According to PwC Nigeria, the Electricity Act’s provision allowing states to enact their own independent electricity laws would be harmful to the expansion of the electricity industry.
This was mentioned in a report that summarized the conclusions drawn from PwC’s Annual Power and Utilities Roundtable, which is in its fourteenth year.
The PwC emphasized that having disparate electricity laws across states would lead to unhealthful competition amongst industry participants.
The PwC highlighted that “having vastly different electricity laws across states will be detrimental, creating market distortions and unfair competition,” with a focus on the theme of “The Electricity Act 2023: Powering Nigeria.”
According to the Hotline magazine, states are now able to have their own electricity laws and regulatory bodies, independent of the Nigerian Electricity Regulatory Commission, thanks to the new electricity act that President Bola Tinubu signed in June 2023.
NERC has so far granted Enugu, Ekiti, and Ondo permission to establish independent regulatory bodies after they met the Act’s requirements.
However, PwC contended that national electricity regulation must be uniform.
The financial consultancy stated, “It is imperative to guarantee equitable and non-regulatory capture in the regulation of electricity throughout the federation.”
PwC estimates that the Electricity Act could prevent economic losses of $28 billion a year. It also gives states the authority to create state-owned utilities, or “successor companies,” that can draw in long-term capital by using creative business models.
In the last twenty years, Nigeria’s power sector has undergone a number of reforms and initiatives, according to the firm. These have included the privatization of the generation and distribution subsectors in 2013, the introduction of the Meter Asset Provider scheme in 2018, the Service Based Tariff regime in 2020, and the Electricity Act 2023. Key policies such as the Nigerian Electric Power Policy in 2001 and the Meter Asset Provider scheme in 2018 have also been implemented.
“There have been notable advancements in the power sector’s policy landscape, but there are still obstacles to overcome,” The Electricity Act of 2023 makes an effort to solve a few of these issues and discover new possibilities.
It further stated that state-specific distribution and supply firms could serve as special purpose vehicles, obtaining funding from public coffers or private investors via primary or secondary markets.
According to PwC, the act promoted cooperative fundraising efforts because it established the Power Consumer Assistance Fund as a joint federal-state mechanism for targeted subsidies.
“Adopting the Electricity Act 2023 involves substantial financial investments,” the company emphasized. Developing and creating state-level regulatory bodies, enlisting legal and business expertise, and competing for scarce state resources are all expensive endeavors. In-depth feasibility and due diligence analyses are essential to guaranteeing effective resource distribution and project viability.
Be the first to comment