Obaseki's vision for a free electricity market and the Nigerian Senate

Obaseki's vision for a free electricity market and the Nigerian Senate

In June 2017, Governor Godwin Obaseki announced to the world that in six month’s time, his administration would provide uninterrupted power supply to Bénin City and environs. According to his plans, government establishments on Sapele Road axis, including Government House, Secretariat, Court Complex, Central hospital, House of Assembly and also the Oba of Bénin Palace, will enjoy the 24 hours power supply.

Obaseki was quite assured that he would deliver on his promise in record time. He gave the assurance after he entered a power purchase agreement with Ossiomo Power and Infrastructure to bulk purchase the five megawatts the firm planned to generate from its 50 megawatts plant at Ologbo in Ikpoba-Okha local government area which BEDC has frustrated. The megawatts was expected to be transmitted on a new 35-kilometre double circuit 33Kva line to deliver 24/7 uninterrupted power.

The senate has passed the electricity bill 2022 that would allow states to generate and distribute power as well as solve the sector’s challenges. The bill was passed recently after the consideration of a report by the senate committee on power.

Gabriel Suswam, chairman of the committee, said the bill sought to provide an ideal legal and institutional framework to leverage the modest gains of the privatisation phase of the electric power sector in Nigeria. Suswam said that it would minimise aggregate value chain losses in the sector when signed into law. He also said there is no need for anyone or firm generating electricity below one megawatt to get a licence, adding that the new law would allow states or individuals with capacities to generate their power.

“Since electricity is on the concurrent list in the constitution, the bill has allowed state governments to license people who intend to operate mini-grids within the states,” he said. According to the lawmaker, the piece of legislation will reinvigorate the institutional framework for the reform of the Nigerian Electricity Supply Industry (NESI) initiated and implemented by the federal government.

Ahmad Lawan, president of the senate, midway through consideration of the bill, sought to know the role and operational capacity of banks that had taken over Distribution Companies (DISCOs) indebted to them. Responding, Suswam explained that the takeover of entities (DISCOs) by banks was duly carried out in collaboration with the Nigerian Electricity Regulatory Commission (NERC) and Bureau of Public Enterprise (BPE).

According to him, there is a transitional process put in place during the take-over of the Abuja Electricity Distribution Company (AEDC) by the United Bank for Africa (UBA) to ensure efficiency in service delivery. He noted that such a process usually involved invitation of new investors to scale up generation and distribution capacities. Suswam further disclosed that the federal government had disbursed 100 million dollars to Siemens to kickstart transmission in the distribution end of the power sector.

The Edo State House of Assembly has passed a bill to repeal the Rural Electricity Board Law of 1972 to re-enact a new law that makes provision for the generation, transmission and distribution of electricity for the residents of Edo State, paving the way for the establishment of an electricity market in the state. The Assembly unanimously adopted all six parts of the bill during a session of the committee of the whole on Tuesday, July 19, 2022. The Speaker, Rt. Hon. Marcus Onobun, directed the Assembly Clerk to forward clean copies of the bill for assent to Governor Godwin Obaseki.

The passed bill provides for the liberalization of the electricity market in the state, allowing for a more pragmatic approach to rural electrification and expansion of distribution infrastructure in the state. The passing of the bill spells better days for electricity consumers in the state, who will now benefit from proper regulation of the electricity sector in the state, which would allow operators a more predictable business environment.

In the new regime, electricity providers in the state with Generation License, Independent Electricity Distribution Network License and Eligible Customer (willing buyer-willing seller) approval from the Nigerian Electricity Regulatory Commission (NERC) would reap the full benefit of a liberalized electricity market.

The new regime will usher in by the new bill will create room for expansion of the off-grid operations of operators such as Ossiomo Power Company which enjoys a Power Purchase Agreement (PPA) with the government. “A lot is going to change. We will have a lot more certainty in the market as there is a state-level regulation for power operations. With this, the likes of Ossiomo Power Company which is already powering public utilities and industrial clusters would be assured of better regulation and would have the confidence to expand. We expect to see more players in the industry.”

