By Nnenna Ogbenna Esq
Introduction
Energy is the power derived from the utilization of physical or chemical resources, to create light and heat or make machines function. The word energy refers to a concept that can be paraphrased as “the potential for causing changes”, and therefore one can say that energy is the cause of any change.1 Energy fuels productive human activities such as agriculture, commerce, manufacturing, industry, and mining. Energy is so essential that it is used for basic human needs such as cooking food, lighting (bulbs, florescent, etc.), a comfortable living temperature (heaters, air conditioners, etc), the use of appliances in the home, essential health care (refrigerated vaccines, emergency, and intensive care), for communication (television sets, radio, electronic mail, the World Wide Web), and transport. A lack of access to energy contributes to poverty and deprivation and on a larger scale, and an economic decline. Energy and poverty reduction are not only closely connected with each other, but also with the socioeconomic development, which involves productivity, income growth, education, and health.2 There are different forms of energy, which includes: heat, light, motion, etc. Energy can also be converted from one form to another and energy sources can be categorized as renewable or nonrenewable.
Renewable energy sources are sources that can be easily replenished while, nonrenewable energy sources are the ones that cannot be easily replenished. Renewable and nonrenewable energy sources can be used as primary energy sources to produce useful energy such as heat, or they can be used to produce secondary energy sources such as electricity.3
Sustainable Development
Sustainable development is development that satisfies the needs of the present without compromising the capacity of future generations, thereby guaranteeing the balance between economic growth, care for the environment and social well-being. World leaders have promised to end poverty, reduce inequality, and tackle climate change by 2030 as part of the Sustainable Development Goals (SDGs).4
Historically, we have discovered that the production and consumption system did not only produce advantages, but also proved disadvantageous. The world has become more and more interconnected than ever before. Goods and Money are being distributed more frequent and faster than ever before, information and ideas are disseminated faster as well. We now live in a network society, there is increased teamwork, networking, outsourcing, subcontracting and delocalisation.5 These features may represent the advancement of our civilization, but may on the long run result in a tragedy of the commons.6
In recent times, the concept of sustainable development has been linked to the one of accesses to sustainable energy. It has become a shared understanding that sustainable development is not possible without sustainable energy access to all. Energy services have a prominent effect on education, food security, productivity, health, and communication services. It can therefore be said that access to energy contributes to the reduction of poverty.
Renewable electricity generation is an essential part of a sustainable energy future. An increasing number of governments are subsidizing the deployment of renewable energy technologies for electricity generation and the growth of domestic industries.
Where does Nigeria stand with sustainable development?
The economic turbulence over the past few years has led to a decline in the growth rate of the Nigerian economy. This has highlighted the urgency and need for Nigeria’s transformation. The optimal use of the available natural resources within our locality dictates the extent to which sustainable growth would be achieved through the use of renewable resources, proper waste management, and perhaps suggesting an effective means of energy generation and distribution as an accomplice to improving the living standard of the nation.
Most of the challenges of the issue of energy has to do with the production system which are related to material impacts, i.e. residues, pollution, etc. which we can see the effects and impacts of. Energy enables us to produce things, and environmental impacts start with the transformation of a given resource. On the other hand, there are implications connected to energy. Transforming resources into energy, requires the capability (technologies), knowhow, and the financial resources to face it.
Nigeria’s energy sector is categorized into power, and oil and gas sector. Nigeria, being the largest economy in sub-Saharan Africa, uses fossil fuel for its energy production. Its electricity is generated through thermal and hydro power sources, but however, limitations in the power sector constrain its growth. Nigeria is endowed with stupendous oil, gas, hydro and solar resource, and it already has the potential to generate 12,522 megawatts (MW) of electric power from existing plants, but most days we are only able to generate around 4,000 MW, which is, at best, insufficient.7 Nigeria has privatized its distribution companies, so there is a wide range of tariffs.
