By Moses Patience Chat
President Bola Tinubu has signed the 2023 Electricity Act that will guide the post-privatization phase of the Nigerian Electricity Supply Industry (NESI) as well as encourage states, and private companies to generate electricity.
The new Electricity Act of 2023 will replace the Electricity and Power Sector Reform Act of 2005 to create a comprehensive legal and institutional framework to guide NESI and consolidates all legislations dealing with the electricity supply industry to provide an ideal Institutional framework.
Also, the Act will ensure the de-monopolization of Nigeria’s electricity generation, transmission, and distribution of electricity at the National level thereby empowering states, companies and individuals to generate, transmit and distribute electricity.
The Act authorizes the Nigerian Electricity Regulatory Commission (NERC) with the power to regulate the electricity sector within Nigeria without bias to the powers of the States to make laws and create electricity markets within the State.
NERC is embedded with the authority to change regulatory responsibilities from itself to state regulators when they are established, which implies that until a state has passed its electricity market laws, NERC will continue to regulate electricity business exclusively carried out in those states.
Issuance of licenses by states to private investors who can operate mini-grids and power plants within the State is permitted by the act, however, the act prevents interstate and transnational electricity distribution.
Electricity generation licenses are expected to meet renewable generation obligations as may be prescribed by NERC as contained in the Act.