President Bola Tinubu has approved the electricity bill, which was passed last year July to replace the electricity and power sector reform Act of 2005. 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 Nigerian Electricity Supply Industry. The Act also aims to break the monopolistic nature in electricity sector and distribution at the national level, empowering states, companies, and individuals to generate, transmit, and distribute electricity.

Under the Electricity Act 2023, the Nigerian Electricity Regulatory Commission (NERC) will be able to regulate the electricity sector within Nigeria without prejudice to the states’ powers to make laws and create electricity markets within those states and to regulate those markets. The Act mandates how NERC can transition regulatory responsibilities from itself to state regulators when they are established. Until a state has passed its electricity market laws, NERC will continue to regulate electricity business exclusively carried out in those states.

For now, Lagos, Edo, and Kaduna States already have electricity market laws and can start regulating their market. But for other states without such laws, NERC will regulate. The Act grants lawmakers the power to carry out oversight responsibilities and function over the NESI through its respective Committees on Power in the Senate and House of Representatives. It is to be carried out notwithstanding the supervisory powers of any government Ministry over government owned enterprises or other entities operating in the Nigerian electricity supply industry. Electricity generation licensees are obligated to meet renewable generation obligations as may be prescribed by NERC. Under the Act, electricity generating companies will be mandated to either generate power from renewable energy sources, purchase power generated from renewable energy or procure any instrument representing renewable energy generation.