Lagos State Electricity Bill to establish Lagos Electricity Market and abolish estimated billing1
The Lagos State House of Assembly is currently considering the Lagos State Electricity Bill 2024 (the “Bill”). This is sequel to the recent amendment of the 1999 Constitution which moved electricity to the concurrent legislative list and the subsequent passage of the Electricity Act 2023 (as amended) which allows States enact their own electricity laws. The Bill, which will repeal the Electric Power Sector Reform (EPSR) Law, 2018, when passed into law, aims to transform Lagos State's electricity supply industry. It will also address key pertinent issues such as electricity blackouts, estimated billing, and establish a comprehensive framework for the administration of a Lagos State electricity market. Some of the key highlights of the Bill include the establishment of Lagos State Electricity Regulatory Commission (LSERC) and the Lagos State Electrification Agency (LEA). It also includes provisions which address the issues around licensing, tariff regulations, market standards, consumer protection, renewable energy, amongst others.
The LEA is set to replace the Lagos State Electricity Board established under the EPSR Law, 2018 and will facilitate electricity solutions for unserved and underserved areas within Lagos State, provide general oversight for the Lagos State Electrification Fund (the “Electrification Fund”) and all off-grid electrification projects.
The role of the LEA appears similar to that of the Rural Electrification Agency (“REA”) including the financing of electrification projects in unserved and underserved areas of the State.
The State Commissioner for Energy and Mineral Resources, Mr. Biodun Ogunleye, during the one-day public hearing on the Bill, stated that it is set to address the power challenges currently experienced by residents and improve access to and reliability of power. He also noted that one of the key objectives of the Bill is to establish a state grid that operates independently of the national grid.
The proposed Lagos State Electricity Bill follows a similar move by other States such as Enugu and Ekiti States in implementing procedures to take control of regulatory oversight of the electricity business within the State.
It is however important that the various States and Federal regulatory agencies, find means to address some of the potential tax and regulatory challenges that may evolve from the transfer of oversight from the Federal Government to the various States as highlighted in some of our earlier publications.
BAT Nigeria inaugurates solar power plant in its Ibadan facility2
British American Tobacco (BAT) recently launched a solar power plant in the Company's facility in Ibadan with an average generation capacity of 3,200 kWh per day. The plant is expected to reduce the Company's annual carbon emission by an estimated 650 tons and eliminate its dependency on the national grid for energy solution.
The Company's Director of External Affairs, West and central Africa, stated that the project is demonstration of BAT Nigeria's commitment to implementing energy solutions that aligns with the environmental and sustainability initiatives of the Federal Government of Nigeria (FGN). You would recall that the Electricity Act, 2023 (as amended) provides for the promotion of generation and consumption of energy from renewable energy sources.
BAT's solar plant presents a compelling economic opportunity for the Company, as decreased dependency on traditional energy sources is expected to translate into cost savings, which can be ploughed back to improve overall efficiency.
This is one of the many efforts by corporate Nigeria to continue to transition to cleaner off grid solutions even though it is not clear whether there is a viable incentive framework for such investments at the moment. It is therefore, important that the Government looks to establish a framework that will encourage more entities to tow this line as it may also reduce the pressure on the grid and allow for improved reliability and supply in the long term.
Geregu Power Plc and Siemens Energy sign MoU for upgrade of Geregu power plant3
Geregu Power PLC, a leading Nigerian power generation company, and Siemens Energy have signed a Memorandum of Understanding (MOU) to jointly develop solutions for the expansion of Geregu 1 power plant from its current 435 megawatts (MW) to 500MW. The proposed expansion is expected to safeguard the longevity of the assets and ensure efficient and sustainable power generation from the plant.
The Geregu 1 power plant currently comprises three simple cycle natural gas-fired Siemens V94.2 STG5-2000E gas turbine generator units, with a total installed capacity of 435MW, and generates approximately 10% of Nigeria's total power consumption. The expansion plan also includes the establishment of combined cycle operations on the plant that will generate an additional 200MW and building of new facilities using lower-emission turbines. The new facilities are projected to add another 500MW (leading to the creation of Geregu 3) which will bring the total nameplate capacity of Geregu Power Plc to 1200MW.
In 2018, the FGN had signed a deal with the German government under the Presidential Power Initiative (PPI). The PPI was expected to increase Nigeria's grid capacity in three phases 7,000 MW by 2021, 11,000 MW by 2023, ultimately achieving 25,000 MW by 2025.
Siemens Energy has been engaged under this initiative to deliver the project with the funding approved in 2020. The MoU follows the current administration's commitment to continuing the initial Siemens electrification deal and aligns with FGN's strategic initiative to modernize, rehabilitate and expand Nigeria's overall grid capacity.
The MoU signifies a promising future for Nigeria's power sector, especially as the planned capacity expansions and technological upgrades of Geregu's power plant will significantly enhance the country's power generation landscape, contributing to a more stable and efficient electricity supply system.
