President Bola Tinubu has given his approval to the electricity bill, which was passed in July 2022 with the aim of repealing the Electricity and Power Sector Reform Act of 2005.
As a result, the new law is now known as the Electricity Act.
The Electricity Act serves as a comprehensive legal and institutional framework for guiding the Nigerian Electricity Supply Industry (NESI) during the post-privatization phase. It consolidates all existing legislation related to the electricity supply sector and encourages private sector investments.
One of the primary objectives of the bill, clearly stated in its initial section, is to establish a comprehensive legal and institutional framework for the NESI.
The Act aims to break the monopoly in electricity generation, transmission, and distribution at the national level, empowering states, companies, and individuals to generate, transmit, and distribute electricity.
Furthermore, states will have the authority to grant licenses to private investors for the operation of mini-grids and power plants within their respective territories. However, these state licenses will not extend to inter-state or transnational electricity distribution.
“This represents the culmination of two years of work to modernize the electricity legislation and align it with the provisions of the constitution,”
The Nigerian constitution, as amended, stipulates a shared responsibility between the federal and state governments in legislating for the electricity sector. However, the actual practice has deviated from this due to the authority granted to the Nigerian Electricity Regulatory Commission (NERC) under the Electricity Reform Act, which enables nationwide regulation.
The journey toward the current status of the Electricity Act began by clarifying the constitutional recognition of joint regulatory powers. This process resulted in a constitutional amendment, which was signed into law by former President Muhammadu Buhari in March.
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The Electricity Act explicitly states that NERC’s regulatory powers within Nigeria do not impede the states’ authority to enact laws and establish electricity markets within their jurisdictions, while also regulating those markets.