Background

The poor power supply in the country should be urgently addressed to reduce overhead costs and make doing business easy. Investments should be made to reduce the country’s other infrastructural deficits. Regulations that obstruct smooth working of businesses should be repealed. Local manufacturers should be well incentivized.

Past Reform and Achievements

Successive governments of Nigeria have expressed determination to tackle the poor state of the power sector. The Electricity Power Sector Reform Act (EPSR) was passed and signed into law in 2005; and it created the Power Holding Company of Nigeria (PHCN). In 2010, the Road Map for Power Sector Reform was launched, to accelerate the pace of activity with respect to reforms already mandated under the EPSR Act and to improve on short-term service delivery.

The Presidential Action Committee on Power (PACP), consisting of Ministers and Heads of Agencies, was set up in 2010 to play critical role in Nigeria’s Power Sector. Acting like a “War Cabinet” it set, granted and expedited approvals for critical decisions.

The Presidential Task Force on Power was established in 2010, to drive the implementation of the power reforms. It brought together all the agencies needed to remove the legal and regulatory obstacles to private sector investments in the power industry. A Multi-Year Tariff Order (MYTO) was subsequently established with a major tariff review every five years, so as to ensure the Nigerian Electricity Regulatory Commission (NERC) only adopt tariffs that are favourable to the Nigerian people and investors. The Nigerian Bulk Electricity Trading Plc (NBET) was established during the transitional stage of the Nigerian Electricity Market Reform, to be responsible for bringing power from IPPs and reselling power to distribution companies and eligible customers.

Power generation increased from 3,514MW in 2011 to over 4,600MW as at November 2014. Foreign Direct Investments have also been attracted

Challenges and Next Steps

The Rural Electrification Agency (REA) should be urgently funded to extend electricity into rural areas, and transform rural economies. The billing and collection systems should be made efficient. Disputes over privatizations in the sector should be resolved and measures taken to ensure that they do not arise again. The transmission process should be strengthened by addressing legal and policy constraints militating against transmission networks as well as by attracting more private sector capital. Vandalism of power installations should be checked with effective coordination between operators, regulators, gas suppliers, security agencies, and other key stakeholders.