President Bola Tinubu has made history by signing the Electricity Act 2023 into law, which replaces the outdated Electricity and Power Sector Reform Act of 2005 and introduces sweeping reforms in the electricity sector.
The new law, which was passed by the National Assembly in July 2022, aims to de-monopolize the generation, transmission, and distribution of electricity at the national level and empower states, companies, and individuals to participate in the electricity market.
According to sources within the presidential villa, the Electricity Act 2023 will bring about the following changes:
- State governments can now issue licenses to private investors who can operate mini-grids and power plants within the state. However, interstate and transnational electricity distribution are still prohibited.
- Electricity generating companies are required to either generate power from renewable energy sources, purchase power generated from renewable energy or procure any instrument representing renewable energy generation.
- The Nigerian Electricity Regulatory Commission (NERC) will continue to regulate the electricity sector within Nigeria without prejudice to the powers of the states to make laws and create electricity markets within those states and to regulate those markets.
- The National Assembly will have oversight responsibilities and functions over the Nigerian Electricity Supply Industry (NESI) through its respective Committees on Power in the Senate and House of Representatives.
- Anyone may construct, own or operate an undertaking for generating electricity not exceeding 1 megawatt (MW) in aggregate at a site or an undertaking for the distribution of electricity with a capacity not exceeding 100 kilowatts (KW) in aggregate at a site, or such other capacity as NERC may determine from time to time, without a license.
The Electricity Act 2023 is expected to have multiple benefits for Nigeria’s economy, environment, and society. Some of these benefits are:
- Increased access to electricity for millions of Nigerians who currently lack reliable power supply.
- Reduced dependence on fossil fuels and lower greenhouse gas emissions by promoting renewable energy sources such as solar, wind, hydro, and biomass.
- Enhanced energy security and resilience by diversifying the electricity mix and reducing reliance on imported fuel.
- Improved efficiency and affordability of electricity services by introducing competition and innovation in the sector.
- Creation of jobs and income opportunities for Nigerians who can invest in or work for renewable energy projects.
President Tinubu has shown his commitment to transforming Nigeria’s electricity sector by signing this landmark law.
This is his second bill signed into law since he assumed office on May 29, 2023. The first one was the bill on uniform retirement age for judicial officers.