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Electricity Act Signed into Law

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power sector

The Electricity Act 2023 passed by the 9th Assembly has been signed into law by the president.

This will be the first bill President Bola Ahmed Tinubu will be signing since he took office on May 29.

The Electricity Act which will replace the Electricity and Power Sector Reform Act of 2005 seeks to provide 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.

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The Act, which precludes the distribution of energy across state lines and internationally, also gives governments the authority to provide licenses to private investors so they can run mini-grids and power plants inside their borders.

It also empowers states, companies, and individuals to generate, transmit and distribute electricity.

As regards the power of the Nigerian Electricity Regulatory Commission (NERC), with the new Act the commission would be able to regulate the energy industry within Nigeria, without impairing the ability of the states to pass legislation, establish electricity markets within those states, and regulate those markets.

The Act specifies how NERC might delegate its regulatory duties to state regulators once they are constituted. Until a state passes legislation governing its power market, NERC will continue to oversee all electricity-related transactions made in those states.

At this time, the states of Lagos, Edo, and Kaduna already have power market legislation and can begin regulating their markets. However, NERC will govern other states without such legislation. The generation and transmission of electricity across state lines will continue to be governed by NERC.

The Electricity Act also mandates the imposition of renewable purchase obligations on distribution or supply licensees.

Under the Act, electricity-generating companies will be required to either generate power from renewable energy sources, purchase power generated from renewable energy or purchase any instrument representing renewable energy generation.

The Act further states that no license is required for anyone to build, own, or operate an undertaking for the generation of electricity with a capacity not exceeding 1 megawatt (MW) in aggregate at a site, an undertaking for the distribution of electricity with a capacity not exceeding 100 kilowatts (KW) in aggregate at a site, or any other capacity that NERC may from time to time determine.

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The signing of the Electricity Act by the president signals an open investment in the electricity market in Nigeria.

The Act which welcomes private and state investment in the electricity market is expected to boost the nation’s electricity generation and distribution which will in turn boost the economy.

Several experts have agreed that electricity generation remains at the fulcrum of stabilising and growing the economy.

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