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PROJECT TOPIC AND MATERIAL ON APPRAISAL OF THE EFFICACY OF THE ELECTRICITY POWER SECTOR REFORM ACT (EPSRA), AN ACT IN PROTECTION OF CONSUMERS
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Nigeria’s electric power sector requires substantial reform if the country’s economic development and poverty alleviation program is to be realized. Currently, the country faces serious energy crisis due to declining electricity generation from domestic power plants which are basically dilapidated, obsolete, and in an appalling state of disrepair, reflecting the poor maintenance culture in the country and gross inefficiency of the public utility provider. The government encouraged the private sectors to invest into the electricity industry so that, the monopoly created by the NEPA could be demolished and at the same time, some independent power producers could enter into the electricity sector. This understanding is behind the introduction of the Power Sector Reform Act 2005 which was recently initiated by the Nerian government with the goal of privatizing the National Electric Power monopoly, NEPA. Age long principles of democratic governance, of sovereignty belonging to the people, the people’s entitlement to participate in their governance and most importantly from the point of view of the topic of this paper, that security and the welfare of the people are the principal aim of government, form the theme of the provisions of section 13 of the 1999 Constitution. In Section 16 of the same Constitution, the second aim of government of ensuring the welfare of the citizens seems to be pointedly enjoined as the state is mandated therein to harness national resources and promote national prosperity and an efficient, dynamic and self-reliant economy which it shall control to secure maximum welfare, freedom and happiness of the citizens and without truncating the rights of individuals to participate in the major economic areas. Building on the analysis of the introduction of the Reform Act, this long essay intends to present the central issues that led to enactment of the Reform Act, the key objectives of the Reform Act. This includes the legal reforms, the. Act, the essential sections, licenses and tariffs, tariff regulation, consumer’s protection, the impact of the reform, the shortcomings of the reform, the consequence of the reform.
This research work shall be carried out through the doctrinal method, that is, Primary and Secondary data collection which includes status, reported laws, books, published journal reports and relevant internet material, also conducting questionnaire.
TABLE OF CONTENTS
Title Page – – – – – – – – – – i
Approval Page – – – – – – – – – – ii
Certification – – – – – – – – – – – iii
Dedication – – – – – – – – – – – iv
Acknowledgements – – – – – – – – – – v
Abstract- – – – – – – – – – – vi
Table of Contents – – – – – – – – – – vii
List of Statutes – – – – – – – – – – ix
Table of Cases – – – – – – – – – – xi
List of Abbreviations – – – – – – – – – xii
1.1 Background of the Study – – – – – – – – 1
1.2 Statement of the Problem – – – – – – – – 6
1.3 Aim/Objectives of Study – – – – – – – 6
1.4 Methodology – – – – – – – – – 7
1.5 Significance of Study – – – – – – – – 7
1.6 Scope of Study – – – – – – – – – 7
1.7 Literature Review – – – – – – – – – 8
1.8 Organizational Layout – – – – – – – – 10
1.9 Definition of Terms – – – – – – – – – 11
EVOLUTION OF NIGERIAN POWER SECTOR
2.1 Discovery of Electricity – – – – – – – – 13
2.2 History of Electricity in Nigeria – – – – – – – 14
2.3 The Electric Power Reform in Nigeria- – – – – – 15
2.4 Privatization – – – – – – – – – 19
2.5 Advantages/Disadvantages of Privatization – – – – – – 22
2.6 Privatization Consideration – – – – – – – 23
THE IMPACT OF THE POWER SECTOR REFORM ACT ON THE NIGERIA POWER CONSUMERS
3.1 Implementation of the Reform in Nigeria – – – – – – 24
3.2 Competitive Market – – – – – – – – – 28
3.3 Market Rules – – – – – – – – – 30
3.4 Challenges- – – – – – – – – – 38
3.5 Impact of the Reform to the Consumer/Country – – – – – 41
3.6 Consumers Right/Obligations – – – – – – – 43
3.7 Consumers Protection Standard – – – – – – – 45
LEGAL AND REGULATORY FRAMEWORK
4.1 Constitution of the Federal Republic of Nigeria 1999 – – – – 47
4.2 Electric Power Sector Reform Act 2005 – – – – – – 48
4.3 Nigeria Electricity Regulatory Commission – – – – – 50
4.4 Rural Electrification – – – – – – – – – 56
4.5 Other Relevant Legislation – – – – – – – – 57
CHAPTER FIVE CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion – – – – – – – – – – 59
5.2 Recommendations – – – – – – – – 59
Bibliography – – – – – – – – – 61
LIST OF STATUTES
Constitution of the Federal Republic of Nigeria 1999 (as Amended 201).
