Legal Informer: Electricity Act 2023: What Changed?
The Electricity Act 2023 replaces the Electricity and Power Sector Reform Act 2005, aiming to streamline and unify laws in the electricity supply industry. It establishes a comprehensive framework to guide the Nigerian Electricity Supply Industry (NESI) postprivatization while promoting private sector investments for growth and development. One of the core objectives of the Electricity Act 2023 is to break the national-level monopoly in generating, transmitting, and distributing electricity. It allows states, companies, and individuals to actively participate in these activities. States are empowered to grant licenses for mini-grids and power plants within their territories, though such licenses don’t extend across state boundaries or internationally.
The recent assent of the Constitutional Amendment Bill by President Muhammad Buhari sets a crucial foundation for the successful enactment of the Electricity Act. This milestone revolutionizes Nigeria’s electricity sector by encouraging increased investor engagement at federal, state, and private levels, fostering progress and development. The Electricity Act mandates electricity-generating companies to utilize renewable energy sources or procure instruments representing renewable energy generation. It enables states, companies, and individuals to produce, transmit, and distribute electricity, promoting empowerment in the energy sector within their respective
Significant regulatory powers are conferred upon the Nigerian Electricity Regulatory Commission (NERC) by the Electricity Act of 2023. While recognizing state autonomy in establishing their own electricity markets and legislation, NERC plays a crucial role in transitioning regulatory responsibilities to state regulators. During the interim period, NERC exclusively regulates electricity businesses within states. Notably, states like Lagos, Edo, and Kaduna have already formulated their market laws and can commence market regulation.
Lawmakers gain comprehensive oversight responsibilities through their respective Committees on Power in the Senate and House of Representatives, surpassing the supervisory powers of government ministries. This legislative scrutiny fosters transparency, accountability, and efficient governance within the electricity sector, promoting good governance and responsible practices.
The Electricity Act includes the preparation of an Integrated Electricity Policy and Strategic Implementation Plan, covering both renewable and non-renewable resources, rural electrification, public-private partnerships, and power-specific policies to stimulate renewable energy development. It emphasizes the overall development and alignment of generation, transmission, distribution, and supply infrastructure in Nigeria’s electricity value chain.