Prior to the enactment of the EPSRA, 2005, FGN was responsible for policy formulation, regulation, operation, and investment in the Nigerian power sector. Regulation of the sector was done through the Federal Ministry of Power (FMP) with operations through the National Electric Power Authority (NEPA), a wholly owned SOE responsible for power generation, transmission and distribution.
To address the twin issues of NEPA's poor operational and financial performance, the FGN amended the then prevailing laws (Electricity and NEPA Acts) in 1998 to remove NEPA's monopoly and encourage private sector participation. The amendments, however, were not far-reaching. This informed FGN of the need to undertake holistic policy, legal and regulatory reforms. The National Electric Power Policy, 2001, specifies the reform agenda, while EPSRA provides the legal basis for the unbundling of NEPA, the formation of successor companies and the privatisation of the latter. EPSRA also provides for the development of a competitive electricity market, the establishment of a dedicated regulatory body and the establishment of a rural electrification agency.
Consequently, FGN established the Power Holding Company of Nigeria (PHCN – the initial holding company) and subsequently unbundled it into eighteen (18) successor companies. Strategically, the objectives of the reform include (i) the transfer of management and financing of SC operations to the organised private sector; (ii) the establishment of an independent and effective regulatory commission to oversee and monitor the industry; and (iii) focusing the FGN on policy formulation and long-term development of the industry. This will lead to (i) increased access to electricity services; (ii) improved efficiency, affordability, reliability and quality of services; and (iii) greater investment into the sector to stimulate economic growth.
Presently, the Presidential Action Committee on Power (PACP), which is chaired by the President of Nigeria, and includes the Vice-President and Ministers of the Government who have key roles to play in sector reform, provides high-level oversight of the implementation of electric power sector reform. The executive arm of the PACP is the Presidential Task Force on Power (PTFP), which is chaired by the Special Adviser to the President on Power. The key tasks of the PTFP are to ensure a symbiotic relationship between the MDAs responsible for implementing various aspects of sector reform and privatisation, that their asks are undertaken comprehensively and on time and that any risks ahead of full sector reform are identified and brought up for mitigation or removal by the relevant MDA or Government functionary or by Mr. President.
The Federal Government-owned electricity system now comprises:
1. Three hydro and seven thermal generating stations with a total installed capacity of about 6,852MW, with available capacity of 3,542MW (as of 31st July 2010). Each entity has been incorporated as a single-asset generating company;
2. A radial transmission grid (330kV and 132kV), owned and managed by the Transmission Company of Nigeria, with the responsibility of undertaking the system operation and market settlement functions, respectively; and
3. Eleven distribution companies (33kV and below) that undertake the wires, sales, billing, collection and customer care functions within their area of geographical monopoly.
Competitive tender will be carried out to receive bids from core investor groups (inclusive of competent generation asset owner/operators) for a minimum of 51% of equity in the following successor thermal generating companies:
a) Afam Power Plc;
b) Sapele Power Plc;
c) Ughelli Power Plc;
d) Geregu Power Plc;
And a separate concessioning process for the following successor hydro generating companies
e) Shiroro Hydro Power Plc;
f) *Kainji Hydro Power
*Note that Jebba power station is part of Kainji Hydro Power Plc.
Competitive tender will be carried out to receive bids from core investor groups (inclusive of competent distribution asset owner/operators). The bids will be considered against certain specific criteria that seek to address the strategic policy objectives summarised above. These criteria, first, are the payment of 51% of the value of the company as determined and incorporated in the Multi Year Tariff Order (MYTO); second, given the levels of investment contained in MYTO proposals on the reduction of Aggregate Technical, Commercial and Collection (ATC&C) losses over a five-year period (Note that a bidder who passes the technical evaluation and offers the highest ATC&C reduction proposal shall be designated the preferred bidder); and, third, proposals for investing in expanding the customer base and customer access/coverage area of the various successor distribution companies, listed as follows:
1. Abuja Electricity Distribution Plc;
2. Benin Electricity Distribution Plc;
3. Eko Electricity Distribution Plc;
4. Enugu Electricity Distribution Plc;
5. Ibadan Electricity Distribution Plc ;
6. Ikeja Electricity Distribution Plc;
7. Jos Electricity Distribution Plc;
8. Kaduna Electricity Distribution Plc;
9. Kano Electricity Distribution Plc;
10. Port Harcourt Electricity Distribution Plc;
11. Yola Electricity Distribution Plc
A separate management contractor procurement process is underway for Transmission Company of Nigeria.
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