Category: General News

The Nigerian maritime sector has always represented a significant commercial engine of the Nigerian economy. Opportunities for Nigeria’s economic growth through linkages in global and inter-Africa supply chains through our maritime lanes remain robust and significant. 

The efficiency and adaptability of our maritime sector are thus critical and the Nigerian government has laid down a marker by prioritising the need to augment the nation’s GDP from the maritime sector.

For the first time, a Ministry of Marine and Blue Economy has been established to harness the nation’s ocean and coastal resources for economic growth. 

In line with these initiatives, the Nigerian Judiciary is also playing its role by updating the Admiralty Procedure Rules, to foster a fit-for-purpose dispute resolution mechanism for stakeholders in the sector and this is symbolised by the enactment of the Admiralty Jurisdiction Procedure Rules, 2023 (“the AJPR 2023“).

After consultation with maritime practitioners, the Admiralty Jurisdiction Procedure Rules of 2011 (“the AJPR 2011”) was repealed and replaced by the AJPR 2023 under the authority of the Honourable Chief Judge of the Federal High Court, Justice Terhiemba Tsoho, in exercise of his powers under Section 254 of the Constitution of the Federal Republic of Nigeria and Section 21 of the Admiralty Jurisdiction Act 1991 (AJA). 

The AJPR aims at augmenting the Admiralty Practice and Procedure at the Federal High Court, bringing it in line with global best practices and making Nigeria a regional dispute resolution hub for Africa.

Several changes have been made. The most notable are outlined below:

Notable New Provisions:

1. THE ESTABLISHMENT OF ADMIRALTY DIVISIONS AND THE DESIGNATION OF ADMIRALTY JUDGES: 

The Chief Judge has now mandated the establishment of Admiralty Divisions for the Court and designated Judges of the Federal High Court as Admiralty Judges. This is significant in ensuring that specialist Judges focus on maritime cases exclusively.

2. ESTABLISHMENT OF THE ADMIRALTY REGISTRY AND THE HEAD OF THE ADMIRALTY REGISTRY: 

The establishment of the Admiralty Registry of the Admiralty Division of the Court and the empowerment of the Admiralty Marshal (or his substitute) to head the Admiralty Registry of each Admiralty Division further reinforces the clear objective of promoting maritime specialisation.

3. VALIDITY OF WARRANT OF ARREST IRRESPECTIVE OF TRANSFER OF ACTION: 

The AJPR 2023, in preserving the position that an admiralty action in rem may be commenced in the Judicial Division of the Court in which the res may be found or is expected to arrive. have introduced two novel provisions:

1.  Where an admiralty action in rem is not commenced in a Judicial Division where the subject of the maritime (the “res”) is located or expected to arrive. provision is now made for the transfer of the warrant of arrest to the appropriate Judicial Division where the subject of the action is located or expected to arrive, and the warrant of arrest shall remain enforceable against the res in any Judicial Division in which the res may be located. 
2. Where a suit is commenced in any Judicial Division other than the Judicial Division where it ought to be commenced, the Rules provide that the suit may be heard and determined in that Judicial Division unless the Court directs otherwise. 

4. IDENTIFICATION OF PARTIES IN ACTION IN REM

The AJPR 2023 has abolished the previous requirement of specifying the “relevant person” as a defendant, in an action in rem in relation to a proprietary maritime claim. The only parties to be specified as the defendant in the Writ of Summons are the Ship or Other property. However, in an action in rem in relation to a general maritime claim, as in addition to specifying the ship or other property, a relevant person must be specified as a defendant.

This helps to clear up unneccsary technicalities that have developed in recent years, which have unfortunately impeded the progress of maritime actions.

5. RECOGNITION OF PHYSICAL AND DIGITAL SERVICE

The AJPR 2023, mandates that a Writ of Summons, a Court order of arrest, and a warrant of arrest in an action in rem, be served through physical service. 

Additionally, the Rules have now accomodated a digital approach allowing for other Court Processes in an action in rem to be served on the defendant through the defendant’s email address. 

Also, a legal practitioner in representing the defendant, can be properly served with such other Court Processes.

