Article Summary
- The House of Representatives has passed an amended bill on the Electric Power Sector Reform Act (EPSRA).
- This amendment bill could create more hardship in the lives of Nigerians who are already drained from a stagnant economy.
- The House needs to review the bill.
Odion Omonfoman, the Chief Executive Officer of New Hampshire Capital Limited and the lead consultant on power for the Nigeria Governors Forum has called on the Speaker and members of the House of Representatives to look more closely at the provisions of the Electric Power Sector Reform Act amendment bill so as not to impose further needless hardship on Nigerians.
Nigeria’s ninth National Assembly has passed respective bills on the Electric Power Sector Reform Act (EPSRA). The Senate’s bill repeals the EPSRA and enacts the Electricity Bill 2022. The Senate Electricity Bill was passed in 2022.
Meanwhile, the House of Representatives has concluded its review of the EPSRA by amending several provisions of the EPSRA (2005), rather than a repeal. The EPSRA (Amendment) Bill was passed by the House of Representatives in April 2023.
In amending the EPSRA, both the Senate and House of Representatives took different perspectives in their reviews. The Senate Power Committee, chaired by Senator Gabriel Suswam chose to repeal the EPSRA 2005 and enact a new Electricity Act 2022. Meanwhile, the House Power Committee, chaired by Hon. (Engr) Magaji Da’u Aliyu decided to amend and pass an EPSRA (Amendment) Bill 2023.
Omonfoman told Nairametrics that the EPSRA Amendment bill creates more hardship for Nigerians. According to him, the amendment Bill needs to be reviewed to address the stipulations that would be detrimental to the power sector and curtail further investments in the Nigerian Electricity Supply Industry (NESI) if passed into law.
Omonfoman told Nairametrics that there are 10 stipulations in the amendment bill that need further review:
- The amendment bill infringes on the constitutional rights of states to make laws for electricity generation, transmission and distribution within their territories.
- The amendment bill imposes significant additional costs on a bankrupt electricity market and the companies operating in the electricity sector.
- The amendment bill is so focused on generating revenues for the existing federal agencies in the power sector, it overlooks the unintended consequences and harms the bill would cause to the power sector, as Nigerians will have to pay higher for electricity.
- The EPSRA Amendment bill by the House prevents State governments from harnessing their hydro resources for small and medium-scale renewable hydroelectric power generation within their states.
- The amendment bill expands the remit of the Hydroelectric Power Producing Areas Development Commission (HYPADEC) to capture small hydroelectric plants/activities in all states. Under the amendment bill, small and medium-scale hydroelectric power companies operating within a state would pay a 10% tax on the total revenues generated. The proposed 10% tax on their revenues will make small-scale hydroelectric power generation within states economically unviable to investors willing to take on the risk of investments in these small-scale hydroelectric power projects.
- The amendment bill imposes a 5% charge on the revenues of all power generation companies (GenCos), except for hydroelectric power generation companies, operating in Nigeria as Host Community Development Fund. Every thermal and renewable energy GenCo, including state licensees and off-grid generation companies, is included.
- The Amendment Bill creates the Rural Electrification and Renewable Energy Agency (REREA). The provisions of the REREA effectively empower the REREA to be the Agency to undertake all aspects of rural electrification within states. Meanwhile, rural electrification is strictly the purview and primary responsibility of States. The REREA as a federal agency should not have the primary responsibility to determine and make policies and regulations for rural electrification as well as implement its own, rural electrification projects within a state.
- The amendment bill imposes a 5% charge on every kilowatt-hour (KWh) of electricity consumed by Nigerian electricity consumers. If your electricity tariff was N62.50/kWh (which is the average DisCo electricity tariff), the REREF adds an additional N3.13 for every kWh consumed to your electricity tariffs.
- The EPSRA amendment bill imposes a carbon tax of 5% on the pump price of all petroleum products sold in Nigeria including premium motor spirit (PMS), diesel, kerosene, and cooking gas.
- The EPSRA amendment bill also proposes a tax of 0.5% on royalties paid to the Federal Government as oil revenues to fund the REREF. The Federal Government collects oil revenues on behalf of the Federation (Federal and State Governments); thus, the amendment bill effectively imposes a 0.5% tax on oil royalties accruing to states.
What you should know
According to Omonfoman, the Electric Power Sector Reform Act (EPSRA) was signed into law by President Olusegun Obasanjo in 2005. The law was passed by the National Assembly a year earlier in 2004. The EPSRA (2005) provides the legal, regulatory, and governance frameworks underpinning the Nigerian Electricity Supply Industry (NESI) as we know it today.
