PwC’s Annual Power & Utilities Roundtable (14th edition)

This report is based on the proceedings and outcomes from the 14th edition of PwC’s Annual Power and Utilities Roundtable report, focusing on the theme, ‘The Electricity Act 2023: Powering Nigeria.’

On 8 June 2023, His Excellency, President Bola Ahmed Tinubu, GCFR, signed the Electricity Act 2023 repealing the Electric Power Sector Reform Act, 2005, and consolidating the laws relating to the Nigerian electricity supply industry by providing a comprehensive legal and institutional framework for the power sector in Nigeria.

Recognising the significant implications of this legislation for the sector, PwC convened its annual Power and Utilities Roundtable on Thursday, 30, November 2023. PwC’s annual roundtable brings industry leaders, executives, and stakeholders to discuss the challenges, opportunities and trends, contributing to ongoing power sector reforms in Nigeria.

Over the past two decades, Nigeria's power sector has seen several reforms and initiatives driven by regulators, ministries, and industry players. From key policies like the Nigerian Electric Power Policy in 2001 to the privatisation of the generation and distribution subsectors in 2013, to more recent interventions like the launch of the Meter Asset Provider scheme in 2018, Service Based Tariff regime in 2020, and the Electricity Act 2023.

The evolution of the policy landscape in the power sector shows that significant progress has been made, but challenges remain. The Electricity Act of 2023 attempts to address some of these challenges and unlock new potential.

Panel discussion of industry power sector stakeholders

The panel discussion was moderated by Akinyemi Akingbade, Partner, Energy, Utilities and Resources, PwC Nigeria.

The moderator-led panel session featured: Engr. Razaq Obe, Honourable Commissioner for Energy and Mineral Resources, Ondo State Government; Dafe C. Akpeneye, Commissioner Legal, Licensing, and Compliance, Nigerian Electricity Regulatory Commission; Mrs. Folake Soetan, Chief Executive Officer, Ikeja Electric Plc; Ugochukwu Obi-Chukwu, Founder/CEO, Nairametrics; and Daniel Mueller, Chief Operating Officer, InfraCredit.

Unlocking the opportunities 

The Electricity Act has the potential of minimising economic losses estimated at $28 billion annually.

Creating the right investment vehicle. The Act empowers states to establish state owned utilities, ‘Successor Companies,’ capable of attracting long term investment through innovative structures.

Dedicated distribution and supply companies within states can act as special purpose vehicles (SPVs), drawing capital from state resources or private investors through primary or secondary markets.

Collaboration in fundraising. Many utilities require patient capital. With the Power Consumer Assistance Fund (PCAF)serving as a joint federal state mechanism for targeted subsidies, the Act facilitates collaborative fundraising efforts.

Navigating challenges

Cost implications. Adopting the Electricity Act 2023 involves substantial financial investments. Engaging legal and commercial expertise, developing and establishing state level regulatory bodies come at a significant cost, competing for limited state resources. Thorough due diligence and feasibility studies are crucial to ensure efficient resource allocation and project viability.

Regulatory uniformity. Having vastly different electricity laws across states will be detrimental, creating market distortions and unfair competition. There is a need to ensure that regulation of electricity across the federation is fairly consistent and avoid regulatory capture.