President Bola Tinubu has given his assent to the Electricity Act 2023, which serves as a replacement for the previous Electricity and Power Sector Reform Act of 2005. This new act aims to bring about the de-monopolization of Nigeria’s electricity generation, transmission, and distribution at the national level. It empowers states, companies, and individuals to participate in the generation, transmission, and distribution of electricity.
The Electricity Act was initially passed by lawmakers in July 2022 during the administration of President Muhammadu Buhari. It provides a comprehensive framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry (NESI) and encourages private sector investments in the sector.
One of the key provisions of the Electricity Act is the empowerment of states in the electricity sector. States are now authorized to issue licenses to private investors for the operation of mini-grids and power plants within their respective jurisdictions. However, the Act prohibits interstate and transnational electricity distribution.
The Act also delineates the powers of the Nigerian Electricity Regulatory Commission (NERC). NERC will have the authority to regulate the electricity sector in Nigeria while respecting the states’ ability to create electricity markets and enact laws within their territories. The Act outlines the process through which NERC can transfer regulatory responsibilities to state regulators once they are established. Until a state has enacted its own electricity market laws, NERC will continue to regulate electricity business conducted exclusively within that state.
Currently, Lagos, Edo, and Kaduna states have already enacted electricity market laws and can commence the regulation of their respective markets