The Energy Commission of Nigeria (ECN) was established by Act No. 62 of 1979, as amended by Act No. 32 of 1988 and Act No. 19 of 1989, with the statutory mandate for the strategic planning and co-ordination of national policies in the field of energy in all its ramifications.8
Electricity regulations in Nigeria
The Nigerian Constitution supports decentralized electricity regulation. It gives federal and state governments the authority to make laws that would improve supply. It allows both Federal and State governments to regulate electricity. Electricity appears on what is known as the concurrent legislative list.9
At the federal level, the Constitution charges the National Assembly with the responsibility to make the laws. It provides that the National Assembly may make laws for the entire federation or any of its constituent parts with respect to electricity and the establishment of electric power stations; and the generation and transmission of electricity in or to any part of the federation and from one state to another state.
At the state level, the Constitution charges the state Houses of Assembly with the responsibility of making laws to regulate electricity. They can make laws for the state with respect to:
• electricity and the establishment, in that state, of electric power stations;
• the generation, transmission and distribution of electricity to areas not covered by a national grid system within that state; and
The Nigerian Electricity Regulatory Commission is an independent regulator of the electricity sector with a definition of its functions and powers in Nigeria. The EPSRA delegated the powers to NERC to make regulations necessary to give effect to the provisions of the Act.10 In a bid to address the problems with Nigeria’s electricity, the current electricity regulations must be identified and examined.
The Electric Power Sector Reform Act
The Electric Power Sector Reform Act (EPSRA) was enacted with a view to provide for the formation of companies to take over the functions, assets, liabilities and staff of the National Electric Power Authority, to develop competitive electricity markets, to establish the Nigerian Electricity Regulatory Commission; to provide for the Licensing and regulation of the generation, transmission, distribution and supply of electricity; to enforce such matters as performance standards, consumer rights and obligations; to provide for the determination of tariffs; and to provide for matters connected with or incidental to the foregoing.
The Act essentially provides for the following, among others:
• The trading arrangements that will allow for competition in the wholesale electricity market (Gencos). The independent power producers (IPPs) are also allowed to compete with distributors (Discos) for the patronage of large consumers.
• The establishment of a regulatory regime including the granting of licences to the successor companies and new entrants in electricity undertakings of generation, transmission marketing and distribution companies, the determination of tariffs of regulated activities and the prevention of abuse of market power. Economic regulation of the power market will be applied independently by NERC. In the wholesale market the focus of the regulation will be to prevent abuse of market power. In the retail market the focus will be on balancing the interests of successor companies and IPPs as suppliers with the interests of customers.
• The establishment of the Rural Electrification Agency to provide rural communities with access to electricity, the establishment of the Rural Electrification Fund to promote, support and provide rural electrification programs through public and private sector participation n, and the establishment of the Power Consumer Assistance Fund to subsidize underprivileged power consumers.11
The idea behind this Fund, is to ensure that provision is made for public assistance in certain deserving cases. However, leaving such fund under the supervision of the commission12 instead of an independent fund manager raises a cause for concern. It may lead to misappropriation and fraud.
Consumers are also expected to ‘contribute’ to this fund,13 the fund that is meant to be an assistance fund. Expecting consumers to bear the burden of this is unfair and defeats the purpose of the fund.
Regulations on National Content Development for the Power Sector 2014
The objective of this Regulation is to promote the deliberate utilization of Nigerian human and material resources, goods, works and services in the industry as well as building capabilities in Nigeria to support increased investment in the industry. This is to ensure indigenous companies also benefit from the electricity sector.
Some of its salient provisions that participants in the Nigerian Electricity Supply Industry (NESI), should be acquainted with are:
a. The Regulations apply to any person who holds a license (“the licensee”) issued under the Act to carry on any regulated activity. The licensee is required to ensure that (a) first consideration is given to qualified Nigerian companies for the supply of goods and works, and for the provision of services and (b) ensure first consideration is given for goods made in Nigeria and services provided by Nigerian firms in the award of contracts. In addition, the licensee is required to develop a framework for the promotion of Nigerian Content and is under an obligation to maintain an Annual Nigerian Content Performance Report detailing all its projects and activities in the previous financial year.14
b. The Regulations introduces the NESI Nigerian Content Consultative Forum (“NNCCF”). The role of the NNCCF is to carry out periodical survey to determine the level of indigenous participation as well as availability of local capabilities in the NESI and to advise NERC as to the benchmark to set as the threshold of required local content.
c. A licensee who intends to engage in a “major project” – a project whose total budget exceeds the threshold for local content set by NERC on the advice of the NNCCF- is obligated to submit to NERC a Nigerian Content Plan for the project. NERC shall, within 10 days from the submission, issue a certificate of authorization for the project if it is satisfied with the Nigerian Content Plan or furnish reasons for its refusal to grant a certificate of authorization.
d. All contracts for major projects shall contain a “Labour Clause” which mandates the use of a minimum percentage of Nigerian labour of specific cadre as may be stipulated by NERC.15
e. Licensees are required to give full and effective support to technology transfer by facilitating and encouraging the formation of joint ventures or alliances between Nigerian and foreign contractors’ companies. Agreements for such joint ventures or alliances are required to meet Nigerian content development specifications and must be to the satisfaction of NERC.