There is need for President Buhari to adopt Governor Obaseki’s power model of power distribution in Edo State. There is competition between Ossiomo and BEDC in Edo State. There is alternative electricity in Edo State today. Nigeria needs this model to solve the electricity challenge.

The electricity market in Edo State is taking a turn for the better as increased competition among players has created options for reliable power supply to residents, who credit the Edo State Governor, Mr. Godwin Obaseki, for opening up the state for investment that has now improved their living standards.

Checks in the Benin metropolis have revealed that the two major power distribution companies in the state, Benin Electricity Power Distribution Company (BEDC) and Ossiomo Power Company are in a fierce battle for the customers with the competition assuring better power options to residents.

It was discovered that with the improvement of distribution infrastructure by Ossiomo Power in select areas in the Benin metropolis, residents are opting for the company’s power solution with the supply averaging 22-24hrs/day. “The industrial areas are even better served because they need electricity to keep the machines running, which is not what you get everywhere in Nigeria.

“It is great that BEDC, which used to dominate the market, now has a competitor. With this, we have a more stable market situation as people are now provided with options when considering power solutions in their homes or industries. Those who will benefit the most are industries, hotels, and others in the hospitality sector.”

Governor Obaseki had disclosed that Edo State has developed plans to help overcome the challenges of power distribution to industries, residential buildings and other users. BEDC has misunderstood this and trying to frustrate the effort of the governor in providing electricity to the people of Edo State. This includes building areas of use, that is, developing industrial parks, housing estates and other clusters that can be directly connected to generating plants.” He said, “When these plans are fully achieved, the state would have steady power supply to support businesses and other users. With time, Benin City and other towns in the state will be better planned and segregated so that industrial use of power can be separated from domestic use.”

“When this is done, the structural challenges along the chain of generation and distribution will then be reorganised and steady power supply will then be guaranteed,” he said. He explained that steady power supply cannot be achieved overnight until the structural impediments are addressed, noting, “Even if the issue of generation of power is addressed, efforts must be made to address issues mitigating distribution and transmission.”

Obaseki is setting new boundaries for power generation in Edo State which Benin Electricity DisCo (“BEDC” or “Benin Disco”) which is one of the successor distribution companies (DisCos) created following the unbundling and privatization of the state-owned Power Utility, Power Holding Company of Nigeria Plc highly misunderstood. BEDC misunderstood Obaseki who has introduced systems approach to quantifying the value of power generation and energy storage technologies in future electricity networks. A new approach that required to determine a technology’s value to the power systems of the 21st century. The centrepiece of the system value (SV) concept is a whole electricity systems model on a national scale, which simultaneously determines the ideal power system design and unit-wise operational strategy.

Obaseki had accused the BEDC of writing petitions against the deal sealed for the purchase of five megawatts of electricity to light up government offices in Benin City. The governor, who said the petitions have hindered the success of the purchase agreement, decried the poor supply of electricity to the state, the company’s resolve not to supply pre-paid meters to electricity consumers and its culture of over-billing its clients.
According to the governor, “195 communities have never seen electricity as BEDC is not ready to extend electricity to these communities. 128 communities have issues of collapse of infrastructure which BEDC is not prepared to fix. 219 transformers purchased by the state government and the former Power Holding Company of Nigeria (PHCN) as replacements for faulty transformers are yet to be installed by BEDC.
“The people are over-billed with the estimated billing system of BEDC. We lost a student due to the negligence of BEDC, for refusing to fix a pole that was knocked down after receiving money to fix it. I have instructed the Attorney General of Edo State to file charges of criminal negligence against the senior management of BEDC,” Obaseki said.

The electricity sector in Edo State is undergoing an unprecedented transition which BEDC has failed to utilize. Today, Ossiomo power is providing affordable, secure and reliable electricity by attracting investors with low risk, stable returns. BEDC has not taken advantage of the liberal investment incentives here and improved power supply from Ossiomo. BEDC cannot provide electricity for industrial customers, for processing, producing, or assembling goods including diverse industries such as manufacturing, mining, agriculture.

Written by Inwalomhe Donald in Benin City [email protected]

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