The Nigeria Governors’ Forums said it plans to license new players in the distribution segment of the power sector, aiming to bolster electricity supply across the 36 States.
This is contained in its report on electricity policy and recommendations to the federal government which is seen by Nairametrics.
The forum recommends granting licenses to new power distribution companies (DisCos) in various territories and geopolitical zones across the country. This is to stimulate market competition and enhance efficiency within the sector.
Currently, Nigeria’s electricity distribution landscape comprises eleven DisCos across the thirty-six states and the Federal Capital Territory (FCT). Despite their private ownership and management, these DisCos operate within the auspices of the federal government.
Meanwhile, following the enactment of the Electricity Act 2023, which grants State governors autonomy over power generation, distribution, and regulation within their respective States, the governors are pursuing approval for additional licenses to foster increased liquidity in the sector.
What the Governors are Saying
Under the recommendation for the development of a multi-tier electricity market, the governors aim to create a State electricity market that will be appropriate for each State.
Moreover, the market design may include energy resources within the States such as gas, hydro, wind, biomass, solar, etc, among other things.
The State governors also suggest licensing new DisCos and creating a new business model that is suitable for each State.
“To cultivate robust competition and facilitate innovation, it is essential for States to expand the constellation of electricity providers and business models accessible within a state electricity market beyond Successor DisCos operating within the State territory.
“Consequently, States will license new players and develop new business models that would introduce more competition in both the wholesale and retail markets within their territories,” the governors said.
What you should know
Despite the privatization initiative of the power distribution companies (DisCos) in 2013, Nigeria continues to grapple with persistent challenges in its power sector, primarily characterized by inadequate power supply.
At present, the country relies on only eleven DisCos to cater to its electricity needs nationwide, a situation that has underscored the complexities and deficiencies within the sector.
Over the years, these DisCos have encountered a myriad of obstacles hindering their ability to provide reliable and sustainable electricity services.
Among the most prominent challenges are financial constraints, which have limited their capacity for investment in infrastructure and technology upgrades essential for improving service delivery.
In addition, an unfavorable investment environment has impeded the influx of much-needed capital into the sector, further exacerbating its woes.
Moreover, the prevalence of energy theft and other forms of illegal connections has plagued DisCos, resulting in revenue losses and undermining efforts to enhance operational efficiency.
Coupled with these challenges is the occasional inability of DisCos to deliver consistent and uninterrupted power supply to their customers, a factor that has contributed to widespread dissatisfaction among consumers.
In response to these pressing issues, many industry analysts and stakeholders advocate for the unbundling of DisCos as a crucial step towards revitalizing the sector.
Furthermore, the recent enactment of the Electricity Act 2023 represents a significant development in Nigeria’s power sector landscape.
This legislation grants states greater autonomy over power generation, distribution, and regulation within their respective jurisdictions, empowering them to take more active roles in shaping the energy landscape in their regions.
