The Senate on Wednesday, 20th July 2022 passed the Electricity Bill, 2022 which seeks to repeal the Electricity and Power Sector Reform Act, 2005 and enact the Electricity Act. It consolidates all legislations dealing with the electricity supply industry to provide an omnibus and ideal Institutional framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry and encourage private sector investments in the sector.
The primary aim of the bill, as stated in its very first section, is to create a comprehensive legal and institutional framework to guide the Nigerian Electricity Supply Industry (NESI). It de-monopolises the generation, transmission and distribution of electricity at the National level, to empower States, companies and individuals to generate, transmit and distribute electricity. States would also be able to issue licenses to private investors who have the ability to operate mini-grids and power plants within the State, but such State licenses are not to extend to inter-state or transnational distribution of electricity.
It should be noted that electricity has never been an Exclusive Federal matter as it is guided by the provisions of the Concurrent Legislative List of the Constitution (in Item 14, Part II of the Second Schedule), which sets out the extent of Federal and State legislative powers. By this provision, States are empowered to make laws with regards to the establishment and management of electric power stations in their States as well as the generation, transmission and distribution of electricity to areas “not covered” by a national grid system “within” the State. The bill restates this constitutional provision but goes further to provide for areas of collaboration between State Governments, the Federal Government and the private sector. While the bill’s scope extends to all parts of the Federation, it recognises the State Assemblies’ power to legislate on electricity and clearly states that such laws made within the scope of the Constitution, shall not be invalidated by the bill.
It should also be noted that that the Constitution amendment Bill No. 33 (Devolution of Powers, National Grid System), which was passed by the National Assembly in March 2022 expands the legislative powers of States to make laws on the generation, transmission and distribution of electricity to include areas within the State “covered” by the national grid. This bill is currently before the State Houses of Assembly for ratification and will have a further re-enforcing effect if adopted.
The Electricity Bill mandates the Ministry of Power in consultation with relevant Government Authorities and relevant stakeholders to develop an Integrated Electricity Policy and Strategic Implementation Plan. The objective of this policy plan is to guide the overall development of the Nigerian power sector and address policy gaps. The Bill also requires the Integrated Plan to incorporate specific policies including waivers and subsidies that will stimulate the development of renewable energy.
The bill gives legal backing to renewable energy by providing a framework for its development and utilisation. It is a progressive development to see the scope widened to capture the ability to generate renewable energy and address fast rising concerns over global warming. It retains the provision in section 62 (2) of the extant Electric Power Sector Reform Act that provides that licences would not be required for persons who want to generate power below one megawatt.
Interestingly, clause 68 (9) seems to prohibit receipt of funds by distribution companies from electricity consumers to purchase electricity transformers or related equipment, but then it goes on in 68 (10) to say that such consumers seeking stable power supply may elect to fund such acquisition and installation where there is a supply delay and there is a prior written request made by them to the electricity company with details such as the amount to be contributed, names, address and occupation of the consumer, and number of customers who will benefit from the transformer to be purchased.
Commendably, the bill makes an effort to be gender sensitive. In addition, clause 1 (5) (b) of the bill requires the Minister for Power to consult with the Ministry of Women Affairs and other relevant agencies to promote gender mainstreaming in the design and implementation of electricity projects and programmes. Clause 104 (3) (d) requires the Rural Electrification Agency to foster gender mainstreaming in rural electrification activities, while Clause 34 (1) (l) which deals with the Nigerian Electricity Regulatory Commission (NERC) mandates the Commission to promote gender mainstreaming and local content requirements within the Nigerian Electricity Supply Industry. NERC remains the independent and apex regulator of the industry with the bill providing that Ministry of Powers’ supervising authority shall not conflict with the provisions of bill or the Constitution. However, the powers of the Commission (NERC) to regulate licensees in the industry is further expanded.
Another subject the bill addresses is electricity theft. It introduces penalties such as prison terms and fines for theft of electricity, bypass of metres, theft of electrical lines and materials, disruption of power supply, damage to public streetlights, etc. This is particularly important as the extant Electric Power Sector Reform Act is not exhaustive on the issue and electricity theft has led to significant loss of revenue in the industry.
The establishment of the National Power Training Institute of Nigeria and the Power Training Fund (Power Fund) is another innovation of the bill worth mentioning. The National Power Training Institute is to serve as the focal point for human resource development, workforce capacity building and a training and research centre with collaborative efforts from local and international institutes of professional in the power sector. The power fund on the other hand is to be utilized for the promotion of skill acquisition and development of human capacity in the Nigerian Electricity Supply Industry (NESI) with the view to generate a pool of indigenously trained manpower to cater to the needs of the power sector.
Overall, the bill has been hailed by stakeholders as a potentially beneficial legislation. In many countries, communities generate their own electricity; therefore, giving the States the reins on energy generation and transmission would go a long way in improving the power sector as less pressure would be put on the National Grid especially with the licensing of mini-grids within the States. The introduction of renewable energy in our energy mix would be quite an innovation as it has the potential to attract investors to the power supply sector and hopefully put an end to the incessant challenges that occur in the generation, transmission and distribution of electricity. The bill will need be sent to the House of Representatives for concurrence.
See the report of the Senate Committee on Power on the Electricity Bill 2022