The Case for Decentralisation of Electricity Transmission
In line with the calls for the devolution of power to the states, there have also been calls for a review of the legal regime that governs the Nigerian Electricity Supply Industry, with a view to engendering the full participation of states 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 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 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 decrepit transmission and distribution infrastructure that conspire to keep Nigerians in darkness. As a result of these inefficiencies, Nigeria which has an available capacity of 7,000 megawatts (mw), only manages to transmit and distribute an average of 4,000mw.
There are those who have suggested that the development of mini-grids 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 insufficient 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 and 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 N200-N360 per Kilowatt), which is significantly higher than the N28 the distribution companies are presently charging grid-connected customers. The argument against the development of regional grids has been its capital-intensive nature. Yes, it is true that the development of regional grids will be relatively expensive, but what is even truer is that regional grids will help solve 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 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.
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 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-centralised 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 liberalisation of the Nigerian power sector, particularly the transmission segment, with a view to establishing regional transmission grids and engendering a truly liberalised and competitive electricity market.
Thus, to achieve this goal, there must be an amendment of the 1999 Constitution, which makes electricity-transmission the exclusive preserve of the federal government, and 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 economic activities are domiciled within the states and this has a 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.
The deleterious centralisation of the electricity industry has stunted our development, and as Nobel laureate, Professor Wole Soyinka recently noted, “centralisation…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.” Ugochukwu Amasike, ugoamasike@yahoo.com