President Bola Tinubu has assented to the Electricity Act 2023.
The Electricity Act which replaces the Electricity and Power Sector Reform Act 2005 will provide a framework to guide the post-privatization phase of the Nigerian Electricity Supply Industry (NESI) and encourage private sector investments.
Under the Act, states can issue licenses to private investors who can operate mini-grids and power plants within the state. However, the Act precludes interstate and transnational electricity distribution.
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.