President Bola Tinubu has given his approval to the new Electricity Act, which replaces the 2005 Electricity and Power Sector Reform Act.
Initially passed in July 2022 during the administration of former President Muhammadu Buhari, the Electricity Act aims to encourage private sector investments in Nigeria’s power sector and dismantle the monopoly in electricity generation, transmission, and distribution at the national level. Here are some of the benefits:
- The enactment of this law means that individuals or entities can construct, own, or operate electricity generation projects with a capacity of up to one megawatt or undertake electricity distribution with a capacity of up to 100 kilowatts, or as determined by the Commission, without requiring a license.
- Electricity generation license holders are obligated to fulfill renewable energy generation requirements set by the Nigerian Electricity Regulatory Commission.
- Electricity generating companies will be mandated to either produce power from renewable energy sources, purchase power generated from renewable sources, or obtain instruments representing renewable energy generation.
- Members of the legislature will have the authority to oversee the Nigerian Electricity Supply Industry (NESI) through their respective Power Committees in the Senate and House of Representatives.
- The Act empowers states, companies, and individuals to engage in electricity generation, transmission, and distribution.
- States have the authority to regulate their own electricity markets by granting licenses to private investors to operate mini-grids and power plants within their respective jurisdictions. However, the Act prohibits interstate and transnational electricity distribution.
- The Nigerian Electricity Regulatory Commission will have the regulatory power to oversee the electricity sector within
At present, the regulation of electricity markets is limited to only three states, namely Lagos, Edo, and Kaduna. These states have implemented their own electricity market laws and have the authority to regulate their respective markets. However, for states that do not have such laws in place, the Nigerian Electricity Regulatory Commission (NERC) will be responsible for regulating their electricity generation and transmission activities.