Electricity Power Sector Reform Act EPSR CAP C20, LFN, 2005.
Rural Electrification. The (REP) 2010.
Hydro-Electric Power Producing Areas Development Commission Act 2010.
Companies and Allied Matters Act Cap C20 laws of the Federation, 2004.
Consumer’s Protection Council Act Cap C25 laws of the Federation, 2004.
Electric Power Sector Reform Act (Amendment) Bill, 2017.
Companies Income Tax Act (CITA), C21 FRN 2004.
Nigeria Dam Authority Act 1962.
National Electric Power Authority Act Cap 256, LFN 1990.
TABLE OF CASES
Adewale v Attorney General of Lagos State 1977 2/CCHJ 109, HC Lagos- – – – 47
Mrs. Funke Adekoya San v. VGC Management & maintenance Company Ltd, (VGMMCL)
held by the Commission in Lagos on 25th August 2009 – – – – – – 32
Petadi v HFP Properties, held by the Commission in Lagos on 28th December 2009- – 42
The Case of 10 Rederiaktiebollaget Amphitrite the King (1921)QB 500 – – -29
LIST OF ABBREVIATIONS
|BOI||Bank of Industry|
|BPE||Bureau of Public Enterprise|
|CAMA||Companies and Allied Matter Act|
|CITA||Companies Income Tax Act|
|CPC||Committee on Privatization of Public Companies|
|EPIC||Electricity Power Implementation Commission|
|EPSRA||Electricity Power Sector reform Act|
|IBID||In the Same Place|
|ICRC||Infrastructure Concession Banking Regulatory Commission|
|IPPs||Independent Power Producers|
|MYTO||Multi Year Tariff methodology|
|NBET||Nigeria Bulk Electricity Trading Plc|
|NCP||National Council on Privatization|
|NELMCO||Nigerian Electricity Liability Management Company|
|NEPP||National Electricity Power Policy|
|NERC||National Electricity Regulatory Commission|
|NESI||Nigerian Electricity Supply Industry|
|NESREA||National Standards and Regulations Enforcement Agency|
|PACAF||Power Consumers Assistance Fund|
|PAIF||Power and Aviation Intervention Fund|
|PHCN||Power Holding Company of Nigeria|
|PPA||Power Purchase Agreement|
|REF||Rural Electrification Fund|
|SAP||Structural Adjustment Programme|
1.1 Background to the Study
Regular power supply is the hallmark of a developed economy. For the economy of any nation to grow, the country must invest heavily in all the sectors including social institutions, agriculture, and healthcare, good network of roads, efficient transportation system, and reliable power sector and must tame financial instability. Nigeria has over the years witnessed a slow steady decline in the power sector which has led to a near complete failure of the system at the onset of the civilian regime in 1999. Every person living in Nigeria has one or two stories to tell about the unreliability of the Nigerian power sector, is it the housewife who looks on dejectedly as she sees the food she has painstakingly prepared turn bad due to inadequate power supply, or the students’ frustration and disappointment as they read overnight with candles in preparation for an examination, or the upheaval in the hospital as a result of the power failure during a surgical operation, or the incessant hum of generators that accompanies you everywhere you go to mention just a few. A nation whose energy need is epileptic in supply prolongs her development and risks losing potential investors. After 50 years of independence, Nigeria a countryof over 140 million people and richly endowed with various sources of energy, crude oil, natural gas, coal, hydropower, solar and wind etc is still mired in the dark. Poor electricity supply has been a serious problem in Nigeria and despite the huge amount of money said to have been expended by successive administrations to revamp the power sector, there is no evident or obvious change as not much seems to have been achieved as the country still witnesses frequent and persistent power outages.
