The Nigerian Electricity Regulatory Commission (NERC) has officially transferred the oversight of Ekiti State’s electricity market to the Ekiti State Electricity Regulatory Bureau (EERB).
Set to take effect on May 1, 2024, this move symbolizes a broader decentralization effort within Nigeria’s power sector, influenced by recent legislative amendments under the Electricity Act 2023.
This transfer was outlined in a NERC order dated April 22, 2024, marking a significant step towards empowering state-level regulatory capabilities.
The move stems from constitutional amendments signed into law on March 17, 2023, which shifted certain powers from the federal to state governments, allowing them to independently manage electricity generation, transmission, and distribution within their jurisdictions.
Details of the Transfer
The official announcement was made through an order dated April 22, 2024, where NERC outlined the transfer process, aligning with the broader legislative changes under the amended Electricity Act 2023.
- These changes, initiated by the amendment of the Constitution on March 17, 2023, have shifted significant regulatory responsibilities from the federal level to individual states, allowing them more autonomy over their electricity markets.
- According to the order, the Ibadan Electricity Distribution PLC (IBEDC) is directed to create a subsidiary specifically for the intrastate management of electricity in Ekiti State, referred to as IBEDC SubCo.
- This subsidiary is tasked with assuming responsibilities for the local supply and distribution of electricity, effectively segregating its operations from the national grid where necessary.
Operational Guidelines and Responsibilities
IBEDC has a 60-day window from the effective date of the order to establish IBEDC SubCo and to delineate the geographic boundaries of Ekiti’s electricity network.
- This involves installing boundary meters at all points where the network transitions from Ekiti State to neighboring regions, ensuring a clear operational demarcation.
- Furthermore, IBEDC SubCo is required to apply for and obtain a license from the newly empowered EERB for its operations within the state.
- The EERB now holds the exclusive authority to set end-user electricity tariffs in Ekiti State.
- These tariffs will be determined based on local economic conditions and operational costs, and are intended to be more closely aligned with the needs and capabilities of the state’s residents and businesses.
How this affects IBEDC
According to the order, the Ibadan Electricity Distribution PLC (IBEDC) is instructed to establish a subsidiary specifically for Ekiti State—dubbed IBEDC SubCo.
- This new entity will handle the intrastate supply and distribution of electricity, ensuring that the state’s energy needs are met independently of national grid constraints.
- IBEDC has 60 days from the order’s issuance to incorporate this subsidiary and is also tasked with delineating the actual geographic boundaries of Ekiti’s electricity network, including installing boundary meters to manage the transition from state to national grid connections.
- Moreover, IBEDC SubCo is required to obtain a license from EERB for its operations, highlighting the state’s newfound authority over its electricity market.
What this means for Ekiti State
This transfer of regulatory powers is expected to foster greater efficiency, accountability, and responsiveness in the management of electricity services in Ekiti State.
- By localizing decision-making, EERB can tailor its regulatory and tariff-setting activities to better meet the specific demands of Ekiti’s electricity consumers.
- Additionally, all tariff policy support for end-use customers will now be the responsibility of the Ekiti State Government, which will work in conjunction with EERB to ensure that electricity prices are fair and conducive to local economic development.
Monumental Change
The recent shift in regulatory control from the Nigerian Electricity Regulatory Commission (NERC) to state-level entities represents a monumental change in the landscape of Nigeria’s electricity sector.
This transition, according to Odion Omonfoman, Chief Executive Officer of New Hampshire Capital Limited, heralds a new era of competition and localized management that could significantly enhance service delivery and foster economic growth.
In a note sent to Nairametrics, Omonfoman elucidated the changes introduced by NERC.
- “The wholesale market, previously operated and regulated by NERC, will now see a significant transition. State governments will regulate these markets under state-specific electricity laws,” he explained.
- This decentralization is expected to ignite competitive forces, particularly at the distribution level, by allowing states to tailor regulatory practices to better fit local conditions and needs.
Looking Forward
This decentralization effort by NERC, as mandated by the latest legislative amendments, is seen as a pivotal move towards enhancing the sustainability and responsiveness of Nigeria’s electricity supply industry.
- It is anticipated that other states will follow in Ekiti’s footsteps, leading to a more diversified and locally managed electricity market across Nigeria.
- The full transition, including the transfer of assets and operational responsibilities to IBEDC SubCo, is expected to be completed by October 22, 2024, setting a new precedent for state involvement in the critical area of energy regulation.