President Bola Tinubu has given his approval to the new Electricity Act, which replaces the 2005 Electricity and Power Sector Reform Act.
The Electricity Act was initially passed in July 2022 during the administration of former President Muhammadu Buhari.
The newly signed bill aims to encourage private sector investments in Nigeria’s power sector and promote the decentralization of electricity generation, transmission, and distribution at the national level.
Here are the ten key benefits of the recently assented 2023 Electricity Act:
1. Exemption from License: The Act allows individuals to construct, own, or operate electricity generation projects with a capacity not exceeding one megawatt or distribution projects with a capacity not exceeding 100 kilowatts without requiring a license.
2. Renewable Generation Obligations: Electricity generation license holders are required to fulfill renewable generation obligations as determined by the Nigerian Electricity Regulatory Commission (NERC).
3. Promotion of Renewable Energy: Electricity generating companies will be obligated to generate power from renewable energy sources, purchase renewable energy-generated power, or procure instruments representing renewable energy generation.
4. Legislative Oversight: The Act empowers lawmakers to exercise oversight functions and responsibilities over the Nigerian Electricity Supply Industry (NESI) through their respective Committees on Power in the Senate and House of Representatives.
5. Empowerment of States, Companies, and Individuals: The Act grants the authority to states, companies, and individuals to generate, transmit, and distribute electricity.
6. State Electricity Market Regulation: States have the ability to regulate their own electricity markets by issuing licenses to private investors for operating mini-grids and power plants within their jurisdictions. However, interstate and transnational electricity distribution is excluded.
7. Strengthened Regulatory Role: The Nigerian Electricity Regulatory Commission (NERC) is empowered to effectively regulate the electricity sector within Nigeria.
8. Transition of Regulatory Responsibilities: NERC has the authority to transition regulatory responsibilities to state regulators once they are established.
9. Continued NERC Regulation: Until states have enacted their electricity market laws, NERC will continue to regulate electricity businesses in those states.
10. State-Specific Regulation: Currently, only Lagos, Edo, and Kaduna have enacted electricity market laws and can begin regulating their respective markets. In states without such laws, NERC will regulate electricity generation and transmission activities.
The implementation of the 2023 Electricity Act is expected to bring about significant changes in the Nigerian power sector, fostering private sector participation, renewable energy development, and improved regulatory efficiency.
