The business of electrical activity in the electricity sector in Nigeria includes the following: electricity generation; transmission; system operation; distribution and trading in electricity. Nigeria has various laws for electricity, which are applicable in the 36 States and 774 Local Government areas in Nigeria.
The principal laws that regulate electricity in Nigeria will be briefly discussed below.
- The Electric Power Sector Reform Act 2005 CAP E7, Laws of the Federation of Nigeria 2004 (EPSRA)
This is a major law that governs the Nigerian electricity industry, which includes electricity generation, transmission, distribution, supply, and trading. The Act is established to provide for the formation of companies to take over the functions, assets, liabilities, and staff of the National Electric Power Authority, to develop competitive electricity markets, to establish the Nigerian Electricity Regulatory Commission (NERC) as an independent regulatory body charged with the responsibility of licensing and regulating persons engaged in the generation, transmission, system operation, distribution and trading of electricity in Nigeria. The purpose of the Act is also to enforce performance standards, consumer rights protection, and to provide for the determination of tariffs among other matters connected with electricity generation, transmission and distribution.
The Act provides for the licensing requirements to operate in the electricity sector of the Nigerian economy. Section 62 of the Act states that "no person except in accordance with a license issued pursuant to this Act shall construct, own or operate an undertaking other than an undertaking specified in subsection 2 of this Section, or in any way engage in the business of;
a. electricity generation, excluding captive generation;
b. electricity transmission;
c. system operation;
d. electricity distribution; or
e. trading in electricity".
The Act also provides that a person may construct, own or operate an undertaking for generating electricity not exceeding 1 megawatt (MW) in aggregate at a site or other capacity as the Commissioner may determine from time to time without a license as provided in subsection (2) of the Act. It also provides for the procedure for the application for a license under Section 70 as follows;
- An application for a license shall be made to the Commissioner in the form and manner prescribed and to be accompanied by the prescribed fee and other information or document as may be required by the Commission.
- Within thirty (30) days after applying for a license, the applicant shall at his own expense cause a notice of the application to be published in the newspaper circulating in the area where he intends to operate as a Licensee and in a separate national newspaper, stating the period within which objection or representation in connection with the application may be made to the Commission, and the Commission shall not issue any license until all objections or representations received has been considered and determined.
- An applicant for a license who owns or a licensee who acquires more than ten (10%) or such other percentage as the Commission may specify of the shares in a body corporate which has applied for or holds another license issued by the Commission shall disclose such interest to the Commission.
- The Commission shall issue the appropriate license to the applicant if on the consideration of an application that it satisfies the requirements of the above.
- If on consideration of the application that satisfies the requirement of the Act, the Commission is not satisfied as to the additional matters, it shall refuse to issue the license to the applicant but before refusing to issue the license on the ground that it is not satisfied, the Commission shall notify the applicant in writing that it proposes to refuse the application and of its reasons for doing so and shall afford the applicant an adequate opportunity to make representation in the matter.
- The period between the Commission's receipt of an application and all documents and information submitted in support of it and the date on which it notifies the applicant of the adequacy of the document and information shall not exceed one month.
Furthermore, the Act empowers NERC under Section 96 "to make regulations prescribing all matters required or permitted to be prescribed to which in the option of the Commission are necessary or convenient to be prescribed for carrying out or giving effect to the Act". The NERC in performing this function has issued several regulations to give effect to the provisions of the Act. Some of these regulations will be explained below.
- NERC Regulations for Independent Electricity Distribution Networks (IEDN Regulations) 2012- The objective of this Regulation is to provide standard rules for the issuance of distribution licenses to qualified operators and licensees to engage in electricity distribution, independent of distribution system operated by the Distribution Company of Nigeria. It is applicable to all independent electricity distribution systems, owners, operators, and users in Nigeria.
- Regulations for the Investment in Electricity Networks 2015- The Regulation makes provision of the procedure for investing in electricity networks in Nigeria. The objective of the Regulation is to create strong incentives to encourage the transmission company of Nigeria (TCN) and the distribution companies (DISCOs) to make a sustainable investment in capacity expansion, to ensure the delivery of capacity at levels already projected in the revenue requirement for the sector. It also includes helping to take up potential penalty costs that may be associated with the inability of relevant utilities to deliver under the current price control. The Regulation also aims toward consumer protection.
- Regulations on National Content Development for Power Sector 2014- The objective of the Regulation is to promote the deliberate utilisation of Nigerian human and material resources, goods, services, and works in the industry. Also, to open the Nigerian electric supply industry at all levels of its complexity to involve Nigerian people and expertise, to build capabilities in Nigeria to support increased investment in the industry, and to leverage existing and future investment to stimulate the growth of Nigerian-located enterprise.
- The Nigerian Electricity Health and Safety Standards Manual- It was made by NERC to address occupational health and safety issues in the Nigerian electricity supply industry. NERC seeks to ensure that employers and their designated corporate representatives have both moral and legal obligations to ensure that both their workers and the public at large are kept insulated from the hazards associated with the industry sector.
- NERC (Embedded Generation) Regulation 2012- The Regulation is made by NERC to provide standard rules for embedded generation and distribution of electricity to ensure safe, secure, and efficient electricity supply. It is applicable to users of distribution networks, embedded generation licensees, applications for embedded generation licenses processed by the Commission, and prospective embedded generation licensees.
- NERC License and Operating Fees Regulation 2010- The Regulation provides for the processing fees for applications. That every application for a license made to the Commission shall be accompanied by a non-refundable application processing fee as contained in the Schedule of Fees. The fees payable shall be paid by means of bank draft or cheque drawn in favour of NERC. Also, all fees received by the Commission shall be acknowledged by the issuance of the Commission's official receipt.
- NERC Regulation for Mini-Grid 2016- The purpose of the Regulation is to provide for the procedure, licensing and operation of mini-grids in Nigeria. The Regulation stipulates the condition and obligations for operating mini-grids.
- NERC MAP Regulation 2018- The purport of this Regulation is to provide a framework for Meter Asset Provider. Prior to this Regulation, most Distribution Companies have been failing in their duties to provide meters for their customers. By virtue of this Regulation, NERC allowed third parties MAP's companies to fill the vacuum and provide meters for electricity users in Nigeria.
- NERC Eligible Customer Regulation 2017- The objectives of the Regulation are to facilitate competition in the supply of electricity, promote the rapid expansion of generation capacity. Other objectives include allowing third-party access to transmission and distribution infrastructure to aid full retail competition in the Nigerian electric sector. The Regulation also allows the licensed generation companies with the uncontracted capacity to access unserved and underserved customers.
- The Nigerian Electricity Management Service Agency Act (NEMSA Act)
The Act establishes the Nigerian Electricity Management Service Agency (NEMSA) as the regulatory body responsible for the enforcement of technical standards, inspections, testing, and certification of all categories of electrical installations, electricity meters and instruments to ensure efficient production and delivery of safe, reliable and sustainable electric power supply and to guarantee the safety of lives and property in the electricity supply industry.
- Environmental Impact Assessment Act 1992
The objective of the Act is to establish before a decision is taken by any person, authority, corporate body including the Federal Government, State or Local Government intending to undertake or authorise the undertaking of any activity those matters that may be likely to a significant extent affect the environment or have an environmental effect on those activities.
Finally, the Nigerian electricity law encompasses the body of law, which regulates the generation, transmission, distribution and trading of electricity. The supervising government agency regulating electricity in Nigeria is the Nigerian Electricity Regulatory Commission, established by virtue of the Electric Power Sector Reform Act 2005
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.