Federalism and Need for Decentralisation of Electricity Transmission
IIn line with the calls for federalism and the consequential devolution of power to the states, there have also been calls for a review of the legal and regulatory regime that governs the Nigerian Electricity Supply Industry, with a view to engendering the unhindered participation of state governments in the provision of electricity to the Nigerian people. The Nigerian Electricity Supply Industry consists of a number of stakeholders, and prominent amongst them is the federal government-owned Transmission Company of Nigeria (TCN), which is responsible for the transmission of electricity across an inter-state transmission-network, otherwise known as the ”national grid”.
The TCN since its establishment by Section 8 of the Electric Power Sector Reform Act (EPSR) 2005 has made concerted efforts to expand the national grid, however, in spite of its best efforts, the transmission of electricity and the entire NESI has remained fraught with challenges, ranging from liquidity-challenges, to obsolete and decript transmission and distribution infrastructure that conspire to keep Nigerians in darkness. As a result of these inefficiencies, Nigeria which has an installed generation capacity of 12,000 megawatts (mw), with an available capacity of 8,000 mw, only manages to transmit and distribute an average of 4,000mw, because the national grid and the supporting distribution infrastructure lack the capacity to evacuate and distribute the electricity generated from the power plants.
There are those who have suggested that the development of mini-grids, that is: stand-alone power systems, is the solution to the myriad of problems confronting the NESI. However, as laudable as the mini-grid initiatives are, the deployment of mini-grids would still be insuf- ficient to meet Nigeria’s anticipated demand, which the Federal Ministry of Power, Works and Housing puts at 19,100mw. Furthermore, doubts have been raised about the economic viability of mini-grids in Nigeria: a country that now has the largest concentration of the world’s extreme poor. According to studies conducted by Nextier Power, a management consultancy agency, “mini-grid developers would have to charge poor rural customers tariffs of about $0.55 - $1.00 per kilowatt (approximately N200N360 per Kilowatt), which is significantly higher than the N28 the Distribution Companies are presently charging grid-connected customers.” It is therefore difficult to conceive a situation where the average Nigerian who barely survives on less than a dollar a day will be able to pay for the electricity provided by mini-grids.
The argument against the development of regional grids has been its capital-intensive nature and yes, it is true that the development of regional grids will be relatively expensive, but what is even truer is that regional grids will greatly help in solving our seemingly intractable power problem. It is also noteworthy that projects of this nature, with their strong economics and social impact, are bankable projects that lend themselves to Public Private Partnership (PPP) funding, and so interested state governments and their partners would not need to break the bank to develop them. It is noteworthy that some of the world’s most progressive economies, such as United States of America, India and the Peoples Republic of China all operate regional grid systems. According to the World Bank in its 2017 State of Electricity Access Report, China, via its regional grid-based electricity transmission system has succeeded in providing 900 million people with access to electricity, with 165 million gaining access between 2000 and 2014.
It is submitted that the fundamental problem of the NESI is its faulty business model, which is predicated on a flawed legal and regulatory regime that derives its force and validity from an equally defective and counter-productive political-economic system, as embodied by the 1999 constitution and ancillary legislations. Thus, whilst appreciative of the government’s sincere efforts to force our overly-centralized electricity industry to work, it is submitted that the most pragmatic solution to the myriad of problems confronting the NESI is to effect the total liberalization of the Nigerian power sector, particularly the transmission segment, with a view to establishing regional transmission grids and engendering a truly liberalized and competitive electricity market.
Thus, to achieve this goal, there must needs be an amendment of the 2nd Schedule of the 1999 Constitution, which makes electricity-transmission the exclusive preserve of the federal government, and Section 8 and 65 of the EPSRA 2005, with a view to effecting the devolution of power to the states of the federation, for the purpose of engendering their full participation in the provision of electricity, and to permit them or private firms to build and maintain inter-state electricity transmission grids. The reality of the Nigerian situation is that the generality of the Nigerian population and its economic activities are domiciled within the states and this has a very direct implication for the involvement of state governments in the provision of critical infrastructure that are incidental to the creation of the enabling environments for businesses to thrive and for the citizenry to live healthy and dignifying lives.
Therefore it is submitted that the unitarist structure of Nigeria and the deleterious centralization of its electricity industry has stunted our socio-economic development, and as Nobel laureate, Professor Wole Soyinka recently noted, “centralization… has been the bane of the Nation on any level you choose and NOTHING will answer the necessity of a harmonious relationship and development of its parts, other than a severe curtailment of the control of the centre over the functioning of its parts.” In conclusion it is submitted that if Nigeria is to achieve its goal of uninterrupted, constant and reliable power supply, then the just and equitable devolution of constitutional power and resources to the states and the concomitant decentralization of electricity transmission should be effected.
It is prayed that the Nation’s policy-makers will place national interest above elemental considerations and take the necessary and urgent steps needed to harness and unleash Nigeria’s much touted potential by devolving power to the states.