Tinubu signs the Electricity Act 2023, which allows states and private companies to generate power

President Tinubu
President Tinubu

The Electricity and Power Sector Reform Act of 2005 has been replaced by the 2023 Electricity Act, which was signed into law by Nigerian President Bola Tinubu.

The recently passed bill would end the national monopoly on energy generation, transmission, and distribution in Nigeria.

States, businesses, and people will all have more power to produce, transmit, and distribute electricity under this new law.

Remember that parliament first approved the Electricity Act 2023 in July 2022 to give states the authority to grant permits to private investors so they can run mini-grids and power plants within the state.

However, interstate and international distribution of power is prohibited by the Act.

Under the Electricity Act 2023, the Nigerian Energy Regulatory Commission (NERC) would have the jurisdiction to oversee the energy sector in Nigeria, without affecting the states' ability to adopt laws, establish electricity markets, and control those markets.

The Act lays out the procedures NERC must follow to transfer regulatory authority to state regulators after they are established. 

Until the electrical market legislation of those states are passed, NERC will continue to regulate energy transactions made only within those jurisdictions.

Lagos, Edo, and Kaduna states now have power market legislation in place and may start to regulate their markets. 

In places where these restrictions don't exist, NERC will nonetheless regulate. NERC will keep enforcing cross-state regulations that govern generation and transmission.

The Act also gives lawmakers the authority to employ the Senate and House Committees on Power to perform oversight duties and exert control over the NESI. Regardless of whatever government ministry has oversight responsibility for government-owned businesses or other organizations active in Nigeria's energy supply industry, this should be done. 

NERC mandates renewable generation targets for licensees of electricity generation. The Act mandates that electricity generating companies produce power from renewable energy sources, buy power produced from renewable energy sources, or purchase any instrument that represents the output of renewable energy.

The Electricity Act also requires that distribution or supply licensees be required to make renewable energy purchases.

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