Nigeria Electricity Regulatory Partnership:
Bolstering Electricity Sector Reform in Nigeria

The Energy Sector

Since the enactment of the Electric Power Sector Reform Act in 2005, Nigeria has embarked on a decade-long effort to reform its electricity sector. Nigeria’s electricity supply currently falls well short of demand, and a growing population and GDP (6.4% increase in 2014) will substantially increase demand for electricity in the future. As part of its reform of the sector, Nigeria has set ambitious targets for increasing its installed generation capacity and integrating renewable sources of energy.

The 2005 Reform Act created the Nigerian Electricity Regulatory Commission (NERC), which is mandated to license and regulate electricity generation, transmission, and distribution in the country. NERC seeks to reform the regulatory environment in order to protect the interests of electricity customers, create an environment of stability for investors, and take steps to increase service quality and access around the country. NERC also implements government plans to integrate renewables, improve reliability, and increase sector efficiency.

In a 2013 effort to unbundle the sector, the Government of Nigeria sold off government-owned distribution and generation companies to private entities but retained the transmission company under its control. With these privatization efforts, Nigeria is seeking to incentivize private investment in its electricity sector in order to increase generation, bolster infrastructure, and improve service quality. NERC is responsible for regulating these newly-privatized entities within the sector and implementing national goals related to efficiency and environmental protection.

 

Our Work

With support from the United States Agency for International Development (USAID) and Power Africa, the Nigeria Electricity Regulatory Partnership provides technical assistance on regulatory issues that NERC needs to implement regulatory reforms in the Nigerian electricity sector. Since 2008, NARUC has worked with NERC to develop more cost-reflective tariff methodologies, improve customer service, and establish an independent system operator. NARUC has also assisted NERC as it has worked to improve its service monitoring and enforcement tools, develop energy efficiency standards, develop and implement a Transitional Electricity Market strategy, and develop a Uniform System of Accounts. NARUC continues to work with NERC to build its capacity to overcome challenges going forward.

 

Selected Results

Tariff Methodology:
NARUC provided a platform for NERC and private sector stakeholders to understand the methods that regulators can use to develop more cost-reflective electricity tariffs through an interactive software-based simulation.

Market Stabilization:
NARUC experts helped NERC develop a regulation to prevent market power abuses and stabilize the electricity sector in the event of a major bankruptcy.

Transitional Electricity Market:
NARUC has supported NERC at every stage during its march toward a fully-reformed sector by developing strategies to implement reforms and creating Key Performance Indicators to determine readiness to move to a more advanced stage.