While businesses crumble daily owing to this long running problem of power supply with manufacturing companies spending so much to generate own power supply with the costs eating into profits, generator dealers are the beneficiaries of the rots and decays in the power sector as virtually every business in the country patronizes them.
Restructuring therefore necessitates changing the overall structure of the electricity industry. It involves mainly the separation of the competitive from the monopolistic components of the industry such as generation versus transmission; distribution versus supply of electricity, transmission and distribution are considered natural monopolies, while generation and supply are highly competitive business ventures.
This long essay is however targeted towards examining how and why the power sector has gotten to this level of decadence, what has been done so far and the challenges ahead. The project would be restricted to the legal aspects of the power sector reform program in Nigeria.
It is widely agreed that infrastructure refers to the basic physical and organizational structures and facilities (like buildings, roads, and power supplies) needed for the orderly functioning of a human society, or the operation of an enterprise.Equally agreed is inverse relationship between lack of infrastructure and economic development, and the sorry story acted out upon the international stage is that of a sore continent – naturally enabled in every way but disabled by its leadership, or lack thereof, and self-inflicted injuries from corruption, internecine wars, myopia and injustice. Rich in natural and human resources but impoverished in the physical facilities and organizational structures required to translate natural gifts to wealth, Nigeria paradoxically continues to experience poverty, certainly not of ideas, but of “ways and means” to translate these ideas into the superstructures that have made the West the envy of the rest of the world. In terms of physical infrastructure like bridges and airports, or intangibles like structures and systems around social services and justice, the deficit is as deep as the gaping cavity left by capital flight from the continent and in particular Nigeria.
of the various elements of basic infrastructure lacking in the country, power has over the years been one of the most intractable and Nigeria is said to have one of the largest supply-demand gaps in the world.With a teeming population (of about 160 million people) in need of constant supply of electricity for domestic, commercial and industrial consumption, it is little wonder that steady supply of power is a top priority of government. However, despite the best efforts of government till date, due to a combination of financial, structural, and socio-political factors, Nigeria continues to grapple with acute electricity shortage. It is stating the obvious that Nigeria’s generating capacity is extremely low when compared with the generation capacity of similar countries, especially in terms of per capita generation.
In terms of hard figures, the statistics indicate that Nigeria’s per capita electricity consumption stands at a dwarfed 7 percentile of Brazil’s and 3% of South Africa’s. Brazil has 100,000 MW of grid based generating capacity for a population of 201 million people; South Africa has -. .000MW of grid based generating capacity for a population of 50 Million people; and in Nigeria, the peak generation supplied is in the region of just 3,500MW, for a population of 160 million people.
To bridge the huge generation capacity gap, private individuals have had to resort to privately- owned alternative capacity using diesel/petrol generators, at costs which average 400% of grid generating prices. In addition to the inadequacy of the installed generation capacity, the Nigerian power sector is also plagued by inefficient and ineffective transmission and distribution systems, lack of capital for investment, ineffective regulation as well as inappropriate industry and market structure. The effect of this is that just about 45% of Nigerians have access to electricity supply at the moment, the total installed capacity of grid electricity in Nigeria is about 4000MW which is a dismal shortfall from the current estimated national demand of over 15,000MW.
