Emeka Ezekwesiri

Official website of Emeka Ezekwesiri, ESQ

  • LEXOLOGY PUBLICATIONS

  • At a glance: natural gas pipeline transportation and storage in Nigeria

    Published in Lexology Panoramic

    The Nigerian chapter serves as a quick reference guide with insights on the domestic gas market, government policies and regulators, production of natural and unconventional gas, gas transportation, storage, distribution and trading, LNG regulation, mergers and competition, international participation and agreements, cross-border sales, affiliate transactions, and recent developments in the sector.

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  • Increasing Electricity Access in Nigeria through Mini-Grids: the Evolving Regulatory Landscape

    Emeka Ezekwesiri & Victor Ayo-Odewale

    Published in SSRN

    Abstract

    Mini-grid has been identified as a key solution to addressing energy poverty and driving rural electrification in Nigeria as it primarily supports reliable and affordable electrification of, and economic development in, underserved and unserved communities across different parts of Nigeria. With the burgeoning investments in the Nigerian mini-grid market, the Nigerian Electricity Regulatory Commission introduced the Mini-Grid Regulations, 2023 to rebirth a body of regulatory framework fit for purpose in the dynamic mini-grid market and catalyze investments in mini-grid solutions towards increasing energy access. This paper (a) examines the key changes introduced by the Mini-Grid Regulations, (b) highlights the implications of these innovations for mini-grid permit holders, their businesses and the Nigerian mini-grid market at large, and (c) explores the impact of the Electricity Act, 2023 on the provisions of the Mini-Grid Regulations, particularly in view of the recent constitutional amendment which allows for generation, transmission, and distribution of electricity by States. This paper concludes that while the changes ushered in by the Mini-Grid Regulations have the prospects of transforming and improving the Nigerian mini-grid market, some of the provisions of the Mini-Grid Regulations may impact adversely on mini-grid operators and their businesses or, at the least, complicate compliance requirements for them. 

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  • In a nutshell: energy M&A in Nigeria

    Published in Lexology Deepdive

    Overview

    There are two broad sub-markets of relevance in Nigeria: the oil and gas sub-market and the electric power sub-market. Each sub-market has a separate regulator. The Nigerian Electricity Regulatory Commission (NERC) is responsible for electric power, and the newly enacted Petroleum Industry Act 2021 (PIA) created two separate regulators for the oil and gas sub-market: the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which regulates the upstream sector (petroleum exploration, prospecting and mining), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), which regulates the midstream and downstream sectors (petroleum refining, storage, transportation, distribution and sale of refined petroleum products). Each of the sub-markets caters primarily to different major buyers: foreign traders for oil and gas, and domestic consumers and business customers for electric power. The contrast between the two markets is considered throughout this chapter.

    The combination of fluctuating international prices and climate change concerns about oil and gas, and low prices for electric power domestically mean that acquisition financing has been harder to access than previously. The fluctuating prices for oil and gas are functions of the foreign markets, post-covid-19 pandemic economic recovery difficulties, increasing international commitment towards green energy, and volatility in the market as a result of several disruptive events on the international scene. The low price of domestic electric power is a function of local regulation.

    The enactment of the PIA has introduced far-reaching changes in the Nigerian oil and gas sub-market. The PIA introduced new institutional, regulatory, licensing and fiscal regimes for the Nigerian petroleum industry. Actors in the Nigerian petroleum industry (regulators and private and public participants) are currently transitioning to the new PIA regime. In accordance with the provisions of the PIA, Nigeria’s national oil corporation, the Nigerian National Petroleum Corporation (NNPC), has transitioned to a private limited liability company and is now the Nigerian National Petroleum Company Limited (NNPC Ltd)

    On the mergers and acquistions (M&A) front, the oil and gas market has been especially active because the largest international oil companies (IOCs) in this market have been carrying out a programme to divest a range of onshore acreage assets with a view to focusing on larger offshore acreage assets. Following the successful conclusion of the marginal field bid round, more M&A activities are expected in the petroleum industry. The electric power market has also been active with the federal government programme to sell several generation companies. The divestment and privatisation programmes are winding down and will run their course soon.

    Also, there have been owners selling and would-be buyers bidding to buy or trying to sell oil and gas assets upstream, midstream and downstream. The success of the divestment programme mentioned above has prompted other IOCs to initiate their own acreage divestment programmes. Interest in buying and selling electric power companies also remains strong, although few deals have actually been concluded. There have also been signs of initial activities related to the sale and acquisition of cash-strapped distribution companies.

    Legal and regulatory framework

    Energy M&A deals require both sector-regulator approval (the NUPRC for upstream petroleum operations, the NMDPRA for midstream and downstream petroleum operations, and NERC for the electric power sector) and sector-neutral merger control approval from the FCCPC prior to being concluded. General merger control approval is needed for all energy sector mergers where the combined annual turnover or assets of the acquirer and the target is worth the equivalent of US$2.4 million, or where the target is worth the equivalent of US$1.2 million in either turnover or assets. This is the position under the FCCPA whether the merger is structured as an acquisition of shares or otherwise.

    The approval of the stock exchange and the securities regulator is also needed where merging companies are either listed or just public companies. The focus of these approvals is on making full disclosure to investors, while that of the general merger control regulator is on protecting competition and consumers.

    A simple asset or shares acquisition may be effected purely by contract. Where liabilities (not only assets) are to be transferred, the parties may achieve their aims either by contract with the consent of the creditors (novation) or by court order where the court is satisfied that the interests of the creditors will not be unfairly prejudiced.

    The new CAMA sets out the statutory mechanism for effecting a transfer of liabilities by court order, empowering the courts, following a meeting of the shareholders and the approval of a 75 per cent majority, to ‘sanction an arrangement’ whereby the assets and liabilities of two or more companies may be vested in only one company.

    The approval of the sector regulators is also required by both statute and regulation. The Minister for Petroleum Resources, acting on the recommendation of the NUPRC (for upstream companies), must approve acquisition transfers, whether of acreage, assets or operating licences in petroleum companies. For midstream and downstream companies, only the consent of the NMDPRA is required. Where the assets are marine vessels or licences to operate them, disclosure to the shipping regulator is needed but not its consent. Similarly, NERC’s approval is required for acquisition and transfers of shares, licences or assets of companies holding NERC licences. Every company operating assets generating more than 1MW or running a distribution network with more than 100kW capacity or transmission network must have an NERC licence.

    Clearance from the tax authorities is also needed in respect of companies’ income tax, capital gains tax and stamp duty where there is to be a merger or an acquisition by transfer of shares or assets.

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