USAID mobilizes N 245bn for critical infrastructure and renewable projects in Nigeria4
The United States government has enabled the mobilization of N245 billion in institutional financing for critical infrastructure projects throughout Nigeria. The investment is championed by the United States Agency for International Development (USAID) and investment bank, Chapel Hill Denham.
The funding includes N33 billion earmarked for renewable energy projects that will provide clean and reliable energy solutions to low-income customers. The USAID announced the funding at the “Powering Nigeria: Mobilizing Private Capital,” conference which was aimed at promoting private sector investment in Nigeria's critical infrastructure in order to drive economic growth and developments.
Electricity deficit has remained one of the key factors that has hampered Nigeria' s productivity and stifled economic growth. With 43% of Nigeria's population lacking access to grid electricity, off-grid solutions that typically employ renewable energy
sources have emerged as a viable and eco-friendly solution to address the deficit and bridge the energy access gap. In recent times, the Nigerian renewable energy industry has witnessed significant external funding which has helped address some of the nation's energy deficit. You would recall that earlier in the year, the World Bank had approved US$750 million facility for the Distributed Access through Renewable Energy Scale-up (DARES). The DARES programme came on the successes recorded in the 2023 Nigeria Electrification Project (NEP) which supported the development of 125 mini grids and the sale of over a million Solar Home Systems to unserved and underserved communities in Nigeria.
Similar to the DARES and NEP financing, the USAID ₦N33 billion fund earmarked for renewable energy projects will provide financing solutions to scale-up private-sector led projects and deploy clean electricity to Nigerians in unserved and underserved areas.
Nigeria approves N21 billion for provision of prepaid meters5
The Federal Government has approved N21 billion under the Presidential Metering Initiative to provide prepaid meters to unmetered power consumers at no additional cost. This was announced by the Nigerian Electricity Regulatory Commission (NERC) via an Order published on 16 June 2024 on the Operationalisation of “Tranche A” of the Meter Acquisition Fund (the Order). The initiative involves all eleven (11) distribution companies (DisCos) and aligns with the National Mass Metering Program (NMMP) which seeks to enhance transparency in electricity metering, reduce billing disputes, and support economic stability for households and businesses by making electricity metering more equitable and affordable.
In the 2023 Q4 reports published by the Nigerian Electricity Regulatory Commission (NERC or “the Commission”), only 5,842,726 (five million, eight hundred and forty-two thousand, seven hundred and twenty-six) customers of the eleven (11).
DisCos operating in Nigeria were metered as at 31st December 2023. This represents only 44.39% of the registered consumer base of 13,162,572 (thirteen million, one hundred and sixty-two thousand, five hundred and seventy-two) across the country based on the latest enumeration exercise conducted by the DisCos.
The Order, which aligns with the Meter Asset Provider Regulations, 2018 and National Mass Metering Regulations, 2021 (MAP and NMM Regulations), aims to operationalise the provision and supply of financing under the Meter Acquisition Fund (MAF) Scheme. Based on the Order, a Fund Manager will oversee the MAF and will be appointed in line with the terms and conditions negotiated by the DisCos and approved by the Commission. The first tranche of revenue from MAF will help the DisCos to mobilise long-term funding to procure more meters which will be provided to unmetered Band A customers within their franchise areas.
The Order expects that the financing to be provided under the MAF will help to expedite the deployment of meters, close the metering deficit, reduce ATC&C losses, improve quality of service and customer satisfaction. The introduction of a source of financing such as the MAF is a welcomed development. Also, the focus on “unmetered” Band A customers is not unexpected from a commercial perspective, as these band of customers are now required to pay full cost reflective tariff for electricity effective April 2024. The provision of meters to existing unmetered Band A customers will enable the DisCos to improve their service delivery to them while plugging any collection leakages.
We are aware that metering of customers is the responsibility of the DisCos, however, given their poor financial positions, accessing long-term financing has been a significant challenge. The MAF is expected to provide security or guarantee to lenders and allow the DisCos access to the required funds for meter acquisition to close the current metering deficit and address the issues of commercial and collection losses.
Footnotes
1. Lagosians to Enjoy Electricity Within 2 Years of New Bill - Ogunleye (theelectricityhub.com) Lagos Electricity Bill to make estimated billing illegal (theelectricityhub.com)
2. BAT Nigeria Inaugurates Solar Power Plant in Ibadan • The Electricity Hub
3. Geregu Power, Siemens Energy Sign MoU for 500MW Upgrade (theelectricityhub.com)
4. USAID Mobilises N245bn for Infrastructure, Renewable Projects in Nigeria • The Electricity Hub
5. Nigeria Allocates N21 Billion for Free Prepaid Meters • The Electricity Hub
The opinion expressed in this article is solely personal and does not represent the views of any organization or association to which the authors belong.