Governmental Framework

Governmental institutions

Federal Ministry of Power

The Federal Ministry of Power develops and implements policies for the provision of adequate and reliable power supply in Nigeria. The policy influences generation, transmission and distribution projects in the sector, provides general guidance and facilitates the emergence of the private sector, with a view to creating a competitive and efficient electricity industry.

http://www.power.gov.ng/

 

Presidential Task Force on Power (PTFP)

Established in 2010, the PTFP aims to safeguard the reform of the Nigerian power sector by removing legal and regulatory obstacles to private sector investment. It also monitors the planning and execution of various short-term projects in generation, transmission, distribution and fuel-to-power that are critical to meeting the stated service-delivery targets.

http://www.nigeriapowerreform.org/

 

Energy Commission of Nigeria (ECN)

The Energy Commission was established in 1988 with the statutory mandate for the strategic planning, co-ordination and evaluation of national energy-sector policies. Its functions include collecting information on national energy policies in Nigeria, analysing electricity sector performance and advising the government.

http://www.energy.gov.ng/

 

Market/Energy Efficiency and Renewable Energy Unit (MEER)

MEER was set up in 2013 and carries out cross-sector monitoring of fulfilment of the energy efficiency and renewable energy targets set out in the Roadmap for the Power Sector Reform Revision 1. It also provides rural and off-grid communities with advice on accessing electricity by developing RE, identifies areas of generation, transmission and distribution losses, monitors sectoral performance and facilitates collaboration with other stakeholders in the sector.

 

Nigerian Electricity Regulatory Commission (NERC)

NERC is an independent agency that monitors and regulates the power sector. Its functions include setting and reviewing tariffs, promoting private sector participation, and approving safety, security, reliability and quality standards. It is also responsible for ongoing analysis of the prevention or mitigation of abuses of market power. This goes hand in hand with its power to grant licences for the generation, transmission, distribution, system operation and trading segments. Furthermore NERC has implemented a multi-year tariff order (MYTO) with the objective of promoting certainty in the determination of cost-reflective tariffs.

http://www.nercng.org/

 

Nigerian Bulk Electricity Trading PLC (NBET)

Established under the Electric Power Sector Reform Act (ESPRA), NBET was set up as an intermediary between private electricity producers and distribution companies. It buys power from independent producers – the now-privatised successor companies of PHCN as well as the National Integrated Power Plants (NIPPs) owned by Niger Delta Power Holding Company (NIPPs) – and resells it to the DisCos.

http://nbet.com.ng/

 

Rural Electrification Agency (REA)

Established under the EPSRA, the main functions of the REA are promoting and supporting enhanced access to electricity in Nigeria’s rural areas. It also heads the Rural Electrification Fund (REF) which provides rural electrification programmes involving RE in the grid and development of off-grid electrification.

http://www.rea.gov.ng/

 

Power Holding Company of Nigeria (PHCN) (formerly National Electric Power Authority [NEPA])

State-owned PHCN was formed by the merger of Electricity Corporation of Nigeria (ECN), which controlled all existing diesel-/coal-fired power plants, and the Niger Dams Authority (NDA), which focuses on the development of hydropower. It was later unbundled and divided into autonomous companies.

 

Regulatory framework – act, policies and regulations

The Electric Power Sector Reform Act was signed in 2005, enabling private companies to participate in electricity generation, transmission, and distribution. Following enactment, the Nigerian government divided PHCN into 11 distribution companies, six generating companies and one transmission company (TCN), all of which were to be privatised with the support of WB funding of USD 100 million. Due to several problems, the privatisation had to be postponed. Finally, in 2012, the sell-off of PHCN’s subsidiaries launched the privatisation process, which concluded in November 2013 with the handover of the companies to private investors.

The privatisation policy aims to ensure more reliable and efficient energy supplies. This is reflected in the revision of the Roadmap for the Power Reform (2013), which projects an available generating capacity of around 28,000 MW in 2020. However, binding targets and the supportive mechanisms are still not in place.

NERC published a final draft for feed-in tariff regulation in November 2015, which is undergoing public commenting. Aiming to make use of Nigeria`s vast and mostly untapped potential for renewable energy, the Commission announced its intent to stimulate investment in the sector. By 2020, a total of 2,000 MW shall be generated through renewables like biomass, small hydro, wind and solar. Additional information can be found below.

