A LEGAL APPRAISAL OF THE ELECTRIC POWER SECTOR REFORMS IN NIGERIA

ABSTRACT

Nigeria's electric power sector requires substantial reform if the country's economic development and poverty alleviation programme 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 Nigerian 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 d 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 innovations and the consequence of the reform. This steady decline in the Nigeria Electric Power Sector has led to a near complete failure of the system at the onset of the present civilian regime in 1999. The Reform program also led to the establishment of the Nigerian Electricity Regulatory Commission in 2005 which was made responsible for the regulation of tariffs. This long essay will therefore also examine the role of NERC as a sector regulators and its impact so far in establishing a licensing regime that will be attractive to potential investors.

As Nigeria implements its national utility privatization program, it is hoped that this legal review will benefit policy makers and emerging managers and providers of electric service in the country

CHAPTERONE

INTRODUCTION

1.1. Background to the Study

The power sector in Nigeria has historically been marked by inefficiency, inadequate investment, and frequent outages. The introduction of the Electric Power Sector Reform Act in 2005 was hailed as a significant step toward addressing these challenges. The reform sought to unbundle the state-owned National Electric Power Authority (NEPA) and pave the way for privatization. However, almost two decades later, the sector continues to grapple with many of the same issues, including insufficient power generation, poor infrastructure, and high costs to consumers.

1.2. Problem Statement

Despite the intentions behind the reforms, Nigeria’s power sector remains one of the weakest links in the country’s economic development. The legal structures, though comprehensive, have not succeeded in meeting the intended objectives. This dissertation examines the effectiveness of the legal and regulatory framework in addressing these challenges and explores whether the reforms have contributed to or detracted from the overall efficiency of the sector.

1.3. Research Questions

1. How has the legal framework for power sector reforms impacted the performance of the sector?

2. What are the legal and regulatory challenges that have hindered the effectiveness of the reforms?

3. To what extent have the reforms benefited consumers and the Nigerian economy?

4. How do Nigeria’s power sector reforms compare with similar reforms in other countries?

1.4. Objectives of the Study

The primary objective of this dissertation is to provide a legal appraisal of the Electric Power Sector Reform Act and the subsequent reforms in Nigeria. Specific objectives include:

To assess the legal and institutional framework of the power sector reforms.
To examine the challenges faced by regulatory bodies and privatized companies.
To evaluate the socioeconomic impact of the reforms on ordinary Nigerians.
To compare Nigeria's reforms with those in other developing countries and offer policy recommendations.

1.5. Significance of the Study

This dissertation will contribute to the body of knowledge on legal reforms in Nigeria's power sector by offering a detailed analysis of the legal and regulatory structures governing the sector. It will also be useful to policymakers, legal scholars, and industry stakeholders looking for strategies to enhance the performance of the sector.