6. MEDIUM OF SERVICE WHERE VESSEL IS ABANDONED OR DEFENDANT’S WHEREABOUTS UNKNOWN

The AJPR 2023, provides that where an action in rem is commenced against the ship or other property which has been abandoned in Nigeria or in personam is filed against the defendant who does not reside in or carry on business in Nigeria through an agent, the Court may order service on such defendant or owner of ship or other property and such service shall be done at the last known address of the defendants business and which shall be delivered by Courier between Nigeria and in the Country of business. 

Alternatively, the service shall be by any mode as accepted by the Court.

7. ARRESTING A SHIP AND OTHER PROPERTY: 

DIGITILISATION

The AJPR 2023 introduces electronic filing (“e-filing) that has been in use in the judicial divisions of state high court and in major cities in country.

There are provisions for the physical filings (to be done at the Admiralty Registry) or e-filing (to be done at the Admiralty E-filing Unit) as regards, ex parte applications for a warrant arrest of a ship or other property. Such e-filed ex-parte applications must be in PDF (Portable Document Format) and shall be sent to the email address as shall be provided by the Admiralty Registry. E-filing, fees payable for the court processes shall be assessed and paid online.

EXPEDITIOUS – PHYSICAL & VIRTUAL HEARINGS

The AJPR 2023 mandates that where it is practicable, such application shall be heard and determined within  a twenty-four (24) hour timeline from the date of filing, and such proceedings may be conducted physically or virtually on any day, including Sundays and public holidays.

CAVEATS AGAINST ARREST

The AJPR 2023 now requires that before a warrant of arrest is issued, the applicant must apply for a search to be made in the caveat book to determine whether or not there is a caveat against the arrest of such ship or other property. 

Upon such application for search, the Admiralty Registry is to issue a report of the search and such report shall be in Form 8A (Report of Search of Caveat Against Arrest Register).

This is an improvement from the uncertain and controversial position under the AJPR 2011, where a prospective plaintiff  was required to file an affidavit stating whether or not there is a caveat against the arrest of such ship or other property. This position was susceptible to manipulation as in many cases, the Court may not be provided with the correct information. 

8. WARRANT OF ARREST FOR FOREIGN COURT PROCEEDINGS AND NIGERIAN OR INTERNATIONAL SEATED ARBITRATIONS

The AJPR 2023 introduces a simplified process of obtaining a warrant of arrest for ships or property in support of foreign court proceedings or arbitration proceedings within or outside Nigeria. The provision ensures efficiency by allowing the Applicant to file such an application without commencing a separate action. The Rules mandate that such an application will be accompanied by the certified true copy (CTC) of the Court or Arbitration Processes, and a duly notarised undertaking as to indemnity if later found that the order for arrest should not have been made.

CONCLUDING REMARKS

The AJPR 2023 establishes a new and progressive legal regime for Admiralty Proceedings in Nigeria. steering it into alignment with contemporary maritime realities. 

It is advised that all stakeholders in the maritime sector, including legal practitioners, shipping companies, and other relevant parties, familiarize themselves with the Rules to effectively navigate the intricacies of maritime legal proceedings.

The Electricity Act Amendment (EAA) bill, 2024, was signed into law on 9 February 2024. It seeks to reform the Nigerian electricity sector and addresses the challenges of power generation, transmission, distribution, and consumption. 

The EAA introduces several changes and innovations to the Electricity Regulation Act, 2006, which was the previous legal framework for the electricity sector. 

Key objectives of the EAA are:

1. Promoting the development and environmental protection of host communities of power generating companies (GENCOs) by setting aside 5% of their annual operating expenditures for infrastructure projects in the host communities.

• Establishing the Transmission System Operator SOC Ltd, a new entity that will be responsible for the operation, maintenance, and expansion of the national grid, as well as the coordination and dispatch of electricity from various sources.

• Creating an open market platform that will allow for competitive electricity trading among GENCOs, distribution companies (DISCOs), eligible customers, and other market participants.

