Understanding the New Act: Ten Questions and Answers regarding the Nigeria Electricity Act 2023
*Precious Esogbue
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The energy sector has been abuzz with anticipation following the passing of the groundbreaking Electricity Act. Despite being passed over two months ago, this act continues to illuminate discussions and energize the sector with new possibilities. Recognizing the surge of inquiries surrounding this legislation, this informative Q&A aimes to enlighten inquirers and ignite captivating conversations around this significant milestone.
- What is the Electricity Act 2023, and who signed it into law?
The Electricity Act 2023 is a game-changing piece of legislation that was signed into law by President Bola Ahmed Tinubu on June 9, 2023. It serves as a comprehensive legal and institutional framework for the Nigerian Electricity Supply Industry (NESI) and aims to address the challenges in the country’s power sector after privatization.
2. How is the Electricity Act 2023 different from the bill signed by former President Muhammadu Buhari regarding electricity privatization?
The Electricity Act 2023 is different from the Buhari bill in that it does not take electricity off the exclusive list. Instead, it provides a framework to guide the post-privatization phase of the NESI and encourages private sector investment. It aims to promote renewable energy sources and empower states, companies, and individuals to generate, transmit, and distribute electricity.
3. What are the key objectives of the Electricity Act 2023?
The key objectives of the Electricity Act 2023 include reforming the electricity sector, integrating renewable energy into Nigeria’s energy mix, attracting investments into the industry, and establishing a self-sustaining, profitable, and sufficient electricity market.
4. What are some changes introduced by the Electricity Act 2023?
The Electricity Act 2023 introduces changes in various areas such as empowering states to generate, transmit, and distribute electricity, providing a framework for renewable energy usage, unifying various Electricity Acts into one comprehensive Act, and granting regulatory authority to the National Electricity Regulatory Commission (NERC) and state regulatory commissions. It also empowers lawmakers to exercise oversight responsibilities and function over NESI.
5. What are the provisions regarding renewable energy in the Electricity Act 2023?
The Electricity Act 2023 mandates electricity-generating companies to generate power from renewable energy sources, purchase power generated from renewable energy, or procure any instrument representing renewable energy generation. This provision aims to promote the utilization of renewable energy and attract investments into the renewable sector.
6. What role does NERC play under the Electricity Act 2023?
The National Electricity Regulatory Commission (NERC) is mandated to regulate the energy sector in Nigeria. Additionally, NERC can delegate regulatory duties to states that have passed their electricity regulations and established their own commissions. In states without such regulatory commissions, NERC will continue to regulate electricity generation and transmission.
7. How does the Electricity Act 2023 empower states in electricity regulation?
The Act allows states to issue licenses to private investors for operating mini-grids and power plants within their borders. However, it precludes interstate and transnational electricity distribution. Some states, like Lagos, Edo, and Kaduna, already possess electricity market laws and can independently regulate their markets. Other states without such laws will be regulated by NERC in terms of electricity generation and transmission.
8. How does the Electricity Act 2023 affect the role of legislators in the electricity industry?
The Act empowers legislators to carry out oversight responsibilities and exercise control over the electricity industry through the Senate and House committees on Power. This role remains intact, regardless of any government ministry’s supervisory authority over government-owned firms or other entities involved in the Nigerian energy supply industry.
9. How does the Electricity Act 2023 promote market competition and private sector investment?
The Act introduces policies and regulatory measures to encourage market competition, stability, and strict governance structures. It also attracts private sector investments across the entire value chain of NESI, ensuring a self-sustaining, profitable, and sufficient electricity industry in Nigeria.
10. How does the Electricity Act 2023 address the challenges in Nigeria’s power sector?
The Act is designed to tackle the post-privatization issues in Nigeria’s power sector by providing a comprehensive legal and institutional framework. It encourages private sector investment, promotes renewable energy sources, and empowers states to play a more active role in electricity generation, transmission, and distribution. By unifying various Acts into one comprehensive law, the Act seeks to create a competitive and well-regulated electricity market in Nigeria.
Precious Esogbue is Research Associate and Lead- Clean Cooking & Livelihood Programme Portfolio at Clean Technology Hub.
