President Bola Ahmed Tinubu has signed the Electricity Act 2023 just 10 days after taking office.
The Electricity and Power Sector Reform Act of 2005 will be replaced by the Electricity Act.
It is anticipated that it would offer a framework to direct the Nigerian Electricity Supply Industry’s (NESI) post-privatization phase and promote private sector investments.
Recall that the 9th National Assembly first became effective in July 2022
The problematic electricity industry in Nigeria is the context for the development.
The law assures that there is no longer a national monopoly on the production, transmission, and distribution of electricity in Nigeria and gives states, businesses, and private citizens the authority to do so.
According to the Act, governments may provide licenses to private investors so they can run power plants and mini-grids inside their borders. However, the Act forbids the delivery of power over state and international borders.
According to the Electricity Act of 2023, the states’ legal authority to enact legislation, establish electricity markets within those states, and control those markets would not be affected by the Nigerian electrical Regulatory Commission’s (NERC) ability to oversee the country’s electrical industry.
The Act mandates how NERC can transition regulatory responsibilities from itself to state regulators when they are established. Until a state has passed its electricity market laws, NERC will continue to regulate electricity business exclusively carried out in those states.
For now, Lagos, Edo, and Kaduna States already have electricity market laws and can start regulating their market. But for other states without such laws, NERC will regulate. NERC will still carry out cross-border regulations – generation and transmission across states will still be regulated by NERC.
The Act grants lawmakers the power to carry out oversight responsibilities and function over the NESI through its respective Committees on Power in the Senate and House of Representatives. It is to be carried out notwithstanding the supervisory powers of any government Ministry over government-owned enterprises or other entities operating in the Nigerian electricity supply industry.
Electricity generation licensees are obligated to meet renewable generation obligations as may be prescribed by NERC. Under the Act, electricity generating companies will be mandated to either generate power from renewable energy sources, purchase power generated from renewable energy or procure any instrument representing renewable energy generation.
The Electricity Act also mandates the imposition of renewable purchase obligations on distribution or supply licensees.
The Act also states that anyone may construct, own or operate an undertaking for generating electricity not exceeding 1 megawatt (MW) in aggregate at a site or an undertaking for distribution of electricity with a capacity not exceeding 100 kilowatts (KW) in aggregate at a site, or such other capacity as NERC may determine from time to time, without a license.
