Scaling up Nigeria’s electricity value-chain

Nigeria's power sector is on the brink of transformation with the recent passage of the Electricity Bill 2022 by the Nigerian Senate. This bill, aimed at reforming the Nigeria Electricity Supplier Industry, is anticipated to revolutionize the power industry by opening up the space for states or individuals to generate and distribute their own power. George Etomi, a Director at Eko Distribution Company, sheds light on the implications of this bill in an exclusive interview with CNBC Africa. The bill marks a significant step towards expanding and consolidating the electricity space in Nigeria. It acknowledges the reforms that led to the unbundling of the Power Holding Company of Nigeria (PHCN) into a series of companies, as well as the establishment of regulatory bodies like the Nigerian Electricity Regulatory Commission (NERC). The primary goal of the bill is to transition the electricity market from its current state to a more structured and contract-driven market. One of the key innovations introduced by the bill is the creation of a fourth segment in the market called 'electricity supply'. This segment will enable distribution companies to supply power to the electricity supply companies, which will act as the 'last mile' interface with the public. Additionally, the bill grants the regulator the authority to reprimand underperforming distribution companies and revoke their licenses if necessary. While the bill paves the way for states to participate in the electricity market by generating, transmitting, and distributing power, the actual implementation is contingent on the constitutional amendment that requires the approval of two-thirds of the National Assembly and the state legislatures. The potential for increased investment in the sector is palpable, especially with states like Lagos already venturing into partnerships with distribution companies to improve service delivery to consumers. However, the success of attracting investments hinges on the coherence of existing obligations, privatization processes, and regulatory frameworks. Investors seek a stable and conducive environment to invest in, and any uncertainties or disruptions may deter capital flow into the sector. The issue of pricing, particularly the need for cost-reflective tariffs, is crucial to addressing the liquidity crisis and ensuring a sustainable power market. For the average Nigerian consumer, the implications of the electricity bill are twofold. While it may translate to more stable power supply and potentially lower overall costs in the long run, the transition and modernization of the sector will be gradual and require continuous investments. Ultimately, the bill holds the promise of improving the quality and reliability of electricity services for the benefit of the Nigerian populace. In conclusion, the passage of the Electricity Bill 2022 signifies a pivotal moment in Nigeria's quest for a robust and efficient power sector. With careful implementation and stakeholder engagement, this legislation has the potential to drive significant transformation and bring about a brighter energy future for the country.