State governors have slammed the Federal Government’s Independent Electricity Distribution Network (IEDN) and distribution franchisee models, developed through the Nigerian Electricity Regulatory Commission (NERC), as ineffective and outdated.
Why It Matters
Thi harsh assessment comes amid widespread frustration over Nigeria’s chronic power supply issues. In a bid to address these problems, the governors are advocating for the establishment of State Electricity Regulatory Commissions (SERCs) to introduce innovative models that would open up the electricity market to competition, potentially improving power delivery across the nation.
It was reported that NERC had issued 13 new licenses for off-grid and embedded power generation, independent electricity distribution, and electricity trading. These licenses, distributed in the third quarter of 2023, included one for Independent Electricity Distribution Network, one for trading, three for off-grid generation, one for embedded generation, and another IEDN license.
Back in October 2023, NERC had already licensed 17 Independent Electricity Distribution Network providers by the end of 2022, as revealed in their ‘2022 Market Competition Report’. The report stated that 10 of these networks were operational, supposedly enhancing competition and efficiency by operating independently of the 11 successor power distribution companies.
However, in their latest document, ‘Development of the National Integrated Electricity Policy and Strategic Implementation Plan Policy Recommendations by State Governments,’ submitted to the Federal Ministry of Power, the state governors painted a bleak picture of the IEDNs’ effectiveness. The document, crafted by the Nigeria Governors’ Forum, argues that these models have failed to deliver the promised improvements.
Why It Matters
Empowered by the Electricity Act 2023, state governments now have the authority to operate and regulate their own electricity markets independently of NERC. The governors didn’t mince words, labeling the IEDNs and distribution franchisee models as obsolete.
“The Independent Electricity Distribution Network and Distribution Franchisee models developed by NERC have not been effective,” the governors asserted.
They called on SERCs to develop new retail and supply licenses and business models to open the electricity market to new companies capable of addressing the dire power situation within their states.
Bottom Line
According to the governors, new retail supply licenses would also enhance revenue assurance in state electricity markets and the broader Nigerian Electricity Supply Industry (NESI). They advocated for the disaggregation of existing successor distribution licenses into ‘wires only’ and ‘supply’ licenses, where feasible, to foster
