Power: Multiple, conflicting markets regulations may confuse investors, Adelabu warns

... Expresses fears over ‘fragile’ national grid
…We have developed standard regulatory instruments to strengthen electricity market, says Oseni, NERC’s Vice Chairman

By Chris Ochayi

The Minister of Power, Chief Adebayo Adelabu has said that creating multiple and unsynchronized markets with conflicting regulations in the sector posed serious risks that could confuse investors and strand power.

Chief Adelabu, who expressed the concerns, while speaking on Thursday at the technical session to mark the 20th anniversary of the Nigerian Electricity Regulatory Commission, NERC, held at Transcorp Hilton Hotel, Abuja, advised industry players must be mindful of such risks.

The Minister also cautioned that the fragile national grid requires careful management to prevent fragmentation that could leave some regions behind.

He recalled that, “Since the enactment of the Electric Power Sector Reform Act in 2005, NERC has been at the center of Nigeria’s transition from a state-run utility to a liberalized, private-sector-driven electricity market.

“Over these two decades, the Commission has laid the foundations of market stability – developing tariff frameworks, consumer protection sector’s evolution. mechanisms, and regulatory guidelines that have shaped our power

“This shift arrived with the Electricity Act of 2023, a landmark legislation signed by His Excellency, President Bola Tinubu, on the 6th of June 2023. This Act, coupled with the prior constitutional alteration, represents the most profound change in our sector’s history.

“It effectively bifurcates constitutional responsibilities, demonopolizing the electricity market and empowering State governments not just to markets is a game-changer. generate, transmit, and distribute electricity within their territories, but to regulate their individual State Electricity Markets.

“This move from a single national grid to potentially multiple, integrated sub-national

“Opportunities, which we must strategically harness. The new structure presents a paradigm shift with immense

Unlocking sub-National potential, he noted “The Act is a powerful tool for energy security. It allows states, many of which are larger than some neighbouring countries, to take charge of their energy economic and social needs. destinies.

“The States can now leverage on their unique resources – be it solar, hydro, or wind, to build grids that serve their specific

Driving investment and competition: By opening the value chain to states and private investors, while fostering competition, which innovative pricing for consumers. will ultimately lead to more options, better services, and

“Achieving Incremental Progress: Some have proposed a strategic, city-by-city approach to achieving steady power, starting with state capitals by 2030.

“This pragmatic model allows for measurable progress and demonstrates the tangible benefits expansion. of reform, building confidence for further investment and

“However, this promising path also demands careful navigation. We must be mindful of the risks, including the potential for creating multiple, unsynchronized markets with conflicting regulations, which could confuse investors and strand power.

“The fragile national grid requires careful management to prevent fragmentation that could leave some regions behind.”

“Embrace a collaborative framework built on four key pillars:
a. Policy and Regulatory Harmonization: While states develop their markets, we must work collaboratively to ensure a degree of standardization and interoperability.

“NERC’s ongoing efforts to Coordinate with state regulators, as seen in the peer-learning sessions with States and the transfer of oversight to a number of States, are exemplary and critical for national cohesion.

“The National Integrated Electricity Policy and Strategic Implementation Plan (NIEPSIP) of the Federal Government, through the Ministry of Power, provides a planning. framework to strengthen the relationship between the federal and the States’ electricity markets.

“It promotes a collaborative yet decentralized approach to energy management and resource.”

In addressing the liquidity crisis, Adelabu said “A decentralized system cannot thrive in an insolvent national market. The government is acutely aware of the debilitating liquidity crisis, with debts to Generation Companies (GenCos) posing a severe threat to sector stability.

“I am pleased to inform you that Mr. President has recently approved a N4 trillion bond to clear verified GenCos and gas supply debts. Alongside this, is the commercialisation. effort at developing a targeted subsidy framework to protect vulnerable households and ensure a sustainable path toward full

On strengthening the entire value chain, he said, “Our focus must be balanced. While we are implementing reforms to strengthen the financial and operational capacity of Distribution Companies (DisCos) including considering minimum capital requirements during licence renewal, we must not neglect generation and transmission.

“We are also advancing the Presidential Power Initiative (the Siemens Project) and have sustained generation capacity at an average of 5,300MW in 2024, up from 4,200MW in 2023.

Prioritizing citizen-centered reforms: “Ultimately, the success of these reforms will be measured by their impact on the Nigerian people.

“This means transparent tariff-setting, enhanced metering through initiatives like the Presidential Metering Initiative, and holding all operators accountable for service delivery.

“States are now empowered to challenge DisCos and the Transmission Company of Nigeria (TCN) to better serve their people.”

In his address, the Vice Chairman of Nigerian Electricity Regulatory Commission, NERC, Musiliu O. Oseni, promised the Commission will continuously strive to provide regulatory oversights to ensure improved reliability of supply.

He said, “To build and nurturing an institution that sustains for 20years is not easy. The Commission has had a fair share of challenges and often opposition from stakeholders in the course of delivering on its constitutional mandates.

“Despite the challenges, the Commission has recorded significant achievements in its two decade of existence. The Commission oversaw the privatisation and unbundling of the hitherto state owned vertically integrated monopoly.

“We have developed standard regulatory instruments to strengthen the electricity market, improve reliability of supply and enhance consumer protection. Relative to 20years ago, not less than 30% of the electricity consumers have experienced significant improvement in their electricity services.”

He noted that, “Through effective regulation, the Commission has saved the Federal Government several trillion of naira in subsidies thereby contributing to improved fiscal position of the FGN.

“As we continuously strive to provide regulatory oversights to ensure improved reliability of supply, the Commission shall focus more attention on unlocking private investments especially in the transmission segment of the value chain. Our transmission networks require significant investments.

” However, our fiscal realities have shown that the government alone cannot fund it. Necessary regulatory framework will go a long way in attracting private investments. We have commenced the process through the creation of the Transmission Infrastructure Fund (“TIF”).

” I hope this effort will receive the necessary supports from the policymakers. Another key priority area is continuous push for fiscal discipline and transparency at TCN. The Commission shall continue the regulatory process for the transition to bilateral trading, and handholding of the state regulatory commissions for capacity development.

“There must be a deliberate policy by the FGN to power our industry for economic prosperity. You can power access through Mini-Grids but you can’t power your economy to prosperity. Thus, there is a need for policy rethink on the utilisation of the USD2bn currently available to the Rural Electrification Agency (“REA”).

“A substantial portion of the fund should be dedicated to providing end-to-end solution to the power supply challenges facing our industrial hubs.
8. The Electricity Act of 2023 provides for regulatory oversights at the subnational level.”

Accounting to him “Today, 15 states have got their transfer Order from the Commission. Eleven of them have crossed the six months transitional period but only eight out of the eleven are currently operational. There is a vacuum in Edo, Ogun and Oyo states.

“I congratulate all the states that have operationalised their regulatory commission. However, I wish to advise our colleagues at the State Electricity Regulatory Commission to note that regulation is not populism, activism or politics, rather, it requires being objective, analytical, attention to details, having an independent mind and being able to see beyond the surface.

“You must constantly remember that there must be a utility before you can be called a regulator! While it is impossible to isolate yourself from the government (policymakers or legislature), always remind yourself of your roles as an unbiased umpire.

“I also urge you to avoid being in a compromising position with your licensees no matter the situation. This is necessary to avoid regulatory capture.”