Oredola Adeola
The Electricity Act (Amendment), 2024, mandating 5 percent of the actual annual operating expenditures of electricity generation companies (GENCOs) from the preceding year be allocated for the development of their respective host communities, was signed into law by President Bola Tinubu.
The amendment also empowers the National Hydroelectric Power Producing Areas Development Commission (N-HYPPADEC) to formulate policies and guidelines for the development of hydroelectric power-producing areas.
𝐀𝐣𝐮𝐫𝐢 𝐍𝐠𝐞𝐥𝐚𝐥𝐞, special adviser on Media and Publicity, made this known in statement on Friday, adding that the new law was assented to by President Tinubu after it was passed by the National Assembly.
This is coming almost eight months after the President signed the Electricity Act of 2023 into law, thereby decentralizing the Nigeria’s electricity generation, transmission, and distribution sectors, while also empowering states, companies, and individuals to participate in various aspects of the electricity value chain.
Advisors Reports gathered that the amendment was passed by the House of Representatives on July 27, 2023, and the Senate on November 14, 2023, was sponsored by Babajimi Benson, who represents Ikorodu Federal Constituency of Lagos State.
The Electricity Act (Amendment) Bill, 2024, seeks to address the development and environmental concerns of host communities, and sets aside five percent of the actual annual operating expenditures of power generating companies (GENCOs) from the preceding year for the development of their respective host communities.
The Bill further provides that the funds set aside for the development of host communities will be received, managed, and administered for infrastructure development in the host communities by a reputable Trustee/Manager to be jointly appointed by the respective GENCO and their host community.
EXPERTS’ COMMENTS
Chukwuebuka Ibeh, Energy lawyer, in his comment stated that Nigeria is poised to unlock its vast energy potential, through proactive policy interventions and collaborative governance structures, while prioritizing the welfare of its citizens and fostering equitable development across the nation.
According to him, the signing of the Electricity Act (Amendment) Bill, 2024 by President Bola Tinubu marks a pivotal moment in the nation’s energy landscape and it underscores a commitment to fostering sustainable growth and environmental stewardship in regions directly impacted by energy production activities.
He said, “This legislation signifies a concerted effort to prioritize the welfare and development of host communities.
“By definition, the Host communities are communities situated or in appurtenant to the area of operation of the power generating companies.
At its core, the Amendment Bill mandates power generating companies (GENCOs) to allocate 5% of their annual operating expenditures from the preceding year for the advancement of host communities.
This directive underscores a commitment to fostering sustainable growth and environmental stewardship in regions directly impacted by energy production activities. Engineer Idowu Oyebanjo, Chief Technical Officer, FGN Power Company of Nigeria, in a comment seen by Advisors Reports stated that the main purpose of the bill is to address the concerns of host communities and related matters.
He said, “Section 82 of the Electricity Act 2023 establishes the National Hydroelectric Power Producing Areas Development Commission (N-HYPPADEC) to formulate policies and guidelines for the development of hydroelectric power producing areas, conceive, plan, and implement policies for their physical development, and tackle environmental problems that may arise as a result of hydroelectric power generation in member states, among other functions
“Section 95 (2) provides for the funding of N-HYPPADEC to be from “5% of all revenue accruing from power generated by the various Power Generating Companies in Nigeria (GENCOs) from the member States”.
This fund would be administered by N-HYPPADEC. In this amendment, Section 95 (2) of the Principal Act is amended by deleting the existing subsection 95 (2) (c) and (d) and substituting it,” it stated.
Engr. Oyebanjo revealed that based on the new amendment, the 5% of the actual annual operating expenditure for the preceding financial year by GENCOs from the member States shall be received, managed and administered by a reputable Trustee.
Advisors Reports further gathered that the Trustees will be jointly appointed by the GENCOs and representative of the Host communities upon agreement by the GENCOs and the Host community on one part and the Trustee on the other part to implement infrastructural development projects identified within the Host communities.
Engr. Oyebanjo noted that the implementation of the Electricity Act has to be based on honesty, sincerity, and probity. He emphasised on the need for the government to collaborate with all stakeholders including host communities, in order for the communities to witness impactful developments over a period of time.
He therefore maintained that the main purpose of the Electricity Act (Amendment) Bill, 2024 will help the government to avoid a situation similar to what was experienced in the oil industry, where host communities do not benefit significantly from the exploitation of resources in their domain while suffering environmental degradation and loss of their main means of livelihood in many cases.
