Reforms reap: Reaping the benefits of the new Nigeria Electricity Act already?
Femi Otedola and Lagos State Partner to Build first of its kind PPP-driven Power Transmission Project
In my explainer last week, I tried to distinguish between erstwhile President Buhari’s assent to enable states in the country to license, generate, transmit, and distribute electricity earlier in March 2023, and President Tinubu’s assent that finally introduced rules governing a decentralized electricity generation, transmission, and distribution by states, businesses and individuals.
Prior to these assents, the electricity market framework in Nigeria was pretty much unitarist, and a logistical nightmare - which partly explains why Nigeria’s electricity supply deficit these days is estimated at nearly 100,000 megawatts.
The recently signed Nigeria Electricity Act by the reforms-frenzy Tinubu presidency, which has now enabled state governments, businesses and private individuals the license to transmit electricity. It is no surprise that Nigeria’s only listed power company, Geregu PLC, through its founder, Femi Otedola, is partnering with the Lagos State government and the African Development Bank (AfDB) to build Nigeria’s first Public-Private Partnership (PPP) driven power transmission project.
The project is a major step forward for the Nigerian power sector, which has long been plagued by transmission problems. In the past 12 years, the national grid collapsed over 222 times, causing widespread blackouts. The new project is expected to help to improve the reliability of electricity supply in Lagos state, which is Nigeria's biggest economy.
For context, Nigeria operates a fractured unitary electricity grid system served by more than 23 electricity-generating plants - this should explain the grid’s susceptibility to collapses and general unreliability.
It is expected that with the new electricity market framework due to the recent reform carried out by President Bola Ahmed Tinubu, a partial decentralization and influx of private players in the transmission and grid sub-set of the electricity market(s) in Nigeria should take shape.
Details about the project is scanty. But from what I hear, it will involve the construction of a new transmission line and substations, all in Lagos state. The project is expected to create thousands of jobs during construction and operation.
Reforms reap? We wait and see, I guess….with Nigeria, one can never be too sure.