Buhari Assents to Bill, Allows States to Generate, Distribute Electricity

President Buhari has signed the Bill allowing States to generate, transmit and distribute electricity in areas covered by the national grid.

Buhari on Friday, March 17 2022 signed 16 Bills on Constitution Amendment into Law. Among the Bills is the Bill paving the way for States to generate, transmit and distribute electricity in areas covered by the national grid. 

The development was made known by the Special Assistant to the President on Digital and New Media, Tolu Ogunlesi on his Twitter handle.

Following the signing of the amendment, the state Houses of Assembly and the National Assembly may now make laws on matters covering the electricity value chain. By way of background, the power to make laws on generation, transmission and distribution of electricity had always been on the Concurrent Legislative list in the Second Schedule to the Constitution. 

However, in relation to the powers of States to make laws on electricity matters, such powers could only be exercised in relation to areas not covered by the national grid. This limitation has been argued as the reason for the under-development of the power sector since the States were effectively shut out from playing an active role.

What does this change mean to Nigerians?

The signing of this Bill to amend the Constitution may serve as the springboard for more development in the sector in view of the opportunity for State Governments to also play an active role. Interestingly, States like Lagos, Ondo, Edo and Kaduna have been at the forefront of playing active roles in power project development within their States. 

Lagos as a matter of fact, passed the Lagos Electric Sector Reform Law of 2018, which law is now undergoing sweeping amendments prior to this Constitutional change.

As widely known, the power sector in Nigeria was privatised in 2013 when the Power Holding Company of Nigeria was unbundled into six successor generation companies, one Transmission Company and eleven distribution companies. Many argue that there hasn’t been much improvement since the decade-long privatization and are quick to refer to the take-over of some distribution Companies in 2022.

However, players within the sector posit that there have been a lot of improvements in the sector ranging from customer metering, technical infrastructure improvement, technology deployment, capacity and manpower improvement etc. It is conceded that a lot more remains to be done and all the stakeholders in the sector must work together to deliver the desired service to customers.

Nigeria has over 200 million people in population and needs to grow the average energy available on the grid above 4,500 megawatts (MW). Installed generation capacity is said to be above 13,000MW.

Sector analysts believe that this Constitutional amendment will go a long way in encouraging the State to develop power projects that can be consumed locally without dependence on the national grid. While this may be true, it is also believed that due to the capital-intensive nature of power projects and the long lead times, State Governments interested in participating in the space will do well to collaborate with existing players, especially the power distribution companies, who have already invested heavily in power distribution infrastructure.

It would also not be surprising to see State Governments now take active steps to make laws on matters such as mini-grids, captive power including regulations on residential power generators, embedded power, rural electrification etc. Some of the expected initiatives by Statement Governments will also boost climate action plans to reduce air pollution from generator fumes etc.