The effect of this requirement to satisfy NERC before parties can enter into agreement may arguably be held to be violation of the rights of parties to freely enter into a contract without the intervention of the state.
Nigerian Electricity Supply and Installation Standards Regulations 2015
The NESIS Regulations are a compendium of standards for engineering designs, installations, construction and commissioning of electrical infrastructure in the Nigerian Electricity Supply Industry.
Regulations for the Investment in Electricity Networks 2015
This provides for the procedure for investing in electricity networks in Nigeria. The objectives of these Regulations are mainly to create strong incentives to encourage the Transmission Company of Nigeria (TCN) and the distribution companies to make appropriate and sustainable investments in capacity expansion.
NERC Regulation for the Procurement of Generation Capacity 2014
This regulation lays out the process to be used by a buyer in procuring additional electricity generation capacity.
NERC (Embedded Generation) Regulation 2012
This provides a legal and regulatory framework for the issuance of licenses to qualified operators to engage in embedded generation of electricity in Nigeria, and to ensure compliance with set standards.
NERC (Independent Electricity Distribution Networks) Regulations 2012
This provides a legal and regulatory framework for the issuance of licenses to qualified operators to engage in electricity distribution, independent of the already existing successor distribution companies, and to ensure compliance with set standards.
NERC Permit for Captive Power Generation Regulation 2008
This provides for a legal and regulatory framework for the granting of permits to qualified operators to engage in captive power generation in Nigeria, and to ensure compliance with set standards.
NERC Mini Grid Regulation 2016
This governs the development of integrated electricity generation and distribution supply systems of under 1MW either in isolation from the distribution companies or interconnected to the distribution companies’ existing network infrastructure.
Nigerian Electricity Smart Metering Regulation 2015
This is a technical regulation that applies to all licensees who deploy smart metering. It sets out the requirements for a smart metering system in the NESI.
Feed in Tariff for Renewable Energy Sourced Electricity in Nigeria 2015
This regulation gauges the tariff for renewable energy and permits the energy capacity to be bought by the off taker and placed on the grid.
NERC Metering Asset Provider (MAP) Regulations 2018
This provides a new class of market participants (meter asset providers) who are charged with the responsibility of providing metering services. The objective of the Regulations is to close the national metering gap through accelerated meter roll out to customers, eliminate estimated billing and attract private investment in the meter services provision in the NESI among others.
NERC Eligible Customer Regulations 2017
This outlines the terms that would guide the direct purchase of electricity by end-users from power generation companies.
The Nigerian government sees renewable energy as an important part of diversifying the country’s energy mix. A number of policies have been developed over the years which have enhanced government’s pursuit of renewable energy as an additional means to solve the electricity challenges in Nigeria.16 Some of the policies that have been passed by the government to encourage alternative energy sources such as renewables are:
i. Roadmap for Power Sector Reform 2013
The Roadmap’s targets for renewable energy technologies that contribute to the overall target to achieve 18 per cent of electricity generated from renewables by 2025 and 20 per cent by 2030 are:
• small-hydro: 2GW (600MW in 2015);
• solar photovoltaics: 500MW;
• biomass-based power plants: 400MW (50MW in 2015);
• wind: 40MW; and
• electrification level of 75 per cent in 2025 (60 per cent in 2015).16
ii. National Renewable Energy Action Plan
The National Action Plan presents the expected development and expansion of renewable energies in Nigeria in order to achieve the national target under the Economic Community of West African States (ECOWAS) Renewable Energy Policy, thus Nigeria’s contribution to the overall ECOWAS target of 23% and 31% renewable energy in 2020 and 2030 respectively. It contains existing and currently planned measures with which the national target is to be achieved.
iii. Rural Electrification Strategy and Implementation Plan
This is a follow-up to the Nigerian Rural Electrification Policy. The primary objective is to expand access to electricity as rapidly as possible in a cost-effective manner through the use of grid and off-grid approaches from renewable and thermal sources in rural areas.
