Synergy Among State Govts Will Lead To Lower Electricity Tariffs – Expert

Nnaemeka Ewelukwa, the former Managing Director of the Nigerian Bulk Electricity Trading Company, praised the licenses the Nigerian Electricity Regulatory Commission (NERC) has granted to some state governments to regulate the tariffs of power generating and distribution companies.

The shift in oversight functions from NERC to eight state governments, according to the expert, would result in better service and lower energy user tariffs.

Ewelukwa was a guest on Channels Television’s Friday edition of Inside Sources with Laolu Akande, a socio-political program.

For decades, Nigeria, Africa’s most populous nation, has been faced with intractable energy challenges, no thanks to an epileptic power supply which significantly affects productivity levels. Despite the privatisation of the electricity sector, power generation, transmission and distribution have remained bogged with hydra-headed monsters of policy inconsistency, low investments and operational challenges.

A unit of power costing about N250 for Band A customers in 2024 was approved by NERC as part of the upward review of electricity prices. The problem with consumers is that the cost of gasoline and diesel, both of which are readily available, has increased by fivefold. Power plants and power distribution were granted licenses by NERC in the same year by at least eight State electrify regulatory commissions. The states are Enugu, Ekiti, Ondo, Imo, Edo, Kogi, Oyo and more recently, Lagos.

Former presidential task force member on power reform Ewelukwa claimed that the Electricity Act 2023’s amendment significantly made it easier for states to enter the power market and support government initiatives. That has significantly democratized the electricity market, according to the report. We now have different states trying different initiatives”, he said.

He claimed that there are now several theaters where improvements to the power supply in Nigeria are being made with the Act’s amendment. He claimed that the power sector is optimistic about the state governments’ initiatives.

Generation of Power Within a Geopolitical Zone

Ewelukwa cited a rise in competition, particularly at the state level, as one of the main benefits of the power sector’s fragmentation. “When competition is done appropriately, it ultimately leads to service improvements, it results in lower prices. Therefore, he said, “I think that having different regulatory bodies makes the work of NERC easier because it now has fewer states to focus on because other states are operating their own thing.”

He claimed that the state-level government has been implemented because it has full control over all aspects of electricity regulation. “When you have states now regulating the electricity market, it brings the issue’s originator closer to being solved.” I see enhanced competition triggering innovation”, he said.

Instead of forming silos to generate and distribute power on their own, the expert advised the states to work together as a geopolitical zone.

“I do believe that we will eventually have states joining forces to create synergy even within geopolitical boundaries.” We will now be able to ask, “Why don’t we pool our resources together?” We don’t all have to invest in generation.

Two of the six states in this region can concentrate on generation while the others on transmission and distribution, enabling them to work together and create that electricity market. Many investors are equally looking at investing in large amounts, which is why I believe that is the way of the future. Rather than invest 2 megawatts in this state, 6 megawatts in another, an investor would rather build a 200 megawatts (station) in one location, “he said.

Ewelukwa also advocated for synergy between traditional rulers and government at all levels to stop transmission line vandalism, which is now a common practice in some parts of the nation.

According to the expert, “When it comes to things like vandalism, it may come down to need for more synergy between the Federal Government and traditional rulers because, ultimately, every piece of equipment that is vandalized anywhere is within a traditional domain.” In that space, there are traditional institutions that can support the federal government’s and the state government’s efforts.

Source: Channels TV