Electricity Act 2023, which was initially enacted by MPs in July 2022, has gained the approval of President Bola Ahmed Tinubu.
The 2005 Electricity and Power Sector Reform Act will be replaced by the Electricity Act. It offers a framework to direct the Nigerian Electricity Supply Industry’s (NESI) post-privatization phase and stimulate private sector investment in the industry.
The Electricity Act aims to govern the following functions, which are highlighted as follows;
State electricity empowerment
The national demonopolization of electricity generation, transmission, and distribution in Nigeria gives states, businesses, and private citizens more freedom to produce, transmit, and distribute electricity.
According to the Act, states may grant licenses to private investors so they can run power plants and mini-grids within their borders. However, the Act forbids the distribution of power over state and international borders.
Powers of NERC
According to the Electricity Act of 2023, the Nigerian Electricity Regulatory Commission (NERC) will have the authority to oversee the nation of Nigeria’s electricity market without interfering with the states’ authority to enact legislation, establish electricity markets therein, and oversee those markets.
The Act specifies how NERC can delegate its regulatory duties to state regulators once they are constituted. Until a state passes legislation governing its power market, NERC will continue to oversee all electricity-related transactions made in those states.
At this time, the states of Lagos, Edo, and Kaduna already have power market laws and are able to begin regulating their markets. However, NERC will govern for other states without such legislation. The generation and transmission of electricity across state lines will continue to be governed by NERC.
Function of lawmakers
Through their respective Committees on Power in the Senate and House of Representatives, lawmakers are given the authority to exercise oversight obligations and control over the NESI under the terms of the Act. This must be done despite the fact that no government ministry has the authority to supervise any government-owned businesses or other organizations engaged in the Nigerian energy supply industry.
Strengthening renewable energy
Renewable generating requirements as they may be set by NERC must be met by electricity generation license holders. Electricity generating firms will be required by the Act to either produce power from renewable energy sources, buy power generated from renewable energy sources, or purchase any instrument that represents the output of renewable energy.
The Electricity Act also requires that distribution or supply licensees be required to make renewable energy purchases.
The Act further states that no license is required for anyone to build, own, or operate an undertaking for the generation of electricity with a capacity not exceeding 1 megawatt (MW) in aggregate at a site, an undertaking for the distribution of electricity with a capacity not exceeding 100 kilowatts (KW) in aggregate at a site, or any other capacity that NERC may from time to time determine.
