In the past few days, a lot of areas in ibadan and oyo state have started to experience electricity shortages far below their usual supply. While this is not a new experience, the cause of this particular shortage is different and in a way a microcosm of what’s to come.
To explain this properly I need to give you context. There are two key details we need to start with.
Firstly, In the 120 year history of electricity generation in Nigeria, electricity has been majorly managed by the Federal Government.
Secondly, the current model of electricity market in Nigeria.
Under the current model, electricity is generated by different private generation companies popularly known as GENCOs.
The electricity they generate using majorly gas amongst other sources like hydropower is then sold to the Nigerian Bulk Electricity Trading Plc (NBET) and then transmitted around the country by the Transmission Company of Nigeria (TCN). It’s important to state that both NBET and TCN are fully owned by the federal Government.
Lastly, this electricity is then supplied to Distribution companies popularly known as DISCOs like Ibadan Electricity Distribution company (IBEDC) which then distributes electricity to homes and businesses. It’s also important to note that the Federal government has a 40% stake in all DISCOs in the country.
The question now is what has changed and why are we experiencing shortages.
In a bid to improve power supply, in June 2023, the Nigerian Government adopted the Electricity Act 2023, which repeals the Electricity and Power Sector Reform Act of 2005.
The major change from the electricity act of 2023 is that state governments now have regulatory authority. This means state governments will now be responsible for electricity in their states.
As at January 10, 2025, The Nigerian Electricity Regulatory Commission (NERC) has commenced the transfer of regulatory oversight to 10 states. Once the transfers are complete, the states will be in charge of regulating their electricity markets. The 10 states are: Enugu, Ekiti, Ondo, Imo, Oyo, Edo, Kogi, Lagos, Ogun and Niger.
This means states will have regulatory power over generation, transmission and distribution of electricity within their states.
While this is a good approach, the details are quite daunting with ibadan experiencing a little of what’s to come.
IBEDC is the distribution company primarily responsible for the distribution of electricity to Ogun, Oyo, Osun,Kwara and parts of Ekiti state.
This reform means that IBEDC might need to be broken up into subsidiary companies in each state.
However, the clog in the wheel is that IBEDC has not been profitable and is currently under the receivership of the Asset Management Company of Nigeria (AMCON). The Federal Government has ordered the resale of electricity Distribution Companies (DisCos) now under the management of banks and the Asset Management Company (AMCON).
But there are no willing buyers.
There is also another bigger issue which is that GENCOs are being owed by the FG for the electricity they supplied to Nigerian Bulk Electricity Trading Plc (NBET).
According to the Association of Power Generation Companies, outstanding debt to GENCOs over the years have reached N2.7 trillion. In addition to this, NERC has ordered Distribution Companies (DisCos) to bypass the Nigerian Bulk Electricity Trading Company (NBET) and establish direct contracts with power Generation Companies (GenCos), raising concerns about potential contract breaches and disruptions in the power sector. Also DISCos are now responsible for fulfilling federal government contracts with GenCos, including costly agreements like the one with Azura power plant, and the new arrangement also indicates a move towards phasing out electricity subsidies, leaving DisCos to rely on their revenues and loans.
Most DISCOs in an effort to get viable are disconnecting huge debtors like University College Hospital (UCH) a federal teaching hospital in Ibadan.
Following its inability to meet the Ibadan Electricity Distribution Company’s monthly N80 million bill as a Band A customer and the disconnection of its supply, UCH has been in darkness for about three months. The institution’s accumulated debt profile from 2019 initially stood at N3.10 billion, out of which N2.91 billion has been paid, leaving a debit overhang of N392 million.
The power outage debacle is not exclusive to UCH. It is the experience of most of the country’s public universities and their teaching hospital extensions. Nigerian universities are mostly in Band A where consumers enjoy at least 20 hours of power daily, saddling them with impossible bills.
DISCOs are also beginning strategic load shedding.
Excluding the most recent IBEDC notice of power outage to the Oyo region which was due to a collision on the Iwo road- ojoo express way which affected the Adogba 33Kv feeder, IBEDC has constantly struggled with unmet hours of service to “Band A “ customers.
IBEDC Band A customers are supposedly paying a tariff without subsidies but aren’t still getting the promised hours constantly.
To solve this current shortage and prevent more shortages in the future, the Oyo state government must hasten its implementation and adoption of 2023 Electricity Act.
Oyo state is yet to fully set up its electricity regulatory commission which will facilitate private sector involvement in the state at generation, transmission and distribution.
For better context, in the last 9 months, Lagos state has set up its electricity commission, advertised and gotten the private sector into electricity generation in the state. Lagos has also sold its stake in Eko distribution to trans grid energy co.
This speed of implementing regulatory frameworks will undoubtedly reduce and avoid these electricity shortages in the future.
I appeal to Governor Seyi Makinde to ensure that the Ministry of Energy expedites the implementation of the 2023 Electricity Act in Oyo State. With the completion of the Shell Gas Pipeline, Oyo State stands to become a highly attractive destination for electricity generation companies. Additionally, the state’s vast potential for solar and renewable energy presents an opportunity for sustainable and diversified power solutions. However, to fully harness these opportunities, the government must urgently establish a robust regulatory framework that fosters investor confidence and ensures long-term energy sustainability.
Addressing electricity shortages is no more solely a federal responsibility, but the new act has put a whole lot on the state governments as they now have a crucial role to play in reducing and preventing power deficits through strategic policies and proactive governance across their respective states. If you have read this far, I hope it is now clearer how state-level action can drive meaningful improvements in electricity supply. Given Governor Makinde’s commendable track record in policy implementation, I am optimistic that we will soon see tangible progress in this critical sector.
Abimbola Gbenjo is a sustainable development enthusiast and a climate change advocate.