Conclusion
In conclusion, it is important to note that; Access or no access to energy determines our quality of life and its limited access represent one of the key barriers to achieve sustainable development. Prior to power sector privatization in September 2013, power generation in Nigeria was at an average of 4000MW. Seven years after privatization, power generation is at an average of 3800MW. The NERC, in its efforts to attain cost-reflective tariff in the power sector value chain, issued a directive on December 31, 2019. It ordered a tariff review effective April 2020 to achieve a cost-reflective tariff in the power sector, which was later moved and was expected to take effect from 1st July 2020. The National Assembly however, was able to convince the Distribution companies to halt this till the first quarter of 2020 because of the challenges brought about by corona virus.17
Way forward
Experts in renewable energy technologies, energy policy and environmental fiscal reform help governments achieve a supportive policy framework for sustainable electricity systems.
The gap between demand and supply of electricity in Nigeria is still large and, has led to recurrent power shortage. Nigeria’s continued reliance on hydro, the lack of energy efficiency practices, inadequate regulations and attacks on energy infrastructure contribute to the challenges the electricity sector faces.
Currently only 40% of Nigeria’s population is connected to the energy grid whilst power supply difficulties are experienced around 60% of the time. To achieve a regular supply of power for economic development, the federal and state governments must collaborate, and not compete.18
The current source of energy used in Nigeria, is getting more expensive for all involved stakeholders. Perhaps, it is time for Nigeria to let go of the old methods and explore new methods of energy generation. The switch to a more sustainable source should be given paramount interest. Countries like Argentina, USA, China, Brazil, and Norway have explored the harnessing of energy from sewage. For a developing country like Nigeria and its thirst for energy, switching to this source will be more economical not only for the generation companies but also the consumer.
By Nnenna Ogbenna Esq., (LLB, BL, LLM)
Associate at Henry A. Iyanya & co,
4th Floor, Right Wing, Kojo Motors Building,
Mabuchi, Abuja.
Email: [email protected]
Whatsapp: 09064190042.
REFERENCES
1. Science Daily https://www.sciencedaily.com/terms/energy.htm
2. Nnaji C. E, and Uzoma CC. CIA World Factbook. http://www.cia.gov/library/publications/the-world-factbook/geos/ni.html
3. Eia, US Energy Information Administration, https://www.eia.gov/energyexplained/what-is-energy/
4. The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for the planet, now and into the future. It was fit into 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries – developed and developing – in a global partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests. https://sustainabledevelopment.un.org/post2015/transformingourworld
5. Fiammetta costa, Energy and Sustainable Development, Academia https://www.academia.edu/37570910/Energy_and_Sustainable_Development
6. Tragedy of the commons is a theory propounded by Garrett Hardin. It is a situation where individual users, consume a resource in their own self-interest, contrary to the common good of all users, by depleting and spoiling that shared resource. For example, through the pollution of the air by humans for many years (burning fossil fuels, gas flaring, etc), the ozone layer is depleting, and the issue of global warming has become worse.
7. USAID, Nigeria: power Africa Fact Sheet, https://www.usaid.gov/powerafrica/nigeria
8. Section (5), Energy Commission of Nigeria Act.
9. Second Schedule, the Concurrent legislative List Part II, paragraphs 13 and 14 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended).
10. 96(1) EPSRA
11. Section 83 EPSRA
12. Section 83(2) EPSRA
13. Section 85(1) EPSRA
14. Regulation 5, 6 and 9 of the Regulations on National Content Development for the Power Sector, 2014
15. Regulations 9 (c)
16. Sustainable energy for developing countries, Dilip Ahuja and Marika Tatsutani, https://journals.openedition.org/sapiens/823
17. Governmental framework, https://www.get-invest.eu/market-information/nigeria/governmental-framework/
18. Power Perspectives, Issues that May Shape the Energy Sector in 2020, https://energycentral.com/news/issues-may-shape-energy-sector-2020
