Nigerian states and private companies are permitted to generate electricity as President Bola Tinubu assented the 2023 Electricity Bill into law.
The Electricity Act passed in July 2022 under the Muhammadu Buhari administration will replace the Electricity and Power Sector Reform Act of 2005.
The president revealed that the aim of the act is to create a comprehensive legal and institutional framework to guide the NESI and consolidates all legislations dealing with the electricity supply industry to provide an ideal Institutional framework.
Also read: Nigerian States Can Now Generate, Distribute Electricity- Buhari
The Act will bring about the de-monopolization of Nigeria’s electricity generation, transmission, and distribution of electricity at the National level and empower states, companies, and individuals to generate, transmit and distribute electricity.
It provides a framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry (NESI) as well as encourage private sector investments in the sector.
The Act mandates 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.
Currently, Lagos, Edo, and Kaduna states already have electricity market laws and can start regulating their market, while states without such laws will be regulated by NERC.
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 licensees are obligated to meet renewable generation obligations as may be prescribed by NERC under the Act.