• Assigning the duties, powers, and functions of the Transmission System Operator SOC Ltd to the National Transmission Company South Africa SOC Ltd, a joint venture between the Nigerian and South African governments, which will own and manage the transmission assets and infrastructure.

• Enhancing the regulatory and enforcement powers of the National Energy Regulator (NER), which will oversee and monitor the electricity sector and ensure compliance with the provisions of the Act.

Key Benefits of the EAA are:

1. Improving the quality and reliability of electricity supply and increasing the availability and diversity of power sources.

2. Fostering the development and welfare of host communities, as it will provide them with funds and opportunities for infrastructure projects, such as roads, schools, health centers, and water supply.

3. Stimulating the growth and competitiveness of the electricity market, as it will encourage more investment and innovation in the power sector and create more choices and options for consumers and producers of electricity.

4. Enhancing the transparency and accountability of the electricity sector, as it will ensure that the NER and other stakeholders adhere to the principles and standards of good governance, and that the electricity tariffs and prices reflect the true costs and benefits of electricity.

Key challenges and Risks to sector and economy at large are:

1. It may face legal and political opposition from some stakeholders, such as the existing GENCOs and DISCOs, who may perceive the bill as a threat to their interests and profits, and may challenge its constitutionality and validity in court.
2. It may encounter technical and operational difficulties, such as the lack of adequate infrastructure and capacity, the need for coordination and cooperation among various entities and agencies, and the possibility of cyberattacks and sabotage on the transmission system and the open market platform.
3. It may require significant financial and human resources, such as the funding and expertise needed to implement and sustain the reforms and innovations introduced by the Act, and the compensation and training needed for the affected workers and communities.

The implementation of the EAA will be monitored by industry operators and prospective investors. It is a positive step in the right direction and if properly implemented, will bring rapid development to the electricity sector.

In 2022, Mr. Anthony Nkadi, a longstanding partner in the Shipping and Transport Group was appointed Head of Regional Shipping and Transport Projects Group (RSTPG). 

This appointment combines his expertise as a seasoned maritime practitioner with his considerable aviation law experience, which have critically addressed the strategic needs, critical opportunities and challenges of the firm’s clients.

This appointment marks another milestone in his career, which has been defined by hard work, commitment and professionalism.

In 2022, Benson Akunya, our litigation partner of considerable years, recorded a number of milestones in our core practice areas and we have the pleasure of announcing his appointment into the firm’s Regional Litigation Projects Group (RLPG). Benson Akunya continues to make substantial inroads in expanding the firm’s core practice areas of litigation, arbitration and dispute resolution, demonstrating the firm’s renewed focus on the firm’s strategic growth priorities in Nigeria and the African region.

This appointment has been characterised by his hard work, commitment and professionalism.

THE DECADE OF GAS

On 29 March 2021, the Nigeria International Petroleum Summit (N.I.P.S) Pre-Summit Conference, marked the official launch of the “The Decade of Gas in Nigeria Initiative” in furtherance of the Federal Government initiative that declared January 1, 2021 to December 31, 2030 as “The Decade of Gas Development for Nigeria”.

 At a time of rising global demand for cleaner energy sources this has been viewed as a bold statement that gas development and utilization should be a national priority to stimulate economic growth, further improve Nigeria’s energy mix, drive investments, and provide the much-needed jobs for Nigerian citizens and eliminating energy poverty, currently affecting about 40% of the population.

The commitment to developing the gas value chain by reviewing and gazetting policies and regulations to enhance operations in the sector had been commenced under the National Gas Policy (2017).

RECENT GAS DEVELOPMENTS

Developments have been made in recent years in gas infrastructure development.

The Nigerian National Petroleum Company Ltd is currently deepening natural gas utilization to reduce energy poverty through the National Gas Expansion Programme and intensifying the use of petrochemicals.

The NNPC has also upscaled efforts in the gas sector through various projects like the Nigerian Liquefied Natural Gas NLNG Train 7, Ajaokuta–Kaduna–Kano Natural Gas Pipeline (AKK), OB3 and ELPS among others. The (NLNG) project since delivering its 1st LNG cargo in October 1999 continues to be the Federal Government’s arrowhead in the reduction of gas flaring in Nigeria and contributes about one per cent to Nigerian GDP, having generated $114 billion in revenues over the years, $9 billion in taxes, $18 billion in dividends to the Federal Government and $15 billion in Feed gas Purchase.

