The Independent Electricity Distribution Network and distribution franchisee models developed by the Federal Government through the Nigerian Electricity Regulatory Commission have not been effective, state governors have said.
Due to this, the governors said State Electricity Regulatory Commissions should come up with new models that would open the retail electricity space for companies to compete and tackle the poor power supply situation nationwide.
On January 16, 2024, The PUNCH reported that the Federal Government through NERC issued 13 new licences for the generation of off-grid and embedded power, independent electricity distribution, as well as for the trading of electricity.
It said the new licences were issued in the third quarter of 2023, stating that “one new licence for Independent Electricity Distribution Network, one new licence for trading, three off-grid generation licences, one embedded generation, and one IEDN licence,” were issued.
Also in October 2023, it was reported that NERC licensed 17 Independent Electricity Distribution Network providers at the end of 2022.
It had disclosed this in a report, titled, ‘2022 Market Competition Report,’ where it stated at the time that 10 of the networks were operational at the end of 2022.
It said the IEDNs had created more room for competition and operational efficiency as more operators function independently of the popular 11 successor power distribution companies.
But in their latest document on the power sector, titled, ‘Development of the National Integrated Electricity Policy and Strategic Implementation Plan Policy Recommendations by State Governments,’ which was submitted to the Federal Ministry of Power, the state governors said the IEDNs were not effective.
They made this known to the Federal Government through the document put together by their umbrella body – the Nigeria Governors’ Forum.
State governments have now been empowered under the Electricity Act 2023 to operate and regulate their own electricity markets outside the control of the Nigerian Electricity Regulatory Commission, an agency of the Federal Government.
The governors described the IEDNs or distribution franchisee models as outdated models.
They said, “The Independent Electricity Distribution Network and Distribution Franchisee models developed by NERC have not been effective, hence the need for SERCs (State Electricity Regulatory Commissions) to evolve new retail and supply licenses, and business and commercial models which would open the retail electricity space to new companies that would compete to address the poor power situation within their states.
“Retail supply licensees will also improve revenue assurance in the state electricity market and the NESI (Nigeria Electricity Supply Industry) in general. States also advocate for the disaggregation of existing successor distribution licences into a ‘wires only’ license and a ‘supply’ license where either feasible or market conditions are favorable for such license disaggregation,” they stated.
They further recommended the establishment of electricity cooperatives to improve electricity access and supply reliability to end-user customers, particularly in underserved and unserved communities in both rural and peri-urban areas.