The federal government announced intentions on Tuesday to create 3 megawatts of solar energy sources across 25 states of the Federation.
Adebayo Adelabu, the Minister of Power, announced this in Abuja, explaining that the proposed facilities would be located in the country’s North and South West geopolitical zones.
He stated, “We have investment plans to create 3 gigawatts, or 3000 megawatts, of solar energy sources across the 25 states in the North and South West. This is an innovative approach, and we feel it will help us address our power problem.
While expressing optimism that the unique method will help to alleviate the country’s chronic electricity problems, the Minister emphasized the critical necessity for Subnational Governments to invest in power generation within their domains.
Adelabu also revealed the Federal Government’s intention to deploy hydroelectric power to coastal cities.
While expressing concern that the majority of the infrastructure dated back to the 1960s, he confirmed that the country has had frequent transmission failures due to a lack of suitable infrastructure.
He reiterated that there is no single backup for the national grid, emphasizing the critical need for alternate sources in the event of a grid failure.
In his remarks, Vice President Kashim Shettima urged State Governments to take the lead in attracting investments into the electricity sector in order to recapitalize distribution companies and ensure a steady flow of investments aimed at increasing electricity access.
The Vice President, who was represented by Engineer Sadiq Wanka, Special Adviser to the President on Power, stated that the dialogue was timely because there is widespread recognition that the country is underperforming in all four pillars of providing reliable, affordable, environmentally sustainable, and accessible electricity to all Nigerians.
“According to some estimates, fewer than 20% of Nigerians have access to reliable energy for more than 12 hours a day. 45% of Nigerians do not have access to any type of electricity. As a result, homes and enterprises have become reliant on self-generation, which is more expensive and polluting.
“The Electricity Act 2023, enacted by the National Assembly and signed into law by President Bola Ahmed Tinubu, aims to revamp the structure of Nigeria’s electricity supply industry. It offers a system that encourages more competition and better flexibility in designing electricity solutions to local needs, while moving to a market structure that would attract much-needed investment and promote environmental sustainability.
“The wholesale structural shift that the Electricity Act 2023 (as amended) and the associated constitutional amendment usher in, means we need to double down on ensuring an orderly transition to the new national electricity market framework,” the minister added.
According to the Vice President, “having the authority to control electricity activities also implies the need to establish the capacity to ensure competent and independent regulators in each state market.
“This means that states must take the lead in soliciting investments to recapitalise distribution businesses and maintain a consistent flow of funding to increase electricity availability.
“State governments can now regulate all electrical value chain activities within their boundaries, but these new powers come with significant obligations.
‘Having the authority to set tariff policy inside state borders entails the obligation of paying tariff gaps and subsidies resulting from such policies. It is the obligation of state governments to ensure payments to the national wholesale electricity market.
Speaker Tajudeen Abbas praised President Bola Tinubu for signing the Electricity Act (Amendment) Bill, 2024, which allows states, companies, and individuals to generate, transmit, and distribute electricity, just a few weeks after his inauguration.
“As you are aware, our discussions at this event take place against a backdrop of enormous problems and remarkable prospects in our electricity sector. The government’s goal is clear: to build a resilient, efficient, and sustainable electricity sector capable of meeting our country’s ambitious economic and development goals.
“Historically, the Nigerian electricity sector has faced constraints that have limited its growth and reduced its efficiency. These issues include insufficient generation capacity, deteriorating infrastructure, frequent power outages, and financial inefficiencies that have weakened the sector’s viability.
“Moreover, insufficient metering and the resulting revenue losses have perpetuated a cycle of debt and underinvestment that has harmed the sector’s potential.
“As we face these problems, we must encourage collaborative projects that draw on public and private sector experience and resources. This discourse exemplifies such teamwork and is critical in charting a new course. The transition to a multi-tiered energy market marks a fundamental shift in our approach to power sector reform.
“This model envisions a systematic market segmentation that allows for differentiated pricing and service levels based on distinct consumer requirements and capacities. It offers increased efficiency through competitive procedures, attracts investment by defining specific market sectors, and enhances overall reliability and service delivery.
“It is worth noting that major stakeholders have touted the system’s benefits, which include increased competition and efficiency because various players can operate in different levels. This stimulates competition, which can result in improved service delivery and innovation.
“There is also the possibility of increased service reliability and quality, particularly for high-demand users prepared to pay more, which will indirectly benefit ordinary service tiers through lower load. Others have pointed out that the system can provide investment incentives. Clear segmentation enables focused expenditures in infrastructure to meet specific market demands and operational requirements, making investment decisions clearer and more predictable.
“However, this is only one side of the coin. Despite the well-publicized advantages, transitioning to a multi-tier market is difficult. These include regulatory complications, the necessity for significant capital investment, the possibility of market fragmentation resulting in differences in service quality, and opposition from various stakeholder groups to changes in pricing structure.
“We must accept that many stakeholders and industry experts have raised worry that the anticipated increase in electricity pricing will result in significantly higher utility bills. This increase may lower consumers’ disposable income, raise company operating costs, and raise the pricing of products and services, disproportionately harming Nigeria’s low-income workers.
“Some analysts believe that these developments will push more people into poverty, particularly if inflation and foreign exchange issues continue to pressure households and businesses.
“Additionally, fundamental concerns in the electrical value chain must be addressed. Technical and commercial losses that have not been successfully addressed result in inefficiencies that customers are indirectly obliged to absorb, leading to cost recovery efforts. These losses amount to billions of nairas.
“I would have assumed that this forum and significant consultations would have occurred prior to the installation of the new multi-tier electrical system. This consultation currently looks to be an afterthought, contrary to the Electricity Act 2024, which requires engagement with all important parties when deciding just and equitable pricing.
“Section 33 of the Electricity Act 2024 established the NERC as a public agency subject to oversight by the National Assembly under Sections 80-88 of the Constitution.
“Section 34 of the Act specifically states that the NERC’s function is to “ensure that the prices charged by the licensee are fair to consumers and sufficient to allow licensees to finance their activities and to allow for reasonable profit for efficient operation,” as well as to “ensure that regulation is fair and balanced for customers, licensees, investors, and other stakeholders.” “I hope this forum allows all stakeholders to question whether the new system meets the criteria outlined in the Act,” the Speaker said.