The NNPC is also expanding and integrating both domestic and regional power grids and growing the domestic gas markets through Autogas/Compressed Natural Gas/Liquified Petroleum Gas to power vehicles.

On Wednesday, February 2, at the 2022 Nigeria International Energy Summit (NIES) held in Abuja, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) newly created under the Petroleum Industry Act (2021) revealed that Nigeria’s proven natural gas reserve had risen to 209.5 Trillion Cubic Feet (TCF) as of January 1, 2022. The new figure represents a major increase of 2.97 TCF in proven natural gas reserves, which, of itself, represented a 1.42 percentage increase from the 206.53 TCF recorded on January 1, 2021.

Such growth, together with the prospects for continued increase, come at the most auspicious moment, given the possibility of buying into the current European need for alternative sourcing of gas.

In January 2002, the idea of a Trans-Saharan Natural Gas Pipeline that was first mooted in the 1970s, came alive when the Nigerian National Petroleum Corporation (NNPC) and the Algerian national oil and gas company, Sonatrach, signed a Memorandum of Understanding for preparations of the project. Aimed at enabling Europe to tap into West Africa’s abundant natural gas supplies, the pipeline included the northernmost Nigerian neighbouring country of the Republic of the Niger for two excellent rationales. The pipeline was going to link through its borders to get from Nigeria to Algeria and it was expected to boost exploration in Niger and expand its energy industry. The 4,128-kilometre pipeline, with 1,037 kilometres in Nigeria, 841 kilometres in Niger, and 2,310 kilometres in Algeria, and a capacity of 30 billion cubic metres of natural gas per year, will connect the Warri region in southern Nigeria, through the length of Niger to the town of Hassi R’Mel in northern Algeria, where it will connect to existing Trans-Mediterranean, Maghreb-Europe, Medgaz, and Galsi Pipelines, allowing Europe to tap into West Africa’s abundant natural gas reserves and diversifying its supply.

RUSSIA-UKRAINE CONFLICT

Russia’s invasion of Ukraine has opened up opportunities for gas rich nations in Africa to tap from the multi-billion-dollar market.

 Russia which accounted for about 45 per cent of the Europe’s gas imports and 40 per cent of its entire gas consumption is facing huge economic sanctions as Europe seeks to reduce dependence on their gas by 80 per cent by the end of 2022.

Nigeria has been described as a gas nation with 206.53 trillion cubic feet of proven gas deposit and hopes to use the energy source as its transition fuel.

The scramble for African gas has begun as Italy’s Prime Minister Mario Draghi on Monday, visited Algeria over diversifying gas supply mix. Italy depends on Russia for 40 per cent of gas imports.

Nigeria has Africa’s biggest proven gas reserves and ninth in the world, according to the United States Energy Information Administration.

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) newly created under the Petroleum Industry Act (2021), Mr Gbenga Komolafe said, “The situation in Ukraine has actually presented a huge opportunity for Nigeria to occupy the market space in terms of the gas supply. I believe that is possible and as a regulator, we are doing everything possible to ensure that Nigeria is able to fulfil that obligation”.

Nigeria’s Suppression of Piracy and Other Maritime Offences Act, 2019  and the Deep Blue Project aim to ‘prevent and suppress piracy, armed robbery’ and any other unlawful act against a ship, aircraft and any other maritime craft, including fixed and floating platforms.

As Nigeria gets set to deploy the Deep Blue Project to protect its coastal waters, the Nigerian Maritime Administration and Safety Agency (NIMASA) says “piracy will no longer be allowed to thrive”.

The combined effect of these two initiatives is to halt the rising trend of piracy and other illegal acts against maritime traffic. The objective being to enhance the flow of maritime activity in Nigerian waters and the Gulf of Guinea.

