President Bola Tinubu has assented to the electricity bill, which authorizes states, companies and individuals to generate, transmit and distribute electricity.
The new electricity law repeals the Electric Power Sector Reform Act (EPSRA) which was signed by President Olusegun Obasanjo in 2005.
The EPSRA (2005) provided the legal, regulatory and governance frameworks underpinning the Nigerian Electricity Supply Industry (NESI).
The new Act signed by President Bola Tinubu consolidates all legislations dealing with the electricity supply industry to provide an omnibus and ideal institutional framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry and encourage private sector investments in the industry.
It also provides a framework for the improvement of access to electricity in rural, unserved, underserved, peri-urban and urban areas through the use of conventional sources and renewable energy off-grid and mini-grid solutions.
With the new law, states would be able to issue licenses to private investors who have the ability to operate mini-grids and power plants but such state licenses are not to extend to inter-state or transnational distribution of electricity.
Speaking on the enactment of the new act, President Bola Tinubu, during an interactive session with traditional rulers on Friday, said the constitutional amendment permits Nigeria’s 36 states to generate electricity.
‘‘That’s devolution of power and that should be our contribution to the developmental projects you are looking for and we will continue in ways that will help our people,’’ Mr Tinubu was quoted as saying.
Under the Nigeria Electricity Act, electricity generation licensees are obligated to meet renewable generation obligations as may be prescribed by NERC.
To create a market for renewable energy and stimulate investments in the sector, 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.
The Electricity Act also mandates the imposition of renewable purchase obligations on distribution or supply licensees.
Meanwhile, until a state has passed its electricity market laws, the Nigerian Electricity Regulatory Commission (NERC) will continue to regulate electricity business exclusively carried out in those states.
The Electricity Reform Act, 2005, also empowers the NERC to oversee the electricity industry activities, including licencing and regulating persons engaged in the generation, transmission, and system operation. NERC would continue performing this function under the new law.
About two weeks earlier, former President Muhammadu Buhari had signed 16 constitutional amendment bills, one of which pertains to the devolution of powers as it relates to the national grid system. It also provided clarity on the powers of the federal government and states to generate, transmit, and distribute electricity.
The Nigerian Electricity Regulatory Commission (NERC) is an independent regulatory agency which was inaugurated on 31st October 2005 as provided in the Electric Power Sector Reform Act 2005.
The Commission is to, among others license operators, determine operating codes and standards, establish customer rights and obligations and set cost reflective industry tariffs. The Commission has its headquarters in Abuja, and currently has presence in most states of the country through its Forum Offices which function as the first level of escalation for customer complaints that are not resolved by the electricity distribution companies (DisCos).
Since inception, NERC has recorded significant achievements including the expansion of capacity and network by the issuance of licenses for electricity generation, transmission and distribution, as well as the development of industry codes and standards, market rules and a multi-year tariff order. In addition, the Commission has issued various regulations and orders that have created an attractive and stable electricity market in Nigeria.
These achievements have been made possible by ensuring that market transactions are rule based and regulatory interventions are preceded by robust consultative and stakeholder engagement processes to ensure transparency, fairness and accountability.
These qualities of transparency, fairness and accountability are critical to NERC as an independent regulator. The EPSR Act was thorough in ensuring this independence.
The Commission believes deeply in the value that its regulatory independence creates for an electricity market that can only thrive in an environment of certainty.
To this end, with the benefit of the laws of independence enshrined in its Act, and by recognizing that regulatory independence also coexists with respectful interdependence. As the market develops, it is hoped that the Commission can fully remove itself from government funding. In the meantime, we will continue to emphasize on rule based processes, transparency, fairness and continuous consultation.
We therefore urge Electricity and Power stakeholders in the country to support the implementation of this law to fullest in order to promote and ensure an investor-friendly industry and efficient market structure to meet the needs of Nigeria for safe, adequate, reliable and affordable electricity.
