- Nigeria Governors’ Forum plans to license new players in power distribution.
- Aim: Increase competition and efficiency in the sector.
- The proposal includes state-specific electricity markets and new business models.
The Nigeria Governors’ Forum (NGF) plans to inject fresh momentum into the nation’s power sector by licensing new players in the distribution segment. According to a recent report, the NGF recommends granting licenses to new power distribution companies (DisCos) nationwide to bolster competition and efficiency within the sector.
Eleven DisCos dominate Nigeria’s electricity distribution landscape across thirty-six states and the Federal Capital Territory (FCT). Despite operating under private ownership, these DisCos function under the auspices of the federal government.
The move for additional licenses comes after enacting the Electricity Act 2023, which grants State governors autonomy over power generation, distribution, and regulation within their respective states. In pursuit of increased liquidity in the sector, the governors seek approval for new licenses to stimulate market competition.
The NGF proposes creating state-specific electricity markets tailored to leverage local energy resources such as gas, hydro, wind, biomass, and solar to enhance the sector’s efficiency further. They also advocate for developing new business models for each state to foster competition and innovation in wholesale and retail markets.
Despite efforts to privatise the power sector in 2013, Nigeria continues to grapple with persistent challenges, including inadequate power supply, financial constraints, an unfavourable investment environment, and rampant energy theft. In response, industry analysts and stakeholders emphasise the unbundling of DisCos as a crucial step towards revitalising the sector.
The recent enactment of the Electricity Act 2023 represents a significant milestone, granting states greater autonomy in shaping their energy landscapes. This legislative development empowers states to take more active roles in addressing the power sector’s challenges and charting a sustainable path towards reliable electricity supply nationwide.