 

Nigeria’s Suppression of Piracy and Other Maritime Offences Act, 2019

The Suppression of Piracy and Other Maritime Offences Act 2019 (SPOMO) gives effect to the relevant provisions of the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation, Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms Located on the Continental Shelf (SUA) The SUA convention was adopted on 10 March 1988 and entered into force on 1 March 1992. Nigeria ratified his convention.

SPOMO has ended the controversy around whether the crime of sea piracy is defined in any local legislation. The Federal High Court has exclusive jurisdiction to determine matters of armed robbery and other unlawful acts at sea.

Without clear domestic statutes, the prosecution of parties suspected of sea piracy, prior to the law’s enactment, was problematic in Nigeria.

Notwithstanding the purported domestication of the SUA Convention (and its protocol) by section 215(h) of the Merchant Shipping Act 2007 there were doubts about the proper domestication of SUA as required by the Nigerian Constitution.

Section 3 of SPOMO has clarified the position by defining ‘piracy’ as any:

(a) illegal act of violence, act of detention. or any act of depredation, committed for private ends by the crew or any passenger of a private ship or private aircraft and directed

(i) in International Waters against another ship or aircraft or against a person or property on board the ship or aircraft, or

(ii) against a ship, aircraft, person or property in a place outside the jurisdiction of any state;

(b) act of voluntary participation in the operation of a ship or of an aircraft with knowledge of facts making it a pirate ship or aircraft; and

(c) act of inciting or of intentionally facilitating an act described in subparagraph (a) or (b) of this section.

SPOMO is a further illustration of the fact that Contracting states are empowered in accordance with their municipal laws to arrest and prosecute persons, ships or aircraft suspected of committing piracy regardless of whether the pirate or attacked ship flies a foreign flag or has a foreign crew. The definition also covers violent acts committed against property other than ships, such as aircraft and floating and fixed platforms in the Nigerian Exclusive Economic Zone.

Section 4 of SUA lists 18 maritime offences and unlawful acts at sea, which include armed robbery at sea and acts other than piracy committed within Nigeria or its maritime zone. Such acts include:

• the hijacking of a ship, aircraft or fixed or floating platform.
• the destruction or vandalism of a ship, installation, or navigation facility; or
• interference with the operation of a ship, installation, or navigation facility.

Jurisdiction of the Federal High Court of Nigeria

Section 5(2) of SUA the Federal High Court, to the exclusion of all other courts, has jurisdiction to hear and determine any matter under the act.

Some Key SPOMO Provisions

Such provisions include those relating to restitution to owners of violated maritime assets and the forfeiture of proceeds of piracy or maritime offences.

The act also provides that the right of prosecution shall reside in the Attorney General of the Federation of Nigeria; any officer so designated by the attorney General; or the Nigerian Maritime Administration and Safety Agency (NIMASA), with the Attorney General’s consent. These provisions have given rise to genuine concerns about the potential for delays or outright vetoes, due to bureaucratic process or political reasons in the grant by the Attorney General of consent to commence proceedings, which may be very urgent.

 

Deep Blue Project – 2021

Nigeria is investing much of its maritime safety and security hopes in the Deep Blue Project. Initiated by the Federal Ministry of Transportation and Federal Ministry of Defence, it is being implemented by the Nigerian Maritime Administration and Safety Agency (NIMASA), with participation from the Nigerian Navy, Nigerian Army, Nigerian Air Force, Nigeria Police, and Department of State Services.

The Deep Blue Project aims to prevent illegal activities in the Nigerian Exclusive Economic Zone (EEZ), enforce maritime regulations, enhance safety of lives at sea, and prevent illegal activities in the inland waterways. In February, the Federal Government added the Secure Anchorage Area (SAA), off the coast of Lagos, to the areas under the protection of the Deep Blue Project.

The project is designed with three categories of platforms to tackle maritime security issues on land, sea, and air. The land assets comprise the Command, Control, Communication, Computer, and Intelligence Centre (C4i) for intelligence gathering and data collection; 16 armoured vehicles for coastal patrol; and about 600 specially trained troops for interdiction, known as Maritime Security Unit. On air, there are two Special Mission Aircraft for surveillance of the EEZ, one of which was received May 12, with the second expected to arrive soon; three Special Mission Helicopters for search and rescue; and four Unmanned Aerial Vehicles. The sea assets consist of two Special Mission Vessels and 17 Fast Interceptor Boats.

