LAGOS, Osun, Enugu, Lagos, Akwa Ibom, Rivers, Delta, and Kogi states have commenced the implementation of the New Electricity Act.
The implementation ushers the respective states into a new era of decentralised electricity market regulation, devoid of the Federal Government’s monopoly.
The Electricity Act, 2023 (“the Act”) was signed into law by President Bola Ahmed Tinubu, on 6 June 2023. The Act was passed in light of the Federal Government’s initiatives to accelerate Nigeria’s energy transition process as well as consolidate the regulation of the Nigerian Electricity Supply Industry (NESI) for optimum functionality and effective service delivery.
By taking steps to domesticate this law at their respective state Assemblies, the aforementioned states now have the power to regulate mini-grids, embedded power, and independent electricity distribution and transmission networks.
Commenting on this development, a power sector governance expert and President of the Consumer Protection Network, Kunle Kola Olubiyo, confirmed to THE ICIR that the aforementioned states have commenced the domestication processes of the Electricity Act in their respective states.
“They are doing so to bring about decentralisation of the monopoly hitherto enjoyed by the Federal Government of Nigeria in the Generation, Transmission, and Distribution of Electricity in Nigeria,” he said.
He noted that the respective state governments are expected to grant licenses to prospective local and foreign investors to collaborate with the states in the areas of generation, transmission, and distribution of electricity in areas within their state jurisdiction.
Also, an energy lawyer and Power sector governance expert, Chuks Nwani, posits that with the new Act, states can now expand opportunities and play key roles in building power plants and complementing the Federal government’s efforts on the transmission expansion project, while also curbing energy theft in the power industry.
“Section 209-224, for instance, talks about the power theft law in detail. This is an area where I expect states to establish power theft agencies. Once this is done, investors’ confidence in investing in the sector will grow. Remember that revenue collection is a major challenge, and the Act addresses that,” a power sector governance expert and energy lawyer, Chuks Nwani, told THE ICIR.
Nwani further said that states can now establish their electricity boards as provided by the Act to look at areas of infrastructure protection, metering, and network expansion investment with the Transmission Company of Nigeria (TCN).
For years, Nigeria has grappled with the challenge of inadequate power supply, hindering its economic growth. The country also relies on multi-lateral interventions of the World Bank and the African Development Bank to sustain the sector. Already, N1.6 trillion has been earmarked for subsidies by the Federal Government in 2024, a concern that could be addressed should states enact laws that enable grid-decentalisation and investment sourcing with the New Electricity Act.
Accordingly, the Act empowers communities and individuals to build their power plants and mini-grids, increasing energy self-sufficiency.
The new Electricity Act mandates the Nigerian Electricity Regulatory Commission (NERC) to prepare and provide feed-in tariff rates for electricity generated from renewable energy sources as a way of encouraging investment in renewable energy power generation.
Essentially, the Act repeals the Electric Power Sector Reform Act of 2005, consolidates the laws relating to the NESI, and provides a comprehensive and institutional framework for the power sector in Nigeria.
Areas covered by the Act include electricity generation, transmission, distribution, supply, trading, system operations, electricity offences, and the enforcement of consumer rights and obligations.
It also makes provision for a holistic, integrated resource plan and policy that recognises all the sources for the generation, transmission, and distribution of electricity, including the integration of renewable energy into Nigeria’s energy mix.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.