A LEGAL APPRAISAL OF THE ELECTRIC POWER SECTOR REFORMS IN NIGERIA

CHAPTER 1

GENERAL INTRODUCTION

1.0.0: INTRODUCTION

Regular power supply is the hallmark of a developed economy. For the economy of any nation to grow, the country must invest heavily in all the sectors including social institutions, agriculture, healthcare, good network of roads, efficient transportation system, reliable power sector and must tame financial instability.

Nigeria has over the years witnessed a slow steady decline in the power sector which has led to a near complete failure of the system at the onset of the civilian regime in 1999. Every person living in Nigeria has one or two stories to tell about the unreliability of the Nigerian power sector, is it the housewife who looks on dejectedly as she sees the food she has painstakingly prepared turn bad due to inadequate power supply, or the students’ frustration and disappointment as they read overnight with candles in preparation for an examination, or the upheaval in the hospital as a result of the power failure during a surgical operation, or the incessant hum of generators that accompanies you everywhere you go to mention just a few.

A nation whose energy need is epileptic in supply prolongs her development and risks losing potential investors. After 50 years of independence, Nigeria, a country of over 140 million people and richly endowed with various sources of energy, crude oil, natural gas, coal, hydropower, solar and wind etc is still mired in the

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dark. Poor electricity supply has been a serious problem in Nigeria. And despite the huge amount of money said to have been expended by successive administrations to revamp the power sector, there is no evident or obvious change as not much seems to have been achieved as the country still witnesses frequent and persistent power outages.

While businesses crumble daily owing to this long running problem of power supply with manufacturing companies spending so much to generate own power supply with the costs eating into profits, generator dealers are the beneficiaries of the rots and decays in the power sector as virtually every business in the country patronizes them.

Restructuring therefore necessitates changing the overall structure of the electricity industry. It involves mainly the separation of the competitive from the monopolistic components of the industry such as generation versus transmission; distribution versus supply of electricity, transmission and distribution are considered natural monopolies, while generation and supply are highly competitive business ventures.

This long essay is however targeted towards examining how and why the power sector has gotten to this level of decadence, what has been done so far and the challenges ahead. The project would be restricted to the legal aspects of the power sector reform program in Nigeria.

1.1.0: BACKGROUND TO THE STUDY

This long essay was necessitated by the ongoing reforms in the country due to the instability and steady decline in the major aspects of the economy. The reform is an ongoing process in which the government of the country has recently dedicated itself to.

Therefore, the researcher intends to analyze specifically the legal reforms in the power sector and examine the power sector as it used to be, as it is now, as it ought to be and the practicability of the reforms embarked upon

1.2.0: AIMS AND OBJECTIVES

The aims and objectives of this research work are; firstly to make us understand the reforms in the power sector in its strict legal sense. Secondly, to examine the practical application of the reforms in the Nigerian policy and thirdly to know what extent the reform is practicable and whether the doctrine has been given a chance to operate in its strict legal sense. This research work is also aimed at bringing out suggestions to restructure the understanding of the populace, especially at correcting the erroneous notion of the majority of people about the impossibility of a reliable power sector.

1.3.0: FOCUS OF STUDY

This study will focus on the concept of power sector, power sector reforms in Nigeria, the extent of these reforms while reiterating the potentials of power sector reforms as a tool for economic development if properly enforced

1.4.0: SCOPE AND LIMITS OF THE STUDY

The scope of this research work in the power sector is on the legal reforms embarked upon by the government and its applicability. It would examine the meaning, nature and structure of the reforms. This work in particular will evaluate the power sector from the time of independence till date, and the practical applicability of the legal reforms. It shall also examine and analyze the Electric Power Sector Reform Act 2005 which led to a lot of innovations in the power sector and how the government has coped with these innovations. Though this work would be done under the constraints of a time limit notwithstanding evaluation of its failure, success or prospects would be left for the readers’ conclusion.

1.5.0: METHODOLOGY

The method to be employed here in carrying out this research would be by means of secondary sources which is mainly documentary. Information would be sourced from the internet, journals and public lectures delivered by various stakeholders. Legal libraries would be consulted in order to have provisional legal information about the power sector in the modern world.

Also, in illustrating the practicability of the reform, various provisions of the Electric Power Sector Reform Act 2005 would be used, great reliance would also be placed on textbooks on the power sector, and the Act would however serve as the primary source of all the provisions to be analyzed.

1.6.0: LITERATURE REVIEW

As it is, there is no single textbook on the topic of this research; there are however related articles which though relevant do not directly discuss our topic. So this work is basically going to be a personal research using the limited resources at my disposal to undertake a comprehensive study of the power sector in Nigeria and how it can be improved. However, various authors expressed their minds on the reform.

