process through the creation of the Transmission Infrastructure Fund (“TIF”).
” I hope this effort will receive the necessary supports from the policymakers. Another key priority area is continuous push for fiscal discipline and transparency at TCN. The Commission shall continue the regulatory process for the transition to bilateral trading, and handholding of the state regulatory commissions for capacity development.
“There must be a deliberate policy by the FGN to power our industry for economic prosperity. You can power access through Mini-Grids but you can’t power your economy to prosperity. Thus, there is a need for policy rethink on the utilisation of the USD2bn currently available to the Rural Electrification Agency (“REA”).
“A substantial portion of the fund should be dedicated to providing end-to-end solution to the power supply challenges facing our industrial hubs.
8. The Electricity Act of 2023 provides for regulatory oversights at the subnational level.
“I also urge you to avoid being in a compromising position with your licensees no matter the situation. This is necessary to avoid regulatory capture,” he said.
