The Nigerian Electricity Regulatory Commission (NERC) has in its Market Competition Report released earlier this month, highlighted that in 1999, Nigeria’s power sector needed a reform, due to a pressing need to address critical deficiencies and inefficiencies that were hindering the sector’s growth and its ability to meet the energy demands of the population.
Before the initiation of sector reform, Nigeria’s electricity sector functioned as a vertically integrated monopoly managed by a sole government-owned utility company, accountable for the entire process of electricity, from its generation, transmission, its distribution.
As a result, the power sector grappled with persistent issues such as inadequate power infrastructure, limited energy accessibility, unreliability, and the necessity for enhanced efficiency.
These challenges collectively urged the Federal Government of Nigeria to make a strategic decision to reform the power sector, setting the wheels in motion with the establishment of the power sector reform implementation committee in 1999.
Here is a rundown of how the reform has played out from 1999 to 2023:
1999: Electric Power Sector Implementation Committee was inaugurated
2001: The Nigerian Electric Power Policy (NEPP) was developed
2002: NEPP was adopted
2005: Enactment of the Electric Power Sector Reform Act (EPSRA)
2005-2007: Establishment of NERC; formation of Power Holding Company of Nigeria (PHCN); unbundling of the PHCN into 18 independent companies
2010: The Presidential Action Committee on Power (PACP) and Presidential Task Force on Power (PTFP) were established; the Roadmap for Power Sector Reform was released; the Nigerian Bulk Electricity Trader (NBET) was incorporated.
2012: The Multi-Year Tariff Order (MYTO) 2 was approved and released
2013: Privatization of the generation and distribution subsectors; the transmission subsector was retained by the government and operated under a management contract by MHI Interim Rules Period (IRP) and the accumulation of N213 billion arrears/debt (to be repaid by Nigeria Electricity Market Stabilization Facility (NEMSF) which included N14 billion for legacy gas debt).
2015: February: MYTO 2.1 was approved and released. Petition by various consumer groups, evoked by electricity price increases of up to 80%, led to the amendment of MYTO 2.1 and a price drop of 25%.
February: Commencement of Transitional Electricity Market (TEM), after NERC declared all Conditions Precedent in the Market Rules as satisfied (1st February).
March to June: Major disruption to ELPS throughout the year.
2016: February: MYTO 2015 became effective
March: Major disruption to Escravos-Lagos-Pipeline System (ELPS) throughout the year
May: Naira revaluation (Retail Tariff unchanged)
December: No MYTO Review (Retail Tariff unchanged)
2017: February: NERC Commissioners sworn in
March: Power Sector Recovery Program (PSRP) approved
2019: July: Retroactive review of MYTO 2015 and introduction of Minimum Remittance Obligation (MRO)
2020: September: The Service Based Tariff (SBT) regime commenced
2022: June: Partial Contract Activation in the Nigerian Electricity Supply Industry (NESI)
July: Approval and implementation of regulatory net-off.
2023: April: Initiation of Bilateral Market Regime
May: Constitution Amendment
June: Enactment of Electricity Act 2023.