The foregoing is especially disturbing in view of the fact that perhaps the most important pointer to development in any nation is the consistency of power supply and as such the importance of the power sector to any given economy cannot be overemphasized. This is not to detract from the strategic importance of the other elements of physical and social infrastructure – any country interested in developing a robust and enviable economy must equally invest its resources in providing the requisite infrastructural framework; the trunk and branches from which the flowers may bloom and upon which the fruits may hang, that the birds of the air may come to rest and nestle.
However, particularly key to industrial growth – an area in which Nigeria is surprisingly backward is the presence of steady, reliable electric power supply. Today, viewed via satellite images, Nigeria is no more than another dark spot on the dark continent and the electricity in the nation has only worsened over the last two decades or more. Nigeria has experienced a slow and sure decline over the past years, and this has had an adverse effect on various facets of our national existence. The average Nigerian has had a bad and painful experience with electricity and it is a common phenomenon to hear shouts of joy in neighborhoods when they are ‘blessed’ with electric power. As earlier mentioned, generators for homes and businesses have become practical necessities in Nigeria today.
That is the tale for the ordinary, everyday Nigerian on the streets, For the industrialist and entrepreneur, the power situation is more than another inconvenience in setting up the business model, it is a major setback; a reason for avoidable additional expenditure in the form of high capacity generators (purchase and maintenance) and fuel costs. In this regard, the unpalatable power situation adversely affects both the multinational corporations and the SMEs alike, and indeed, it would appear that in a nation of such ethnic, cultural and social diversity, there is at least one point of convergence – all are equal before the god of power failure, no discrimination between the individual and the corporate, the great and the little, the rich and poor – everyone has had a taste of this dark, bitter pill, and this is particularly saddening because the country has massive hydro energy reserves, petroleum reserves and gas reserves.
in view of this, it is of utmost importance that changes be made to ensure that the decline is crested and the power sector is injected with life and naturally restructuring of the power sector, this point will mean a complete overhaul of the system from the inside out which would include not just a change in administration which would be merely cosmetic but also a split of rime different components of the industry for them to be able to function independently and Hopefully, more effectively. It would appear that this understanding has largely informed the Nigerian power sector reforms, as the ethos driving the post-reform Nigerian Electricity Supply industry (NESI) has been one of pragmatism, efficiency and liberalisation, within framework of the law and the overarching policy objectives of the Federal Government.
1.2 Statement of Problem
Nigeria have over the years experienced constant epileptic power supply, a different story would have been expected of Nigeria being one of the major oil exporters in the world.
Poor electricity supply has been a serious problem in Nigeria and despite the huge amount of money that have been expended by successive administrations to revamp the power sector, there is no evident or obvious change as not much seems to have been achieved as the country still witnesses frequent and persistent power outages and this could be due to bad, corrupt and unreliable administration and management in the industry.This led to the enactment of the Electricity Power Sector Reform Act (EPSRA) in 2005 to aid proper management of the power sector and ensure proper distribution of electricity. The researcher in this work seeks to review the EPSRA Ac stating its positive contribution upon the achievement of protection of power consumers.
- Aim/Objective of Study
- It is against this backdrop that this essay has been prepared, to trace the historical trajectory of Nigerian power sector from inception till date, consider the reforms that have been made recent years, and bearing in mind that these reforms are a work in progress into which the government is putting considerable effort, analyse the shortcomings which are still inherent in the sector and make recommendations for improvement, from a social and legal perspective. Thus, in essence, this essay sets out examination of: (i) the issues in the power sector, (ii) the challenges faced; (iii) the steps that have been taken towards reform; (iv) the effectiveness of the reforms and the implementation thereof; and (v) suggestions for law and policy development, by way of insights to be drawn from other climes.
- Methodology of Study
In conducting research, the researcher relies on both primary and secondary data primary data in this context, referred to statute, laws, while secondary data referees to relevant research publications, books, published journals report and relevant internet materials. The researcher would also adopt the analytical, evaluative and realistic approach which is the doctrinal method.
