Nigeria faces significant challenges in its electricity sector, with the lowest access to electricity globally.
Approximately 92 million individuals, out of a population of 200 million, lack access to power. Despite this, the country’s highest recorded electricity generation on the national grid was 5,802MW, achieved on March 1, 2021.
However, power generation has since fluctuated between 4,000MW and 5,000MW, falling short of the increasing electricity demand.
In light of these challenges, the signing of the Electricity Act 2023 by President Bola Ahmed Tinubu represents a crucial milestone for Nigeria’s electricity sector. This Act replaces the previous Electricity and Power Sector Reform Act of 2005 and is expected to address the persistent issues in the industry.
Objectives
The primary objective of the Electricity Act is to guide the post-privatization phase of the Nigerian Electricity Supply Industry (NESI) and encourage private sector investments. By providing a comprehensive framework, the Act aims to attract private investors and promote competition in the sector. This is crucial for stimulating growth, improving service delivery, and ultimately expanding access to electricity for the Nigerian population.
The Act’s significance lies in its potential to address the problems of power in Nigeria. It sets the stage for a more efficient, transparent, and sustainable electricity sector. By encouraging private sector participation and investment, the Act aims to enhance infrastructure development, increase generation capacity, and improve the reliability of power supply.
Furthermore, the Act’s provisions on regulatory control and state autonomy provide a balanced approach to governance in the sector. It grants states the power to issue licenses for mini-grids and power plants within their boundaries, promoting localized power generation and decentralization. At the same time, it ensures that the national level retains regulatory control over interstate and transnational electricity distribution.
The Electricity Act 2023 signifies a significant step forward in Nigeria’s electricity sector. It holds the potential to address the country’s electricity challenges by promoting private-sector investments, improving infrastructure, and enhancing regulatory mechanisms. With proper implementation, the Act can contribute to expanding access to electricity, driving economic growth, and improving the quality of life for the Nigerian population
Key implications
One of the key implications of the Electricity Act is the de-monopolization of Nigeria’s electricity generation, transmission, and distribution. This empowers states, companies, and individuals to generate, transmit, and distribute electricity, promoting decentralization and localized power generation.
While the Act provides opportunities for states to issue licenses to private investors, it precludes interstate and transnational electricity distribution. This ensures regulatory control at the national level while granting states more autonomy within their boundaries.
The Act allows for the construction, ownership, and operation of small-scale electricity generation and distribution without a license, facilitating the development of decentralized and localized power infrastructure. This promotes access to electricity in remote or underserved areas.
Role of NERC, State Regulators
NERC plays a crucial role in implementing the Act, with the provision for a transition of regulatory responsibilities to state regulators once established. States with existing electricity market laws can now regulate their markets, while states without such laws will be regulated by NERC until they establish their frameworks.
The Act grants lawmakers oversight responsibilities through the Committees on Power in the Senate and House of Representatives, ensuring accountability and effective monitoring of the NESI. This complements the supervisory powers of government ministries over government-owned enterprises in the electricity sector.
Renewable Energy
The Electricity Act emphasizes the importance of renewable energy generation, imposing renewable generation obligations on electricity licensees and purchase obligations on distribution or supply licensees. This drives the adoption of renewable energy sources and promotes sustainability in the sector.
In conclusion, the signing of the Electricity Act 2023 signifies a significant step towards a more diversified and decentralized electricity sector in Nigeria. It empowers states and private investors, promotes renewable energy adoption, and provides oversight mechanisms for effective governance.
The Act has the potential to drive investment, improve electricity access, and stimulate economic growth in Nigeria.