 

Electric Power Sector Reform Act (EPSRA) 2005

The EPSRA can be seen as the turning point in Nigerian energy policy and the subsequent restructuring, as it set out the framework under which private investors were allowed to participate in electricity generation, transmission and distribution. It also established the Nigerian Electricity Regulatory Commission, provides for the development of a competitive electricity market and serves as the basis for determining tariffs, customer rights and obligations, and other related matters.

 

National Renewable Energy and Energy Efficiency Policy (NREEEP)

Implemented in 2015, the NREEEP sets out a comprehensive framework for the development and exploitation of renewable energy resources.
The table below listing targets for renewable energy is based on a 7% growth scenario.

List of Renewable Electricity Targets

S/N Resource 2012 Short Term (2015) Medium Term (2020) Long Term (2030)
1 Hydro (LHP) 1,938.00 2,121.00 4,549.00 4,626.96
2 Hydro (SHP) 60.18 140 1,607.22 8,173.81
3 Solar 15 117 1,343.17 6,830.97
4 Biomass  – 55 631.41 3,211.14
5 Wind 10 50 57.4 291.92
All Renewables plus LHP 1,985.18 2,438.00 8,188.20 23,134.80
All Energy Resources(Ongrid power plus 12,500MW of self-generated power) 21200** 24,380** 45,490** 115,674**
% of Renewables plus LHP 23% 10% 18% 20%
% RE Less LHP 0.80% 1.30% 8% 16%

 

**Supply projections are based on the addition of on-grid power, and a base capacity of 12,500MW of self-generation (i.e. power generated for own use) including off-grid generation from year 2012 to 2030.

Source: National Renewable Energy and Energy Efficiency Policy (NREEEP)

Roadmap for Power Sector Reform (2013)

The roadmap’s targets for renewable energy technologies, aimed at achieving the overall objective of 18% of electricity from renewables by 2025 and 20% by 2030 are:

Small-hydro: 2,000 MW (600 MW in 2015), solar PV: 500 MW, biomass-based power plants: 400 MW (50 MW in 2015), wind: 40 MW, and electrification level of 75% in 2025 (60% in 2015).

 

Renewable Energy Programme

The Renewable Energy Programme was initiated by the Federal Ministry of Environment to enable Nigeria to play a part in the African strategy for voluntary emission reductions under the United Nations Framework Convention on Climate Change (UNFCCC). It includes:

  • Commitments to emission reduction targets and mitigating action by developing countries by 2020
  • Short-term funding for immediate action and long-term financing
  • Mechanisms to support technology transfer

 

Feed-in tariff

The Nigerian Electricity Regulatory Commission has approved a new feed-in tariff regulation for electricity from renewable energy sources. Aiming to make use of Nigeria`s vast and mostly untapped potential for renewable energy, the Commission announced its intent to stimulate investment in the sector. By 2020, a total of 2,000 MW shall be generated through renewables like biomass, small hydro, wind and solar.

According to the new regulation, the electricity distribution companies (Discos) will be obliged to source at least 50% of their total procurement from renewables. The remaining 50% was set to be sourced from the Nigerian Bulk Electricity Trading Company. Moreover, a distinction was made between small and large generation plants. While electricity procured from small plants (between 1 MW and 30 MW) will automatically be integrated as renewable energy, the Commission will initiate a competitive bid process for larger renewable energy projects (more than 30 MW). Furthermore, the new feed-in tariff regulation already determines the procedure for auctions for the larger Projects.

Supply regulations determine the application of the distribution code for the embedded generation class, while others using the transmission network for electricity transit fall in the grid code.

The Commission declared that investors in the renewable energy plants would be given an operating period of 20 years, within which they should be able to recover their investments for the entire life span of the plants.

 

Standardised power purchase agreements

Special conditions set by the Nigerian government need to be met in order to sign a power purchase agreement with Nigerian Bulk Electricity Trading. The Minister of Power published a handbook entitled Understanding Power Purchase Agreements in order facilitate the process.

 

Electricity licensing regulations

Anyone wishing to purchase, sell or trade more than 1 MW of electricity must obtain a trading licence from the NERC. The terms and conditions of the trading licence, and the procedure for obtaining it, are governed by NERC Regulation No. NERC-R-0110A.

 

Regulations for Independent Electricity Distribution Networks

The Nigerian Electricity Regulation Commission published the Regulations for Independent Electricity Distribution Networks in 2012, explaining in detail the procedures and regulations that have to be followed while entering the Nigerian electricity market.