THE POWER SECTOR AND THE POTENTIAL BAN ON THE IMPORTATION AND USE OF GENERATING SETS IN NIGERIA – SOME USEFUL THOUGHTS FOR MODIFYING THE BILL
Very recently, a bill proposing the ban on the importation and use of generators was passed at First Reading by the Nigerian Senate. From the Bill’s title, the purpose of the ban includes, to curb the menace of environmental (air) pollution and to facilitate the development of the Power Sector. Notwithstanding the intendment of the bill, a large section of the social media space have described the Bill as insensitive to the plight of the average Nigerian citizen. The argument by the naysayers can be summarized thus; “Give us 24hrs power supply and we will stop importing/using generators”.
Accordingly, the question is whether the introduction of the Bill is totally misplaced – given the fact that electricity supply in the country is on a downward turn. The purpose of this article is, therefore, to consider the importance of the Bill vis-à-vis the desire for an improved power sector. The article further makes proposals for modifying the Bill if it eventually becomes law, for it to better serve its intended purpose.
The Bill – Prohibitions and Exceptions
Pursuant to the provisions of the Bill, “Any person who imports generating sets; or knowingly sells generating sets shall be guilty of an offence and be liable on conviction to be sentenced to imprisonment for a term not less than ten years”. Generating sets are defined in the bill as machines running on diesel, kerosene and petrol (“generators”), and as such do not include renewable energy generating sets such as inverters and solar panels.
Furthermore, the Bill creates exceptions. According to the Bill, the ban shall not include generating sets used for essential services such as:
- medical purposes (hospitals and nursing homes and healthcare facilities)
- airports
- railway stations/services
- elevators (lifts)
- escalators
- research institutions, and
- facilities that require 24 hours electric power supply.
Ipso facto, by virtue of (vii) above, other institutions shall be able to apply to the Minister of Power for exclusion from the ban. This appears to provide an avenue for companies, business entities and other institutions to continue to use generators for their business operations provided the approval of the Minister of Power is obtained.
The Purpose of The Bill – And Prevailing Problems
Following from the above, the first purpose as identified in the title of the bill is to curb the menace of environmental (air) pollution. According to a report, the air people breathe in Nigeria is more likely to cause harm than the air in any other country in Africa because Nigeria has the highest burden of fatalities from air pollution in Africa and 4th highest in the world with 150 deaths per 100,000 people attributable to pollution. There are also numerous cases of fumes from generators killing members of a family who inhaled it while they were asleep. It, then, behoves us to ask why the Bill is considered misplaced by members of the public which the Bill is intended to protect.
On a related matter, it will be recalled that which aims to avoid the most devastating effects of climate change by cutting carbon emissions. Under the Convention, each country submitted an emissions reduction proposal known as Intended Nationally Determined Contributions (INDCs). In its INDCs, Nigeria considered 30 percent energy efficiency in industries, homes, businesses and vehicles, and increased use of natural gas in generators and renewable energy. Other measures being considered include stopping gas flaring, capture of gas, setting standard for appliances, buildings and climate smart agriculture; with all expected to lead to $4.5 billion benefits to the country. This, therefore, suggests that the ban on the importation/use of generators will go a long way in addressing air pollution and climate change issues in Nigeria, whilst ensuring Nigeria keeps to its pledge under the INDCs.
The second purpose of the Bill is to facilitate the development of the Power Sector. This likely rests on the assumption that the Nigerian government will take more active measures to address the downturn in the power sector if the alternative means of generating power is cut off. Imagine, for instance, that major commercial hubs and ‘rich Nigerian citizens’ no longer have recourse to generators, then the intended reforms of the Power Sector will be a matter of urgency.
Whether these assumptions represent the views of the sponsor of the Bill, or whether they are valid at all, is a subject for debate.
Some Useful Thoughts for Modifying the bill
It is unclear if the Bill will eventually be passed into law. What is clear, however, is that the bill is not far reaching. The author of this piece is of the opinion that the Bill is well conceived and the timing perfect, but should be realigned in line with thoughts identified below, in order to achieve its true purpose:
- The Bill should be expanded to include the provision of subsidy for alternative means of generating power supply. If the intention is to curb oil pollution and improve the power sector, then our best bet is to adopt a system where gadgets such as solar panels and wind turbines can be affordable for the average Nigerian citizen/company. In addition, subsidies and tax incentives should be introduced for companies that can utilize at least 80% renewable energy for powering its business operations.
The rational for this proposal is that the provision of subsidy will provide an incentive for the importation and use of renewable energy generating sets , such as inverters, solar panels and wind turbines. It will also serve a commercial purpose, as this will ensure traders in generators, including artisans required to install and effect repairs, shall continue to remain in business by trading in the renewable energy generating sets. Overall, it will ensure that the power deficits that will be occasioned by the potential ban on the importation/use of petrol/kerosene/diesel generators will be filled, whilst continued efforts are made to address the issues affecting the Nigerian Power Sector.
- More generally, the author notes that the privatization of the Power Sector needs to be taken to its most logical conclusion. It will be recalled that the Electric Power Sector Reform (EPSR) Act 2005 unbundled the Power Holding Company of Nigeria into 11 distribution companies (Discos), six generating companies and one transmission company. Although these companies were largely privatized, the Federal Government continues to have significant stake in their operations – with over N1.7 trillion spent by the Federal Government in the last three years.
The proposal, therefore, is that the States and Local Governments should be given additional powers to generate their power by engaging in public private partnerships with capable private entities. The present national grid system has not worked; the 23 grid power systems, with capacity to generate roughly 10,000 Mega Watts (MW) of electricity, are only able to generate about 4,000 MW, some of which is eventually lost during distribution to the final consumer. Thus, by bringing the generating plants closer to the consuming community, this reduces the amount of power wastage, the cost of transmission, the potential hazards during long transmissions, the pressure on the Discos to pay for power they are not able to sell and also ensures that enough power reaches the final consumers.
Given the above, this author believes that the Bill is a brilliant attempt at addressing the menace of air pollution, combatting climate change, and encouraging the speedy resolution of the issues surrounding the downturn in the Power Sector. However, as contemplated above, the Bill will not be far-reaching if it does not provide an alternative, an argument the author believes can be remedied by encouraging the use of renewable energy generating sets. A fortiori, this paper concludes with the notion that the legislative process, whether in the economic, social or administrative spheres, must be vigilant to changing realities and must seek to bring about better conditions of living for the citizens. After all, any regulatory reform that is worth its salt should yield benefits in terms of enhancing efficiency and stimulating innovation.
About the Author
Akorede is a Corporate Finance Associate at Odujinrin & Adefulu. He holds a B.L. (Lagos) (First Class Honours); LLB (UK) (First Class Honours); BA (Hons) Philosophy, Ekiti. Akorede is also a candidate of the Freshfields Stephen Lawrence Scholarship Scheme, UK.
