Nine years down the Nigeria electricity privatization exercise, adequate electricity supply remains a critical challenge affecting millions of Nigerian citizens.
Despite the unbundling of the sector, the amount of power supplied to the grid has been stagnant at best. Statistics show that of the 8GW capacity wheeling capacity of the national grid, only an average of 4500MW has been successfully wheeled to consumers.
In Lagos, the country’s economic hub, the electricity crisis is dire, and residents have had to turn to off-grid sources for their energy needs. To this effect, the Lagos State Government moved to establish a state electricity market; the state unveiled its electricity policy set out to develop the Lagos state electricity market.
In this context, The Electricity Hub organized a Power Dialogue to assess the possibilities and benefits of a decentralized electricity market and analyze the framework of the Lagos state electricity policy.
The Panelists at the discourse were: Olalere Odusote, Honourable Commissioner, Energy, and Natural Resources, Lagos State, Chukwubuike Onwuzurumba, Partner, Oake Legal, and Bunmi Folayan, Senior Specialist, Power Sector Recovery Operations – PSRP.
While analyzing the policy, the Commissioner highlighting the essence of the Lagos state electricity policy said that the state only receives an average of 800MW for a population of 26 million. He emphasized that prior to establishing the policy, that state already operated on an informal decentralized electricity market as a majority of the state’s power came from off-grid sources.
The Commissioner also noted that the constitution allows for a decentralized market, which is one that is not based on a sharing formula or percentage power allocation. Hon. Olalere further highlighted the features of a decentralized market as including an enabling constitution and legal framework, an integrated resource plan, an autonomous credible regulatory body, a transparent procurement of generators, and a bankable commercial framework, all of which are already established in Lagos state.
He also noted that the Lagos state electricity market would function with the National Regulator NERC, the state government, and independent system operators and also partake in inter-state and cross-country electricity trading.
Chukwubuike Onwuzurumba speaking at the discourse noted that creating an independent system operator in a state appears difficult, knowing that the state is still interconnected with the national market. He said there has to be a central dispatch for the system to be efficient.
Chukwubuike also emphasized that while a decentralized market is essential, he noted that defining them regionally rather than one delineated by state boundaries would be more feasible.
This, he said, is because Lagos has a compact structure in which the demand and consumption of energy are concentrated in the state. In contrast, other states might lack such systems and the capacity to operate their own transmission infrastructure.
In all, Lagos state seeks a solution to sustain its energy market by being self-sufficient and remaining interconnected to the grid. However, there are concerns that decentralization could mean devolution of powers that could lead to over-regulation and not necessarily foster the market’s growth.
Electricity Hub
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