The Federal Government has issued six licences to different firms for the independent distribution of electricity in Nigeria, data obtained from the Nigerian Electricity Regulatory Commission showed.
An analysis of the recent licensing and permits’ sections of the commission showed that the regulator issued the Independent Electricity Distribution Network licences to the six companies in 2023.
The commission explained that the networks were designed to be independent of the main transmission system and operate on a smaller scale, providing electricity to specific areas or communities.
It said the development of independent electricity distribution networks is seen as a viable solution for improving electricity access and reliability in Nigeria.
The commission stated that it authorised the issuance of two new Independent Electricity Distribution Network licences and amendment of an existing IEDN licence in the first quarter of last year.
In the second quarter of 2023, the commission did not issue licences for power distribution networks, but stated that it “issued two new trading licences in 2023/Q2.”
The commission also stated that out of the 36 licences, permits and certifications issued in 2023/Q3, one was for the establishment of a new Independent Electricity Distribution Network, while one was a licence renewal for an IEDN.
The other licences, according to NERC, include a trading licence and certifications for Meter Service Providers and Meter Assets Providers.
The commission also issued 36 licences, permits and certifications in 2023/Q4. Three of the licences were for new Independent Electricity Distribution Network, while the others were trading licences, and certifications for Meter Service Providers and Meter Asset Providers.
All together, the commission issued six new Independent licences for the distribution of electricity in Nigeria. This, however, is different from the privatised 11 power distribution companies that emerged from the unbundling of the Power Holding Company of Nigeria in November 2013.
Although the issuance of licences and creation of Independent Electricity Distribution Networks by NERC is viewed as a means of improving electricity access and reliability in Nigeria, there have been resentments about the initiative.
State governors, for instance, recently declared that the Independent Electricity Distribution Network and distribution franchisee models developed by the Federal Government through NERC had not been effective.
Recall that due to this, the governors had said State Electricity Regulatory Commissions should come up with new models that would open the retail electricity space for companies to compete and tackle the poor power supply situation nationwide.
They disclosed this in their latest document on the power sector, titled, ‘Development of the National Integrated Electricity Policy and Strategic Implementation Plan Policy Recommendations by State Governments,’ which was submitted to the Federal Ministry of Power.
They made this known to the Federal Government through the document put together by their umbrella body – the Nigeria Governors’ Forum.
State governments have now been empowered under the Electricity Act 2023 to operate and regulate their own electricity markets outside the control of the Nigerian Electricity Regulatory Commission, an agency of the Federal Government.
The governors further described the IEDNs or distribution franchisee models as outdated models.
“The Independent Electricity Distribution Network and Distribution Franchisee models developed by NERC have not been effective, hence the need for SERCs (State Electricity Regulatory Commissions) to evolve new retail and supply licenses, and business and commercial models which would open the retail electricity space to new companies that would compete to address the poor power situation within their states,” the governors stated.