- Significance of Study
Irregular power supply has really been an issue in the country. The power consumers have been at a disadvantageous state due to the nature and unsatisfactory power supply and power regulation.
The study sought to develop an in-depth understanding of power sector reforms and the protection of power consumer by the power sector reform Act also consideration of the reform to know whether the reform will better the industry, consumers and the entire country as well.
- Scope of Study
The scope of this work is the study of the legal reforms in the electrical power sector reforms. To take a look at the meaning, nature and structure of the reforms. This work will examine the historical progress of the power sector and the reforms that have been carried out with special reference to the Electric Power Sector Reforms Act (ESPRA)enacted in 2005.This work will also consider the innovations that have come about under the act and their progress. To be perfectly clear, this essay examines the reforms only from a legal perspective, to examine the practicability, the progress and the problems of the reforms, to look at the various newly set up regulatory bodies under the new regime, to examine the mode of implementing the reforms, and to make suggestions as to the restructuring of the sector so as to ensure effective power supply in Nigeria. This work hopes to make veritable and workable suggestions following the analysis of the reforms.
1.7 Literature Review
Existing literary material on the Nigerian power sector reforms has been quite limited and thereare few texts which discuss in-depth, the post-reform NES1 and the morphing legal landscape.
Some of these are considered very briefly below:
- Yemi Oke, (2013) – this book aimed at closing the lacunae that had been created by the lack of proper and thorough works on the topic of regulation and effective control of the Nigerian power sector. The author provides an extensive treatise on the history of the power system and the components of the new regime post the 2005 reforms. It examines the workings of the EPSRA, and draws comparisons with other jurisdictions, namely Indonesia, China and Western Australia. Notably, the book also considers renewable power, a topic which Oni brushes over, but does not discuss in detail.
- Ayodele Oni (2013) – this attempts to condense into circa 300 pages, the practical issues to be borne in mind by professionals advising on deals in the NESI, from an investment perspective or from a regulatory perspective. More of a practicing lawyer’s manual than a core academic resource, Oni, in this book: (i) takes a look at the history of the NESI, tracing the chronology from the pre-independence through the post-independence eras, (ii) examines the entire power sector value chain from a local and global vista; (iii) discusses the general legal and regulatory framework of the sector; and (iv) examines the power sector reforms in Nigeria. The book also considers practical issues around financing of power projects in Nigeria, cognate issues such as environmental law, dispute resolution and intellectual property.
- Adoghe, A O in his article did brief and comprehensive analysis of the power sector and was of the opinion that a reform was due in the power sector and that the country was on the right path as the Nigerian Electricity Regulatory Commission was doing a good job.
- I Okoro and E. Chikuni in their journal mainly examined the impact of monopoly on the power sector, and in particular the operational inefficiency (of NEPA) which this had occasioned. It is envisaged that the reform will usher in a competitive energy market, break the monopoly enjoyed by NEPA and increase the rate of technology development as well as provide jobs for both technical and non-technical graduates.
- yemi Oke in his article: “Compulsory Purchase as an Alternative to Revocation of Title to Land for Electricity Purpose in Nigeria”takes a look at the provisions of the EPSRA act on land acquisition for the purpose of electricity development in relation to the provisions of the LUA in item 51. He contends that the provisions of the EPSRA are overreaching in its provisions and grants too much of a leeway to licensees of generation, distribution and transmission of power in that they are nit state owned organizations or charitable organizations and are set up for the sole purpose of profit making. He is of the opinion that ‘compulsory purchase’ should be used in place of ‘revocation of title to land’ cause the latter seems derogatory to the rights of the citizens to own land as provided for under the constitution.
- In another article, by Dr. Yemi Oke: “ Beyond Power sector Reforms: The Need for Decentralized Energy Options (‘DEOPs’) for Electricity Governance in Nigeria”, the author takes a look at the electric power sector reforms in Nigeria and then the decentralized energy options which centers on holistic approach to sustainable energy policy for the developing countries.