All the assets have been delivered, except one Special Mission Aircraft.

The Deep Blue Project assets would be deployed to prevent pipeline vandalism, oil theft, illegal bunkering, arms smuggling, drug trafficking, human trafficking, and illegal fishing. They would also be deployed for pollution prevention and control in the Nigerian maritime environment.

The project is in line with the country’s total spectrum maritime security strategy, anchored on four pillars, namely, situational awareness, response capability, law enforcement and local partnerships, and regional cooperation.

With crude oil prices remaining robust throughout 2017 and now reaching trading highs of $ 64-$65 per barrel, the international Oil Companies (IOCs) namely ExxonMobil and Royal Dutch Shell Plc (the latter being slightly ahead of the former) are leading other IOCs in global operational profitability and flourishing under current global oil prices.
In the same vein, the Nigerian oil industry seeks to re-position itself, having recovered from the low crude oil price volatility in 2016 punctuated by interruptions to key production sources arising from militant activity in the Niger Delta. The Nigerian government now seeks to attract more investment in the oil & gas sector, improve production activity, currently 1.85 million barrels per day (mbpd) and ensure that the oil sector continues to perform its traditional role of supporting the Nigerian economy.

The 2018 budget was presented to the Nigerian federal legislature on 7 November 2017. The budget proposal presented by the Minister of Budget and National Planning Mr. Udoma Udo Udoma provides that the government plans to fund the budget with N6.6 trillion (approx. $ 18.3 billion) in revenues from various sources particularly the oil and gas sector amongst which signature bonuses (funds paid by oil companies to the Federal Government upon their successful bid for oil blocks in the oil sector) will contribute 1.7% amounting to N112 billion (approx. $ 311m). Such signature bonuses arise from the planned marginal field bid round, in respect of which guidelines were released in September 2017. With 46 acreages on offer. No specific date has yet been fixed for this bid round and it is hoped that a process which has suffered several setbacks in recent years will finally be concluded in late 2017 or early 2018. The outcome of this bid round shall be an important litmus test of the current indigenous appetite for investment in the upstream oil and gas sector.

Further encouraging signs have come from the Nigerian National Petroleum Corporation (NNPC). The NNPC has stated, in endorsement of the 2018 budgetary projection, that the 2018 crude oil national production projection (for Joint Ventures, Modified Carry Arrangement or External Financing, Production Sharing Contracts, Independents, Marginal Fields and Service Contracts) that about 2,298,000 barrels per day is achievable and realistic in view of the renewed security in the Niger Delta. Such projections are based on price scenarios of $35 (low), $45 (medium – the benchmark used for the 2018 budget) and $55 (high)

This outlook is reassuring given the positive global economic growth and the improved compliance with the Organization of the Petroleum Exporting Countries’ (OPEC) current production cuts for 2017, which cap Nigeria’s crude oil production (excluding condensates) to 1.8mbpd. It however remains to be seen, how much of an impact, OPEC’s production caps on Nigeria will have on Nigeria’s 2018 budget projections.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has on the back of the budgetary projections and highlighted key aspects of the roadmap policy unveiled in 2016 by President Muhammadu Buhari titled ‘7 Big Wins’ in the oil and gas sector said that the government would begin the implementation of some fiscal policies to generate about $2 billion yearly in the short term and $9 billion in the long term.

The other big wins have been the delivery of zero fuel availability since 2015/2016; exiting the cash call system giving the multinational oil firms more belief in the need to invest in the country (investments which could be in excess of $ 15 billion). Examples of such investments are Agip and Shell’s Zabazaba Deepwater project and Shell’s Bonga extension project. Other big wins are the improved transparency in NNPC’s operations and deeper engagement and resultant stability in the Niger Delta region through the office of the Vice President, the Niger Delta Ministry, the security forces and the Presidency.

