States, companies authorised to generate power as Tinubu signs electricity bill into law

President Bola Tinubu has assented to the electricity bill, which empowers states, companies and individuals to generate, transmit, and distribute electricity.

The new electricity law repeals the Electricity and Power Sector Reform Act of 2005 and consolidates the laws relating to the Nigerian Electricity Supply Industry (NESI).

TheCable had reported that the senate passed the electricity bill in July 2022 to solve the sector’s challenges.

On the other hand, President Muhammadu Buhari had signed 16 constitutional amendments in 2022, one of which pertains to the devolution of powers (national grid system) – clarifying the powers of the federal government and states to generate, transmit, and distribute electricity.

Consequently, states have been granted constitutional authority to enact laws that allow them to generate, distribute, and transport electricity within its boundaries, including territories formerly covered only by the national grid.

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,’’ he said.

NEW ELECTRICITY ACT: AN OMNIBUS FOR POST-PRIVATISATION PHASE

Meanwhile, the newly-signed act provides an omnibus and ideal institutional framework for the post-privatisation phase of Nigeria’s power sector in the areas of generation, transmission, distribution, supply, trading, and general use of electricity.

According to the document, the primary objective of the regulation is to create a comprehensive legal and institutional framework to guide the operation of a privatised, contract, and rule-based competitive electricity market in Nigeria.

It also aims to attract, through transformative policy and regulatory measures, private sector investments in the entire power value chain of the NESI.

Additionally, it 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.

Under the law, states would be able to issue licenses to private investors who have the ability to operate mini-grids and power plants, but such licenses would not apply to the distribution of electricity between states or internationally.

FUNCTIONS OF NERC

According to the electricity act, 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.

The new electricity act said NERC would continue this function.

The regulation also states that the commission will promote competition and private sector participation in the post-privatised power sector, “when and where feasible; establish appropriate obligations regarding the provision and use of electricity services”.