Authors: Mercy O. Erhun and Daniel O. Johnson
Affiliated organizations: Energy and Environment Research
Type of publication: Journal article
Date of publication: 26 November 2018
Nigeria has fairly adequate endowment of energy resources, yet the country is lagging behind in terms of access to reliable and affordable energy supply. The country has just 45 electrification rate, with only 54.7% of her population electrified as at 2016. More than 80 million people are still without access to electricity with frequent power failure. This has contributed to the slow economic growth currently experienced in Nigeria.
Around 1,500MW of Nigeria’s hydropower potential is currently being used, contributing to about 30% of the total amount of electricity produced. The large amount of gas associated with oil exploration operations is being wasted through flaring instead of being valuably used for power generation and industrial processes. Current patterns of production and consumption of energy are not sustainable.
Regulatory Regime for the Nigerian Power Sector
The Electric Power Sector Reform Act 2005
The above Act led to the transition of National Electric Power Authority to the Power Holding company of Nigeria. The Act was enacted on March 11, 2005, with the objective of ensuring private sector participation, and bringing about a competitive power market in place of monopoly market earlier dominated by NEPA and fast-tracking the restructuring and privatization of the sector. The Act therefore made provision for the development of a competitive electricity market.
The Electric Power Sector Reform Act is saddled with the responsibility of providing uninterrupted electricity. It is also has the responsibility of ensuring safe, adequate, reliable and affordable services in the generation, transmission, distribution and trading of electricity to ensure private sector participation, to protect the interest of the consumers, to monitor the health and safety regulations by electricity companies to make fair regulations and ensure vigilant over-sight of the electric industry and been firm in the enforcement of rules and regulations.
The Electric Power Sector Reform is expected to improve the stability of electricity supply, improve cost recovery, increase the availability of investment capital, usher in competitive energy market and provide jobs for the populace. The Reform also poses some political challenges like the construction of plants within the Niger Delta area which has unfriendly political climate environmental, technical challenges as a result of the high carbon monoxide emission already witnessed in Nigeria from chemical industries, economic and social challenges like the generation of more electricity.
The Nigerian Electric Regulatory Commission (NERC)
The Nigerian Electric Regulatory Commission was established by the Electric Power Sector Reform Act (EPSRA) to ensure effective implementation of the goals and objectives of the Electric Power Reform Act. Its function is to regulate and monitor the Nigerian Electricity Industry. The mission of the Commission is to promote and ensure an investor friendly industry and efficient market structure to meet the needs of Nigeria for safe, adequate, reliable and affordable electricity. Its vision is to “keep the lights on” by providing electricity on demand. The establishment of NERC is pivotal in making the Power Sector Reform a reality.
Barriers to Environmentally Friendly and Sustainable Electric Energy Production
Lack of Adequate Framework to Regulate the Energy Sector
One of the challenges of the electrical sector is the establishment of an effective and transparent licensing framework that will attract potential investors, while still able to ensure best practices in industry, standards and codes are enshrined to protect the interest of consumers and other stakeholders. Nigerian energy policies are deficient to ensure sustainable electric energy supply as the country does not carry out frequent review of her energy policy. Nigeria lacks adequate legal, policy, institutional and regulatory framework to address her electrical energy problems and the private sector has not be effectively mobilized to participate in the operation and management of the electricity sector of Nigeria. The Nigerian Electricity Regulatory Commission is faced with the challenge of providing a licensing framework to enable independent power producers interested in investing in the generation of power in Nigeria to commence operations. As a result, Nigeria’s energy policies do not adapt to the reforms to the reforms taking place all over the world in the global energy sector.
Framework for Sustainable Energy Sector in Nigeria
A framework that will ensure that all the dimensions of sustainable development are integrated at all levels of governance in Nigeria includes the following:
The Establishment of an Adequate Institutional, Policy, Legal and Regulatory Framework
Legal measures in promoting electric energy for sustainable development are very important if sustainable electric energy is to be realized. Adequate institutional structures as well as a strong and effective legal and regulatory framework that would help create conducive environment for private sector participation in the development, operation and management of the energy sector is very important. Adequate attention should be given to the development of appropriate legal and regulatory structures with enforcement mechanisms which will provide clear rules of the game for all players and define the responsibilities and obligations as well as protect business and investor interests while safe-guarding the public and consumers. Such regulatory measures should discourage provisions for subsidies so as to enhance the revenue base in Nigeria.
One of the challenges of the electrical sector is the establishment of an effective and transparent licensing framework that will attract potential investors, while still able to ensure best practices in industry, standards and codes are enshrined to protect the interest of consumers and other stakeholders
Environmental Impact Assessment Act
Environmental impact assessment of any operation in the electric power sector is a very important tool for the promotion of sustainable electrical energy sector. Such a measure will require all federal actions which are likely to significantly affect the quality of human environment in the Nigeria. Capital projects in electricity sector can to be subjected to environmental impact assessment. Citizens should be empowered with the locus standi to challenge project which fail to conform to the provisions of the Act in court. Consequently, the consequences of any proposed action can be adequately considered before they are implemented.
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