It establishes a framework to oversee the Nigerian Electricity Supply Industry’s (NESI) post-privatization phase and to stimulate private sector investment in the sector.
President Bola Tinubu has signed the Electricity Act 2023 into law. Remember that the act was first passed by MPs in July 2022.
The Electricity Act will take the place of the 2005 Electricity and Power Sector Reform Act.
It establishes a framework to oversee the Nigerian Electricity Supply Industry’s (NESI) post-privatization phase and to stimulate private sector investment in the sector.
According to Nairametrics, the following are some of the functions that the Electricity Act attempts to guide:
State power over electricity
The national de-monopolization of electricity generation, transmission, and distribution in Nigeria empowers states, businesses, and individuals to generate, transmit, and distribute electricity.
States can award licenses to private investors to operate mini-grids and power plants within their borders under the Act. The Act, however, prohibits interstate and international electricity delivery.
NERC’s Authority
The Nigerian energy Regulatory Commission (NERC) would be able to govern the energy industry within Nigeria under the Electricity Act 2023, without prejudice to the states’ authority to pass laws, create electricity markets, and regulate those markets.
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The Act specifies how NERC can delegate regulatory authority to state regulators once they are constituted. NERC will continue to regulate energy business conducted solely in those states until those states’ electricity market regulations are passed.
For the time being, Lagos, Edo, and Kaduna states already have power market regulations in place and may begin regulating their markets. However, NERC will regulate in states where such regulations do not exist. NERC will continue to carry out cross-border rules, regulating generation and transmission across states.