Adoghe A.O in his article1after a brief and comprehensive analysis of the power sector was of the opinion that a reform was due in the power sector and that the country was on the right course as the Nigerian Electricity Regulatory

Commission2 was doing a satisfactory job and he was positive of the outcome.

O.I Okoro and E. Chikuni in their journal3 said that the major reason why the services of NEPA have remained poor is essentially because of monopoly. The company has been the sole provider and distributor of electricity to the entire nation and it is envisaged that the reform program will usher in a competitive energy market, break the monopoly enjoyed by NEPA and increase the rate of technology development as well as provide jobs for both technical and non-technical graduates.

1 Adoghe A.O, ‘Power sector reforms in Nigeria; likely effects on power reliability and stability in Nigeria’ <http://www.punchng.com/achive.php> accessed on 25 July2010.

2 Hereinafter referred to as NERC.

3 O.I Okoro and E. Chikuni, ‘Energy in Southern Nigeria’ (2007) 18(3).

Professor Bartholomew Nnaji who doubles as the presidential adviser on Power as well as the Chairman, Presidential Taskforce on Power traced the repeated failure to resolve the seemingly intractable issue of power supply and distribution to lack of a clearly defined roadmap by previous administrations and therefore the government’s recent decision to privatize the power sector should be applauded and looking at the liberalization of the telecommunications sector and the healthy competition that the private investors and carriers have brought into the sector should inspire a similar policy for PHCN.

Barrister Onjefu Adogu, a legal consultant to the Bureau for Public Enterprises (BPE) and Securities and Exchange Commission (SEC) was also of the opinion that reforms in the power sector will certainly galvanize and ensure optimal value of privatization to the Nigerian economy.

Dr. Goodluck Jonathan,4 in his foreword to the Roadmap for power sector reform

in Nigeria5 said that the growth, prosperity, and national security of any country are critically dependent upon the adequacy of its electricity supply industry. And that the link between electricity supply and economic development is such that the health of the industry is a matter of deep and personal concern to all citizens

4He is the President and Commander-in-Chief of the Armed Forces, Federal Republic of Nigeria

5 President Jonathan, ‘RoadMap Launch – Brochure’ <http://nigeriapowerreform.org/rokdownloads/Roadmap%2520for%2520Power%2520Sector%25 20Reform%2520Full%2520Version.pdf> accessed on 20 November 2010

thereby making the full implementation of the electric power sector reform a key priority.

1.7.0: DEFINITION OF TERMS

REFORM:

Reform means to improve an existing institution, law, practice etc by alteration, correction of abuses. It could therefore be said to be an improvement or change for better, especially as a result of correction of legal or political abuses or malpractices. It is also a series of actions advancing a principle or tending toward

a particular end.6

POWER:

Power means the ability to cause or prevent an action, make things happen; the discretion to act or not to act. It could be said to be an instrument transferring or

vesting legal authorization.7

PRIVATIZATION:

Privatization means the transfer of ownership of property or businesses from a government to a privately owned entity. It was a transition from a publicly traded and owned company to a company which is privately owned and no longer trades

6 Reform, ‘Definition of Reform’ <http://www.thefreedictionary.com/reform> accessed on 18 April 2011

7 Power, ‘What is power? definition and meaning’ <http://www.businessdictionary.com/definition/power.html> accessed on 18 April 2011

publicly on a stock exchange. When a publicly traded company becomes private,

investors can no longer purchase a stake in that company.8

ELECTRICITY:

It is a fundamental form of energy observable in positive and negative forms that occurs naturally (as in lightning) or is produced (as in a generator) and that is expressed in terms of the movement and interaction of electrons. It could

therefore be said to be an electric current or.9

LAND:

it is the solid part of the surface of the earth; opposed to water as constituting a part of such surface, especially to oceans and seas; as’ to sight land after a long voyage. It could also be said to be any portion, large or small, of the surface of the earth, considered by itself, or as belonging to an individual or a people, as a

country, estate, farm, or tract.10

1.8.0: CONCLUSION

Privatization is therefore not just an end but a means to an end, the end which means availability of power and unless we undertake reforms, the aspirations of Nigerians in the power sector would remain a dream because to have power, there

8 Leslie Rutherford and Sheila Bone, Osborne Concise Law Dictionary (8th ed. Sweet and Maxwell, 1993)

9 Electricity, ‘Definition of Electricity’ <http://www.merriam-webster.com/dictionary/electricity> accessed on 18 April 2011

10 Land, ‘Define Land at dictionary.com’ <http://dictionary.reference.com/browse/land> accessed on 18 April 2011

is a need for reforms to attract investment in the power sector as no investor would want to invest in the power sector as it is. And as Nigeria implements its national utility privatization program, the intention is for this legal review to benefit policy makers and emerging managers and providers of electric service in the country.