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Electricity Act : Experts laud FG on 5% compensation to host communities

Electricity Act : Experts laud FG on 5% compensation to host communities


By Yusuf Yunus


Some experts in the power sector have commended the Federal Government for the  five per cent set aside to host communities in the 2024  Electricity Act (Amendment) Bill.

They gave the commendations in separate interviews with the Business  Intelligence (TBI Africa) on Tuesday in Lagos.

It would be recalled that President Bola Tinubu on Feb. 9, signed the Electricity Act (Amendment) Bill 2024, into Law.

The bill, which was passed by the House of Representatives on July 27, 2023, and the Senate on Nov.  14, 2023, was sponsored by Babajimi Benson, who represents Ikorodu Federal Constituency of Lagos State.

The Bill sought to address  development and environmental concerns of host communities, thus setting  aside five per cent of the actual annual operating expenditures of Power Generating Companies  (GenCos) from the preceding year for the development of their respective host communities.

The experts said  the five per cent would go a long way in addressing  the development and environmental concerns of host communities.

Dr Akinrolabu Olukayode, Chairman of the Customer Consultative Forum of Festac/Satellite Town, Lagos state,  described the step as a  positive one that would ensure  communities benefited from the presence of power generation facilities in their area.

Olukayode said that this also showed a commitment to addressing the needs and concerns of the local population.

According to him, I support the Electricity Act (Amendment) Bill 2024 as it demonstrates a commitment to addressing the needs of host communities and promoting sustainable development.

” It is important to continue monitoring and evaluating the implementation of the bill to ensure that it is effectively achieving its intended goals.

“However, all these as laudable as they may appear or seem, should there not be adequate mechanisms to monitor the compliance level; the whole process will be messed up and the objectives thwarted.

“Having a reputable trustee/manager appointed to oversee the funds for infrastructure development in the host communities is a good idea as it ensures transparency and accountability in the management of the funds.

” It also helps to ensure that the funds are used effectively for the intended purpose,” he said.

The expert also advised the trustee/manager to work closely with the host communities to understand their needs and priorities in terms of infrastructure development.

He said that communication and collaboration would be key in ensuring that the funds were managed and articulated in a way that benefited the host communities.

Olukayode said: “I believe that this development is a positive step toward promoting community development and addressing the needs of host communities.

“My advice will  be to ensure that there is clear communication and transparency in the management of the funds, and to actively involve the host communities in the  decision-making processes,” he added.

On his part, an electricity market analyst, Mr Lanre Elatuyi said  the five per cent of generating companies’ operating expenditure for host communities would  lead to unintended purposes.

This, he said, was because it came at a time when the GenCos were being owed huge amounts of money.

Elatuyi added that government is  saddled with subsidy burden of over N1.67 trillion alone in 2024,  because of market shortfalls and low remittances.

He said that GenCos might  have to pass the  burden to the consumers by increasing their wholesale price.

According to him, The Nigerian Bulk Electricity Trading (NBET), still owes the GenCos over a trillion naira.

” GenCos are being paid just a few percentage of their invoices. Why then bringing more financial burden on them,” he asked.

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