State governments are free to generate and distribute their own power, subject rules by the Nigerian Electricity Regulatory Commission (NERC). Heavy consumers of power also have the liberty to purchase energy from sources other than Distribution Companies (DISCOs) but will have to pay a rate between N30-N80 per kilowatt. This was stated in a communique issued at the 18th power sector operators meeting.
Implications of this clarification
State governments could decide to move into electricity generation and distribution in order to enhance commercial activities in their domain. Manufacturing outfits tend to be concentrated in areas that have regular power. This in turn will boost commercial activities in the states. States will also benefit from enhanced tax revenue both from companies operating and individuals that will be employed. The states could also have an easier time running these operations as they would be able to raise the necessary financing. Distribution Companies (DISCOs) are currently hampered by several issues ranging from heavy loans due to commercial banks that funded their acquisition, poor payment by customers, and an inability to meter them. States will also have no issues with right of way when expanding or building infrastructure to do distribute or generate power.
Old problems could come up
As positive as this news is, the very issues that lead the Federal Government to privatize power assets could repeat themselves. Government at any level is a poor manager of business enterprises. Government owned companies tend to be badly run, and bedeviled by corruption and inefficiency. This could then lead to inefficient power supply.