10 Things You Should Know About the Newly Signed Electricity Act

10 Things You Should Know About the Newly Signed Electricity Act

Promise Eze 

President Bola Tinubu has assented to the electricity bill, which empowers states, companies and individuals to generate, transmit, and distribute electricity.

Here are ten things you should know about it:

Replacement of the 2005 Act: The Electricity Act 2023 replaces the Electricity and Power Sector Reform Act of 2005. It serves as a framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry (NESI) and encourages private sector investments in the sector.

State Empowerment: The Act allows states, companies, and individuals to generate, transmit, and distribute electricity, effectively de-monopolizing Nigeria’s electricity generation, transmission, and distribution at the national level.

Mini-grids and Power Plants: States can issue licenses to private investors for operating mini-grids and power plants within their boundaries. However, interstate and transnational electricity distribution is excluded under the Act.

Regulatory Powers of NERC: The Nigerian Electricity Regulatory Commission (NERC) has been granted the authority to regulate the electricity sector within Nigeria, while still respecting the states’ power to create electricity markets and make laws related to those markets. NERC can transition regulatory responsibilities to state regulators once they are established.

NERC Regulation: Until a state establishes its electricity market laws, NERC will continue to regulate electricity business exclusively within those states. Lagos, Edo, and Kaduna states already have electricity market laws and can begin regulating their markets. NERC will continue to regulate cross-border activities such as generation and transmission across states.

Lawmakers’ Oversight: The Act empowers lawmakers through their respective Committees on Power in the Senate and House of Representatives to carry out oversight responsibilities and functions over the NESI. This authority is granted irrespective of the supervisory powers of any government Ministry over government-owned enterprises or entities in the electricity supply industry.

Renewable Energy Empowerment: Electricity generation licensees are required to meet renewable generation obligations set by NERC. This means that electricity generating companies must generate power from renewable energy sources, purchase power generated from renewables, or procure instruments representing renewable energy generation. Distribution or supply licensees also have renewable purchase obligations imposed on them.

License Exemptions: The Act allows anyone to construct, own, or operate an undertaking for generating electricity not exceeding 1 megawatt (MW) in aggregate at a site, or for distributing electricity with a capacity not exceeding 100 kilowatts (KW) in aggregate at a site, without the need for a license. The specific capacity limits may be determined by NERC.

Promoting Private Sector Investments: The Electricity Act 2023 aims to encourage private sector investments in the electricity sector in Nigeria. By providing a framework that supports competition and diversification, the Act seeks to attract more private investors into the industry.

Focus on Efficiency and Reliability: The Act’s provisions aim to enhance the efficiency and reliability of Nigeria’s electricity supply by promoting renewable energy, enabling state-level regulations, and empowering various stakeholders to participate in the sector’s development.


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