- The PwC’s report urged states to perform proper assessments and due diligence to ensure genuine commitment and successful implementation.
- The report directed DisCos to renegotiate contractual frameworks with Power Purchase Agreements.
Pricewaterhouse Coopers (PwC), in its recently released report, stated that despite the Electricity Act 2023’s potential to foster regulatory chaos, it is not cheap, and states must perform proper assessments and due diligence to ensure genuine commitment and successful implementation.
The report, released based on the outcomes of the 14th edition of PwC’s Annual Power and Utilities Roundtable discussion held on November 30, 2023 roundtable, was titled ‘The Electricity Act 2023: Powering Nigeria’.
PwC’s annual roundtable brings industry leaders, executives, and stakeholders together to discuss the challenges, opportunities, and trends contributing to Nigeria’s ongoing power sector reforms.
On June 8, 2023, President Bola Ahmed Tinubu signed the 2023 Electricity Act into law to de-monopolise electricity generation to states, businesses and individuals.
In the report, PwC stressed that having vastly different electricity laws across states would be detrimental, creating market distortions and unfair competition. However, it reiterated the need to ensure that electricity regulation across the federation is reasonably consistent and avoids regulatory capture.
The discussions at the 2023 edition of the roundtable showed that power sector stakeholders welcome the Electricity Act 2023 as a good step for consolidating the laws governing the Nigerian Electricity Supply Industry and establishing a policy framework that empowers state governments and investors.
However, more needs to be done to enhance the legislation and make it more responsive to industry stakeholders’ yearnings. The report further stressed that the 2023 Electricity Act is collaborative, designed to improve access, inclusive of a national integrated electricity policy, and pro-renewable.
According to the report, the opportunities outlined in the 2023 Electricity Act include creating the right investment vehicle, collaborating in fundraising, collaborating in knowledge exchange and collaborating in enforcement.
In the report, PwC urged market-driven solutions, state government collaboration, capacity building, dispute resolution, regulatory clarity, infrastructure investment, and grid development.
Recommendations:
PwC encouraged the government at the national and sub-national levels to facilitate harmonisation, conduct baseline assessments to understand state needs, set goals, and ensure the long-term viability of state electricity markets.
They also stressed the importance of stakeholder engagement, legislative review, and developing a new national plan that incorporates establishing state electricity markets, as well as investment incentives.
PwC urged states to engage with regulators, adopt a fair allocation methodology for asset division when creating subsidiaries and develop strategies for each subsidiary.
Furthermore, the report compelled electricity generating companies to engage with government and regulators, renegotiate contractual frameworks with Power Purchase Agreements, and collaborate with government and stakeholders during TCN’s unbundling into Independent System Operator and Transmission Service Provider to ensure compliance.
In addition, the report prompted financiers to analyse risk assessment and monitoring, conduct periodic regulatory reviews, identify opportunities and engage with governments at all levels to explore potential financing opportunities.