In 2018/2019, the government plans to rehabilitate the refineries and end or severely diminish the importation of refined petroleum products and reveal a package of fiscal policies, which will be subject to the Federal Executive Council approval and thereafter transmitted to the federal legislature for requisite legislative backing. The Minister of State for Petroleum Resources has predicted that this will expand federal government income in the short-term by over $2 billion a year and then on to over $9 billion in the long-term.

The federal legislature continues its work, commenced at the beginning of this year (2017) as regards ensure the passage into law of the entire aspects of the Petroleum Industry Governance Bill PIGB (a bill for the establishment of the institutions that will govern the Nigerian oil and gas sector). It is widely understood that the PIGB will need the strong support of the executive arm of the federal government to make it functional for the long-term stability of the oil industry.

The major trend witnessed in the Nigerian Energy and Utilities sector over the last 12- 18 months is increased government intervention through policy and regulation. There has been a focus on strong market regulation and a cost reflective tariff system, as evidenced in the Nigerian Electricity Regulatory Commission’s (“NERC”) new electricity tariff, called the Multi-Year Tariff Order (MYTO 2015) effective from February 1, 2016. The MYTO 2015 eliminates fixed charges and prescribes a robust mechanism which ensures that electricity distribution companies fully meter their consumers and eliminate baseless billing within one year.

Improvements in the performance of the Nigerian power sector in the past 2 years have dramatically increased power delivery by 35% and have bought breathing space for major reforms required to attract the investment needed to transform Nigeria’s power sector. Nigerian national power supply has reached new peaks with a daily average of 4,000 MW being achieved with a significant decrease in major blackouts. The improved service delivery in power has produced savings to Nigeria estimated by industry and infrastructure experts as worth over $1.2bn in a full year.

Nevertheless, the 4,000MW now being generated for Nigeria’s population of 180 million is grossly inadequate. In contrast, Brazil generates 100,000MW of grid-based power for 201 million and South Africa generates 40,000MW for 50 million.

Annual public sector investment averaging US$2bn between 2006-2009 leading to only moderate increases in power supply resulted in the Nigerian Government taking the logical decision to privatise the bulk of its power. This culminated in the execution of Share Sale Agreements and Concession Agreements, signifying the hand-over of power sector assets to 14 Preferred Bidders for 15 of the 17 Companies created out of the Power Holding Company of Nigeria on 21 February, 2013.

The current benefits are the outcome of the establishment in 2010 by the Nigerian government of a Power Programme Support Unit (PPSU) in collaboration with and management by the DFID-funded Nigeria Infrastructure Advisory Facility (NIAF), which is managed by Adam Smith International. The PPSU’s mandate was the rehabilitation of under-performing assets, adding more generating and transmission capacity to the grid, as well as stabilising the network by reducing the alarming number of system collapses. This resulted in the development of a comprehensive rehabilitation plan, with over 10,000 lines of activity, involving repairs and upgrades on plant and equipment across Nigeria, some of which had not been adequately maintained for decades.

However, with average annual per capita power consumption at only 155 kWh, Nigeria ranks amongst the lowest in the world. In contrast to its status as a leading global oil producer. Nigeria’s per capita electricity consumption is 7% of Brazil’s and 3% of South Africa’s. At the same time, at least 50% of Nigerian households have no connection whatsoever to the grid. Self-generation (diesel or petrol generators) in Nigeria is estimated to be 6,000MW.

According to DFID-NIAF estimates, Nigerians and the Nigerian economy pay unduly for the power gap in demand and supply. The poor currently pay more than N80 ($0.38)/kWh burning candles and kerosene, whereas manufacturers pay in excess of N60 ($0.28)/kWh on diesel generation. Meanwhile, everyone else who can afford it pays around N50-70 ($0.24-0.33)/kWh for self-generation. By contrast, grid power, if available, costs between N18 and N23/kWh.

The absence of adequate power is the most significant barrier to economic growth in Nigeria. If the current power situation continues as is until 2020, the Nigerian government estimates that some $97 bn (US dollars) in GDP would be lost every year.