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Nigeria’s House of Representatives has passed for final reading, a bill seeking to compel Power Generating Companies (GENCOs) in the country to set aside five per cent of revenue generated from selling electricity for communities hosting electricity installations.

The Bill titled: “An Act to Amend the Electric Power Sector Reforms Act, to Provide for the Reservation of 5 Percent of all Revenue Accruing from Power Generating Companies in Nigeria for the Development of the Host Communities”, is sponsored by Rep. Babajimi Benson (APC-Lagos).

In his Lead Debate on the legislation, Benson, argued that, “This bill seeks to amend the Principal Act as follows: Create a new Part V titled “DEVELOPMENT OF HOST COMMUNITIES”

“b. Deleting Part V to XII and renumbering them as Part V to XIII, and, c. Create a Section 77 under the new Section VDear colleagues, Section 77 of the Act will now read thus:

“(1) The adverse effects on the environment, human and aquatic lives on the communities hosting the power generating stations all over the country, particularly thermal pollution from the power generating stations are, hereby, recognised under this Act.

“(2) Without prejudice to any existing right or rights that may be accruing to host communities under this Act or any other enactment, five per cent of the revenue accruing from power generated by the various power generating companies in Nigeria shall be set aside for the development of the respective host communities.

“(3) The revenue referred to in Subsection 2 of this section shall be received, managed and administered by a trustee to be appointed by the GENCOs and representative of the host communities, upon agreement between the host communities and GENCOs on one part and the trustee on the other part.” This bill was read the first time on February 23, 2020.

“The purpose of this amendment is to lawfully provide for the development of communities hosting power generating companies across the country.

“Hon. Colleagues, when passed, this bill will help to ameliorate the untold hardship and infrastructural degradation often suffered by communities hosting power generating firms as a result of the adverse climatic, livelihood and public health effect of their activities. As stated above, host communities of all generating companies (GENCOs) shall be entitled to 5% of the firms’ previous year’s actual operating expenditure.

“Hon. Colleagues, power generation, transmission, distribution and usage is known to cause huge harmful environmental and health challenges for host communities. In fact, it is almost impossible to produce, transmit and consume power without significant environmental impact.

“The electricity sector is unique among industrial sectors in its very large contribution to emissions associated with nearly all climatic and health issues”.

The lawmaker argued further that “Power plants also require access roads, railroads and pipelines for fuel delivery as well as electricity transmission lines and cooling water supplies which could lead to soil erosion, deforestation, and water pollution from their construction work.

“This destabilizes the livelihood of the communities hosting them and also lead to water and soil contamination from waste and byproducts.

“Furthermore, the electricity sector is known to have a significant impact on water habitat and species.

“Power generation leads to the destruction of aquatic life and consequently the disruption of sources of livelihood for host communities, especially the fishing communities.

“In particular, hydro dams, which is a major source of power generation in Nigeria, and transmission lines have significant effects on water and biodiversity.

“Also, dear colleagues, hydropower generation causes significant dislocation in the lives of people where the reservoirs are installed and often lead to flooding and disruption of aquatic ecosystems.

“Water diversion or impoundment also affects people as well as plants and wildlife that depend on their access in certain locations. Changes can also impact water quality and change land uses.

“The host communities are even more at catastrophic risk when the dam wall fails”.

According to him, “Specifically, power generation, especially through fossil fuels, biomass and municipal and industrial waste, is known to lead to the emission of the following substances: Carbon dioxide (CO2) – a greenhouse gas, which contributes to the greenhouse effect. Sulfur dioxide (SO2) – causes acid rain, which is harmful to plants and animals that live in water.

“Nitrogen oxides (NOx) – contribute to the degradation of ground-level ozone. Particulate matter (PM) – causes hazy conditions in cities and scenic areas.

“As for human health, power generation causes serious health challenges for people living in their host communities.

“For instance, SO2 worsens respiratory illnesses and heart diseases, particularly in children and the elderly while Particulate Matter contributes to asthma and chronic bronchitis, most especially in children and old persons too.

“It also causes emphysema and lung cancer. Finally, NOx is believed to irritate and damage the lungs. The effect of carbon monoxide on human health is also common knowledge, while heavy metals such as mercury remain hazardous to human and animal health.

“All these and several other devastating effects of power generation on their host communities make it imperative that a particular amount of money is lawfully assigned for developmental projects there.

“What currently entails is merely corporate social responsibility (CSR) which is solely at the discretion of the GENCOs. This amendment will compel them to earmark a percentage of their revenue specifically for community development in their settlor communities.

“Honourable Colleagues, setting aside 5% of revenue generated by GENCOs for developmental projects in host communities will further promote peaceful and harmonious coexistence in these communities.

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“In addition, it will foster sustainable shared prosperity amongst those communities and across the country generally while providing direct social and economic benefits from the power generation companies to the host communities.

“In line with the recommendations by this honourable House for 5% of oil companies operating expenses (OPEX) to be allocated to host communities in oil-producing states as contained in the PIB, a law requiring that a similar 5% of expenditure by GENCOs be allocated to their host communities will engender equity, fairness and even development in similar communities across Nigeria.

“Importantly, this amendment is holistic and nationalistic in its impact as GENCOs exist across all geopolitical zones of the country.

“There are 23 GENCOs operating in Sapele, Jebba, Egbin, Ughelli, Shiroro, Afam and Kainji. Others are in Katsina (windmill), Olorunsogo (Ogun state), Omoku (Rivers state), Benin, Alaoji (Abia State), Geregu (Kogi State), Egbema (Imo State), and several other parts of the country.

“The host communities are in dire need for development, and this can only be achieved through the provision of a special fund which this amendment seeks to achieve”.

“Monies accruing from this fund will be applied to sustainable infrastructural development projects, job creation, improvement of education, empowerment and skills acquisition for youths, women and other vulnerable groups, provision of medical facilities and personnel and any other developmental project agreed to consequent upon a needs assessment.

“It is pertinent to note that provision of certain funds for the development of host communities is a global best practice. These funds, often referred to as Trust Funds, exist in Canada, Namibia, United Kingdom, Kyrgyzstan and neighbouring Ghana.”



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