Privatisation of public electricity company as a strategy for sustainable energy use in Nigeria

by K. B. Oyende PhD

Being a paper presented at the 14th Colloquium of the IUCN Academy of Environmental Law held at Rovira University I Vigili Terragona, Spain from 30

June to 5 July 2014

The National Policy on Energy in Nigeria hinges on the twin concepts of sound environmental practice and the principle of sustainable development.

There are other principles: The principle of intergenerational equity, the principle of sustainable use.

Nigeria has suffered from a shortage of power generation due to the inefficiency in the public electricity generation company formerly known by the acronym National Electricity Power Authority (NEPA) which gave way to the Power Holding Company of Nigeria (PHCN) after the commercialisation of NEPA.

Current demand for electricity in Nigeria is very high. While the electricity generation companies as a whole can only generate about 4,500 megahertz of electricity. The balance is supplied by Generators and independent power producers with serious consequence on the environment.

• The National Policy on Energy in Nigeria hinges on the twin concept of sound environmental practice and the principle of sustainable development

• There are other principles: The principle of intergenerational equity• Nigeria has suffered from a shortage of power generation due to the inefficiency in the public

electricity generation company formerly known by the acronym National Electricity Power Authority (NEPA) which gave way to the Power Holding Company of Nigeria (PHCN) after the commercialisation of NEPA

• Current demand for electricity in Nigeria is ??? While the electricity generation companies as a whole can only generate about 4,500 megahertz of electricity

• The balance is supplied by Generators and independent power producers with serious consequence on the environment

Solar power as an alternative source of power

Solar power being used to power streets in Lagos

Power lines used to distribute electricity

Strategies for sustainable energy development

Market mechanism

Supply and demand mechanism-

Supply: Generation mainly from GENCOS and private independent power companies

Distribution – through the DISCOS to end users. Marketing through appropriate pricing

• The Regulatory Agencies-• The Nigerian Electricity Regulation Company (NERC)• The Transmission Company of Nigeria (TRN)• The Bureau for Public Enterprises• The laws and regulations-• The National Electric Power Authority (NEPA) Act Cap

256 LFN 1990• The Electric Power Sector Reform Act No. 6 2005• The NERC (Methodology for Estimated Billing)

Regulations 2012 FRN Official Gazette No. 113 Vol. 99 of 1 August 2012

• Posers - What is the appropriate price for the sale of the PHCN?• Are the successor companies equipped with the necessary skill and

expertise for the task?• The successor companies lack sufficient funds for the purpose of investing

in the generation and distribution of electricity• The companies still rely on the former staff of the PHCN for their

operation• What has changed – only the name• What is the appropriate price for a unit of electricity generated?• What is the basis of determining the amount of electricity consumed

where no meter reading took place?• The issue of fixed charges being levied on electricity consumers whether

they consumed the electricity or not. This is unjustifiable and unsustainable

• What is the basis for making a four year projection on the tariffs for electricity generated when there is actual fall in the generation capacity as shown by statistics?