- Professor Bartholomew Nnaji identified that the problem being faced by the sector is as a result of the failure of previous regimes to set out clear cut roadmaps and is of the opinion that in the light of this privatization that all of the competitiveness that exists in private businesses will help in taking the sector out of the mud.
- Organizational Layout
The research is done and discuss in five chapters, chapter one serves as the introduction of the research, which laid to the background for the research, and adduced pertinent answer in the course of this research, chapter two traced the come about i.e. the evolution, discovery and history of electricity, advantages and disadvantages. The chapter three review the implementation of the form in Nigeria, its success, challenges, impact of the reform to the consumers and overall nation as well, also considered the consumers protection standard, consumer rights and obligation. While the chapter four looks at the legal and regulatory framework that followed up the reformand lastly the chapter five drew conclusive summary of the research work and made some recommendations.
- Definition of Terms
- Electricity: Electricity according to the Oxford Advanced learners dictionary (6th edition) is an elementary particles, usually supplied as electric current through cables, wires, etc for lighting/heating and driving machines.
- Privatization: refers to the transfer of a company or organization from government to private ownership and control. It can also said to involve the total transfer of public ownership and assets structures to private companies, or conversion of public enterprises to private companies or conversion or incorporation of new private entities in place of public enterprises or public private participation in the end running of public enterprises, which can be by management transfer, leases, operational concessions, development leases etc.
- Act: According to the black law dictionary (9th edition). An act is a law passed by the provincial or federal legislature. Act here is also referred to as statutes. Also according to the oxford advanced learners dictionary, (6th edition) an act is a product of a legislative body, a statute.
- Power Consumer: Power consumers are persons who trades money for goods and services as individuals, thus they are people to whom electricity (light) are been supplied to for running of their day to day activities. That is, for commercial, industrial and domestics used and enjoyment.
- Light: Light itself is the energy from the sun, lamp that provides illumination and wrath and make it possible to see things, and is rightly considered as one of the most important element on earth, also recognized as electromagnetic radiation with a wave length of 400-750 nm, within which vision is possible.
- Reform: reform means to correct, to change something to make it better, also to correct a written instrument under court order.
P C,Kalita &M, Mehdi, ‘Importance of Power Sector for Socio-Economic Development of Assam’, (2006), 2, A Journal of Humanities and Social Science.
‘Africa loses $60 BN annually through illicit financial flows – Mbeki’ News Agency of Nigeria 30 March 2014. Available from http://www.nanngronline.com/section/economy/africa-loses-60bn-annually-through-illicit-financial-flows-3E2%80%93-mbekiaccessed 2 April 2018
T Kio, Lawson, ‘Emerging issues in Nigeria’s Energy Sector; (Lagos business CamelAuthor house 2014) p11
A S, Sambo, ‘Matching Electricity Supply with Demand in Nigeria(2008) 1(22),International Association for Energy Economics Journal.
 E, Okafor, ‘Development Crisis of Power Supply and Implications for Industrial Sector in Nigeria’. The transmission system in Nigeria is reputed to be technically weak, and therefore very sensitive to minor disturbances.
 The distribution network in most locations in Nigeria is very inadequate, the voltage profile poor and the billing inaccurate.
O, Ayodele,‘The Nigerian’ Electric Power Sector Policy Law Negotiation Strategy.(Lagos business Carmel And
fearon Authorhouse 2013)P 39-40.
O, Ayodele, ‘The Nigerian’ Electric Power Sector: Policy Law Negotiation Business Strategy ( Lagos Business Carmel AndFearonAuthorhouse 2007) P 15-19
 Professor of Computer Integrated Manufacturing and Robotics in the Department of Mechanical and Industrial Engineering at the University of Pennsylvania, United States He doubles as the presidential adviser on Power as well as the Chairman, Presidential Taskforce on Power