June 9, 2023

President Tinubu has assented to the 2023 Electricity Act which is a replacement for the Electricity and Power Sector Reform Act of 2005.

The Act will bring about the de-monopolisation of Nigeria’s electricity generation, transmission, and distribution of electricity at the National level and empower states, companies, and individuals to generate, transmit and distribute electricity.

According to reports, 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.

The Electricity Act was first passed in July 2022 under the Muhammadu Buhari administration.

President Bola Ahmed Tinubu has assented to the Electricity Act 2023 which was initially passed by lawmakers in July 2022.

The Electricity Act will replace the Electricity and Power Sector Reform Act of 2005. It provides a framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry (NESI) as well as encourage private sector investments in the sector.

Highlighted below are some of the functions the Electricity Act seeks to guide-

State electricity empowerment

The de-monopolization of Nigeria’s electricity generation, transmission, and distribution of electricity at the National level empowers states, companies, and individuals to generate, transmit and distribute electricity.

Under the Act, states can issue licenses to private investors who can operate mini-grids and power plants within the state. However, the Act precludes interstate and transnational electricity distribution.

Powers of NERC

Under the Electricity Act 2023, the Nigerian Electricity Regulatory Commission (NERC) will be able to regulate the electricity sector within Nigeria without prejudice to the powers of the states to make laws and create electricity markets within those states and to regulate those markets.

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.

Role of lawmakers

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. This 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.

Empowering renewable energy

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.

TVC