PwC: ELECTRICITY ACT 2023 COULD SAVE NIGERIA $28 BILLION
PwC Nigeria, a multinational professional services firm, released a report analyzing the potential economic benefits and implementation challenges of the recently enacted Electricity Act 2023.
Potential Economic Gains:
- The report estimates the Act has the potential to minimize annual economic losses in the power sector by a staggering $28 billion.
- Improved electricity supply is expected to boost economic activity and productivity across various industries.
State-Owned Utilities and Investment:
- The Act empowers states to establish independent “successor companies” – essentially state-owned utilities.
- These companies could attract long-term investments through innovative financing structures.
Concerns Regarding State-Level Regulation:
- PwC emphasizes the potential drawbacks of vastly different electricity laws across states.
- Such inconsistencies could create market distortions, unfair competition, and unhealthy rivalry among industry players.
- The report recommends maintaining a level of regulatory consistency across the nation to avoid “regulatory capture” by individual states.
Collaboration and Funding Mechanisms:
- The Act facilitates collaborative fundraising efforts through the Power Consumer Assistance Fund, a joint federal-state mechanism for targeted subsidies.
- Dedicated distribution and supply companies within states could act as “special-purpose vehicles,” attracting capital from state resources or private investors.
Investment Considerations:
- PwC acknowledges the substantial financial burden associated with implementing the Electricity Act 2023.
- Legal and commercial expertise, along with establishing state-level regulatory bodies, come at a significant cost.
- The report stresses the importance of thorough due diligence and feasibility studies to ensure efficient resource allocation and project viability.
Overall, PwC’s report paints a cautiously optimistic picture of the Electricity Act 2023. While significant potential exists for economic improvement, careful planning and collaboration are crucial to overcoming challenges associated with state-level implementation and resource allocation.
