On Tuesday, September 28, 2021, the “Electricity Bill, 2021 (now Electricity Bill, 2022), sponsored by Senator Gabriel Suswam, the chair, Senate Committee on Power, passed Second Reading in the Nigerian Senate and was referred to the Senate Committee on Power for further legislative action. The formulation of the Bill and its consequent introduction in the Senate was preceded by a rigorous process involving industry-wide appraisal of extant operational and statutory lapses confronting the Nigerian Electricity Supply Industry (NESI) since the conclusion of the privatisation exercise in 2013.
On the whole, a team of consultants engaged by the Committee had undertaken a thorough appraisal of several industry issues consequent upon which a diagnostic report which included recommendations on the way forward was submitted to the Committee for consideration. The recommendations were reviewed by the Committee and largely formed the basis of the Electricity Bill, 2022 which scaled through Second Reading in the Senate and now the subject of further legislative scrutiny by the Committee through a proposed two –day public hearing slated to take place on Monday 28th February and 1st March, 2022 at the Senate Wing of the National Assembly. In terms of the structure, the Bill is made up of 213 clauses subdivided into XXI Parts and Five schedules.
Since the Second Reading of the Bill and its consequent release to critical stakeholders and members of the general public ahead of the scheduled public hearing, it has become necessary to undertake an analysis of the overarching objectives of the Bill, its structure, key novel provisions and related issues with a view to enhancing understanding of the Bill by invited stakeholders and its likely impact on the fortunes of the Nigerian power sector.
With respect to its objectives, Clause 1 of the Bill provides that Bill seeks to among other things – repeal the Electric Power Sector Reform Act, 2005, consolidate all legislations in Nigerian Electricity Supply Industry (NESI) and enact an omnibus Electricity Act for the industry to provide the ideal legal and institutional framework that will regulate the post –privatization phase of the industry in Nigeria. The Bill also seeks to provide the framework that would attract more investors to leverage on the modest gains of the privatized electricity industry in Nigeria to accelerate growth in power generation capacity and improve utilisation of generated power through increased investment in new technologies that that would enhance transmission and distribution of generated power and minimise aggregate value chain loses.
Furthermore, the Bill for the first time under Clauses 3(1) and 4 seeks to give statutory backing to the preparation and implementation of an integrated resource plan for the NESI through the National Integrated Electricity Policy and Strategic Implementation Plan (NIEPSIP) covering areas stated in the Bill and such other areas that the federal government may determine as requiring policy direction. It is proposed that the federal government through the Federal Ministry of Power shall within one year from the Commencement of the Electricity Act, prepare and publish in a Federal Gazette, a NIEPSIP in consultation with relevant Government Authorities as defined under the Bill. The NIEPSIP is to be reviewed or revised every five years or within such a reasonable timeframe as the Minister of Power may determine. This provision is intended to address the problem of policy lull or gaps in the NESI.
On the need for the harmonisation of the roles of regulators in the NESI and their respective legislations, it is must be noted that under Part V while the NERC retains its preeminent regulatory powers in the NESI, other enactments such as the Nigerian Electricity Management Services Agency (NEMSA) and the Hydroelectric Power Producing Areas Development Commission (HYPPADEC) establishment Acts have been consolidated and codified under the Bill. To further streamline the roles of NERC and NEMSA in the NESI, the powers of electrical inspection and appointment of electrical inspector have been domiciled in NEMSA bearing in mind the latter’s statutory core mandate in enforcement of technical standards and regulations; inspection, testing and certification of all categories of electrical installations. The overall intent of these provisions is to align regulatory responsibilities and ensure clarity of statutory roles for ease of compliance by operators.
The Bill also contains other novel provisions that will stimulate investments in the power sector and also ensure clarity regarding the roles of successor companies in the post-privatised regime. With respect to power distribution, the implication of the provisions of clauses 64 and 73(8) and (9) is that the Bill provides for the decoupling of distribution and retail functions with separate licenses for Distribution Network Operators (DNOs) and for supply in order to facilitate future opening of the market towards retail competition. The Bill further gives statutory recognition to electricity distribution franchising (EDF) under Clause 69(5), and independent electricity distribution networks (IEDN)/ independent electricity distribution networks operators (IEDNOs) under Clause 69 (9) in recognition of the work already being carried out by NERC to allow for third parties investments in the distribution segment.
Similarly, the Bill provides under clause 85(1) a statutory framework for investments in the national grid by a non-licensees and the TCN to allow for expansion or integration of technology into existing transmission infrastructure. Another option is for the establishment of Independent Electricity Transmission Networks (IETNs) and Independent Electricity Transmission Network Operators (IETNOs). Part IV of the Bill comprising clauses 16 to 33 provides a clear guide on the unbundling of the TCN into a Transmission Service Provider (TSP) and Independent System Operator (ISO) in accordance with its license.
It must, however, be clarified that apart from the Electricity Bill, 2022 (SB.511) which is the subject of the proposed two –day public hearing slated for 28th February and 1st March, 2022, the House of Representatives on its part had course to consider several Bills bordering on the Nigerian electric power sector and public hearings have been held by relevant Committees in the House of Representatives on these Bills. The Bills already considered in the House of Representatives are the Electric Power Sector Reform Act (Amendment) Bill, 2020 – HB 681, Electric Power Sector Act (Amendment) Bill, 2021 – HB 1528, National Power Training Institute of Nigeria (Establishment) Bill, 2019 –HB 657, Energy Commission of Nigeria Act (Amendment) Bill, 2019 –HB 243, National Renewable Energy Development Agency (Establishment) Bill, 2021 –HB 1241, and Energy Commission of Nigeria (Amendment) Bill, 2019 –HB 446. One striking difference between the Electricity Bill, 2022 and the aforementioned Bills is that while the former seeks to consolidate all electricity related laws into one statute, the latter seeks to either amend existing legislations or attempt to deal with issues already covered in detail by the Electricity Bill. Again, the Electricity Bill under review here is not an amendment Bill to the EPSRA as wrongly reported but a fresh Bill that repeals all existing enactments in the power sector and in place of such repealed enactments seeks to put in place an omnibus Electricity Act for the NESI. It will therefore not be difficult for the two chambers to deal with these Bills within their Rules of Procedure in such a manner as to enact a single statute for the NESI.
From the foregoing, it is clear that so much effort has been made to address key statutory and operational lapses in the NESI under this Bill. However, it is not unusual for some stakeholders to have reservations regarding certain provisions in the Bill. What is expected of such aggrieved stakeholders is to submit written memoranda articulating their comments and recommendations to resolve all grey areas so that at the end of the public hearing, the Bill will be enriched and passed in a form and content to achieve stated objectives.
…Suswam, a former governor of Benue state and currently serving Senator, writes from Abuja