Emerging Issues in Nigeria’s Power Sector

Emerging Issues in Nigeria’s Power Sector

 
The Nigerian power sector was a monopoly run by a single government-owned entity handling generation, transmission and distribution of electricity. This single entity has metamorphosed recently into the Power Holding Company of Nigeria. Dolapo Kukoyi, Adesola Bamisile and Ugochukwu Ndubisi discuss emerging issues in the Nigerian power sector highlighting, in particular, the role of the Nigerian Electricity Reform Commission.
 
The authors write: Nigeria’s power sector over the years has witnessed a steady decline leading to a near complete failure of the system at the inception of the present civilian regime in 1999. The National Electric Power Authority (NEPA), as a result of the barrage of challenges it encountered, was unable to carry out its mandate effectively. Some of these challenges may be listed as follows:

 Ineffective regulation;
 Inadequate gas supply to drive power plants;
 Ever-rising consumer debts;
 High technical losses and vandalism of NEPA installations;
 High cost of maintenance;
 Infrastructural decay;
 Low water level at the hydro power stations;
 High cost of foreign exchange;
 The abysmally low tariff regime;
 Illegal connections; and
 Unbridled corruption.

In an effort to surmount these challenges, the Federal Government of Nigeria inaugurated a working group known as the Electric Power Sector Reform Implementation Committee (EPIC) in 2001. It was set up to recommend measures for sector reform, promote the policy of liberalization of the power sector and oversee the drafting of the electricity reform policy which later metamorphosed into the Electric Power Sector Reform Act of 2005.A New Regulatory Framework

The EPIC came up with a new Regulatory Framework, which aimed at revitalizing the power sector in Nigeria. The highlight of the reform was the unbundling of the NEPA, now known as the Power Holding Company of Nigeria (PHCN). This unbundling led to the establishment of successor companies of the PHCN comprised of six generation companies, one transmission company and 11 distribution companies. Creation of an independent transmission company (Transmission Company of Nigeria) which would be responsible for the operation of transmission business was another achievement. The Transmission Company, though owned by the Federal Government of Nigeria, would be handled by contractors on an Operate and Manage (O&M) basis. Other features of the reform were the deregulation of the sector leading to private participation in the generation sector and the operation of a number of independent power plants in the country today, as well as the establishment of the Nigerian Electricity Regulatory Commission (NERC) and the Energy Commission of Nigeria (ECN) for strategic planning and coordination of national policies in the field of energy.