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Adewale Sanyaolu
Despite billions of hard currency spent on power supply in the country without positive results, efforts of Nigerians to get alternative through off-grid power solution has again been stalled by bureacracy.
Recently, President Muhammadu Buhari had sparked renewed interest in power sector expenditure during the Obasanjo years when he accused a former President of spending $16 billion on power with nothing to show for it.
More than ever, the funds expended on power projects have failed to deliver electricity to homes, factories and offices. With a population of over 170 million people, Nigeria is still struggling with less than 7,000 megawatts (mw) of electricity, a development that has led to the collapse of the industrial sector, thus forcing many companies to relocate to neighbouring West African countries just to remain in business.
But amidst the tottering state of the power sector, one solution that appears to provide answer to the dark ages of the country appears bogged down by constitutional and regulatory challenges is the off-grid solution consisting of embedded, captive and renewable energy solutions.
Stakeholders appear worried that the inability of investors to have hassle-free operation in the aspect of off-grid power solution has become a source of concern to almost everyone in the power sector.
Several millions worth of investments are being tied down as a result of the imbalance in the Electric Power Sector Reform Act (EPSRA), which is not explicit on the position of the law on off-grid power, thus giving the Nigerian Electricity Regulatory Commission (NERC) a leeway to regulate off-grid power solutions.
As a result of the regulatory lacuna, the Distribution Companies (Discos) have often been at war with investors and companies who choose to invest in any aspect of off-grid power, insisting that the licences they got covered every area of power generation.
Failed investments
In 2004, the Federal Government granted exclusive right to Geometric Power Limited (GPL) to build a 140MW power plant in Aba to supply power to the commercial city and its environs. GPL was licensed to help bridge the electricity gap.
The company reportedly invested a whopping $500 million (about N81 billion), to build the state-of-the-art power plant designed to supply uninterrupted power to Aba and environs. This huge investment is now lying waste, while the responsible government agencies dilly-dally.
There have been reports that high-wire politicking between the National Council on Privatisation (NCP) and the Bureau of Public Enterprises (BPE) is stalling the power plant.
For now the question of who controls the distribution assets in the Aba area is the crux of the matter. The interest of the people is nowhere in the picture and the economic leverage is discountenanced.
By the terms of the Memorandum of Understanding (MoU) executed, NEPA assigned its distribution rights in Aba to Geometric Power Limited, the brainchild of Prof. Barth Nnaji, a former Minister of Power.
Subsequently, the same Aba franchise already granted to Geometric Power was resold to Interstate Electrics. During the 2013 privatisation exercise, the BPE went ahead to list the Aba assets as part of the Enugu Distribution Company (Disco), without recourse to Geometric Power. What happened is akin to selling a piece of property to two different buyers and leaving them to slug it out. In that situation, only the seller has the power to resolve the matter.
None of the buyers would just give up. The onus is on the seller, in this case, the Federal Government, through its agent, BPE, to resolve the matter in the public interest. There have been interventions to resolve the matter but the take off of the power plant is taking so long.
A similar case in dispute is that of a completed $10 million 6MW gas-fired power plant, which idles away in Banana Island since 2013.
The construction of the power plant, scalable to 15MW, was fully funded by GELMARK Power Solutions Limited promoted by Akinwole Omoboriowo, following an agreement with the management of Banana Island Property Owners and Residents Association (BIPORAL), Lagos, which negotiated and signed the contract on behalf of the residents.
In 2013, GELMARK agreed and undertook to build a plant to generate and distribute electric power for the exclusive use of BIPORAL, for 15 years under a Build, Own, Operate and Transfer (BOOT) investment structure, which means ownership of the plant will revert to the residents after 15 years.
Everything seemed to have gone well until the project was completed and then the shocker came when in a surprise repudiation of the agreement it entered into, the resident association leadership declared the contract illegal. The executive gave as grounds for disowning the contract, by claiming that GELMARK had no license from NERC and that the contract terms violated provisions of Electric Sector Power Reform Act (ESPRA) and Multi-Year Tariffs Order (MYTO) made by NERC.
Court injunction/Ariaria Market
Despite the injunction by a Federal High Court of Nigeria, Umuahia Judicial Division, to maintain the status quo, NERC recently granted a 9.5MW embedded electricity generation licence to Ariaria Market Independent Power Plant Limited and an Independent Electricity Distribution Licence to distribute same within Ariaria Market to Ariaria Independent Energy Distribution Network Limited.
According to a statement by NERC’s Head, Media Unit, Vivian Mbonu, “the licences issued in line with Section 71(6) of the Electric Power Sector Reform, EPSR, Act 2005 were granted after careful consideration of the applications in public interest to promote access to common goods and to promote commercialisation and industrialisation for Ariaria.
“Both licences granted to Ariaria were affirmation of the Commission’s commitment and response to the long-time yearnings of the market for a stable, reliable and sustainable electricity supply to improve quality of goods and services by Nigerian enterprises and entrepreneurs.
But the Enugu Electricity Distribution Company (EEDC), had alleged that Ariaria Independent Energy Distribution Network Limited encroached and trespassed on its distribution licensed coverage area by illegally constructing distribution lines without a license nor the authorisation from it.
A constitutional albatross
A don and energy law expert at the University of Lagos, Dr. Yemi Oke, has faulted the position of the law, especially as contained in the EPSRA, saying the silent nature of the law on who has the right on off-grid power solution was responsible for the crisis. He said the vacuum created by the law was now being explored by NERC in granting licenses to those interested in providing off-grid power. Oke noted that NERC has no role to play in regulating and licensing off-grid power producers, saying such powers are vested in the respective state governments.
He noted that a lot of companies that have invested in captive power cannot sell the excess power to others that need it because of the position of the law, since they are always at loggerheads over the use of shared assets.
‘‘Let me state here that NERC does not have anything to do with power that is not connected to the grid. Contrary to the constitution, NERC has been licensing on-grid and off-grid power providers. This is not supposed to be so. Regrettably, you see the agency interfering in captive, embedded and renewable energy solutions’ licensing and regulations. It’s absurd,’’ he said.
He explained that it is only the courts that can bring about a permanent solution to the impasse, saying because a grid line passes through a community does not actually mean the community is accessing power from such facility.
On the other hand, he said regulatory stipulation has equally made it difficult for Discos to make money because their tariffs are fixed, and as such, cannot buy excess electricity from captive power producers because it will be too expensive to sell to consumers.
Again, he noted that the scope of jurisdiction still needs to be clearly defined by the law because the law never envisaged a situation where a consumer would be able to source independent power without recourse to a Disco.
