The Nigerian government embarked on a transformative journey by conducting an extensive review of the Electricity Power Sector Reform Act (EPSRA) 2005. This comprehensive evaluation was aimed at addressing the persistent challenges in the power sector, harnessing new opportunities, as well as propel Nigeria toward a future of reliable, affordable, and sustainable electricity supply.
The Electricity Bill was enacted into law as the Electricity Act, 2023 ("the Act") on the 8th of June 2023. The Act establishes a thorough legal and administrative framework for the operation of Nigeria's fully privatized electricity market. The Act prioritizes the implementation of tariffs that accurately reflect the cost and service provided, as well as promotes competition in the electricity sector through the use of contracts and rules. The main objective of this law is to enhance the efficiency and effectiveness of Nigeria's electricity industry.
The Electricity Act, 2023 which was enacted into law on June 8, 2023, among others aims at:
- Consolidating the Laws Pertaining to the Nigerian Electricity Supply Industry
- Establish a thorough legal and institutional framework for the Nigerian power sector, covering electricity production, transmission, system operation, distribution, supply, trading, and enforcement of consumer rights and obligations.
- Establish a comprehensive integrated resource plan and policy that acknowledges all sources of electricity generation, transmission, and distribution, as well as the incorporation of renewable energy sources into Nigeria's energy mix, and that aims to attract investments.
- Prioritize the implementation of tariffs that accurately reflects the cost and services provided.
- Promote competition in the electricity sector through the use of contracts and rules.
It is crucial to highlight that before the enactment of the Electricity Act 2023, there existed multiple independent legislations about the power sector, which were not consolidated. However, with the enactment into law of the Electricity Act 2023, all these legislations concerning the Nigerian Electricity Supply Industry (NESI) were harmonized and the challenges faced after privatization were all comprehensively addressed.
While the Nigerian Electricity Regulatory Commission (NERC) is retained as an independent regulatory body overseeing the power sector at the federal level.
The consolidation of these electricity-related Legislations led to the repeal of the existing independent multiple legislations and saw to the creation of the National Power Training Institute to be saddled with addressing the concerns and difficulties experienced in the power sector. Under the new electricity regime, both the Nigerian Electricity Management Services Agency and the Rural Electrification Agency (REA) were retainable.
Key Provisions of the Electricity Act 2023:
- Decentralization and State Electricity Markets:
One of the notable provisions in the Electricity Act 2023 is the decentralization of the power sector and the creation of state electricity markets.
The decentralization of the sector and the establishment of state electricity markets will improve energy access, delivery, and supply of electricity to citizens within a state, reduce reliance on the national grid, and effectively capture unserved as well as underserved areas in the states.
This will indeed have potential benefits in improving energy access and supply. By allowing more localized control and decision-making, these measures will potentially address the needs of the unserved and underserved areas more effectively. Also, State-level electricity markets will promote competition and innovation, therefore, leading to increased efficiency and potentially lower electricity prices for consumers.
- Legal Consequences for Electricity Offense:
The Electricity Act introduces legal consequences for various illegal activities related to electricity theft, illegal meter tampering/bypassing, and intentional damage to electricity infrastructure. The Act criminalizes these actions and prescribes penalties for those found guilty. Electricity theft now attracts a sentence of 6 months to 3 years imprisonment, while theft of electricity lines and materials can result in imprisonment between 3 to 5 years. Receiving stolen electricity is a felony with a 14-year maximum sentence. Interfering with meters or the works of licensees is punishable by three years imprisonment. Similarly, obstructing licensee staff from carrying out lawful activities now attracts a jail term of 6 years and a minimum fine of N2 million.
It is worth noting that anyone who aids, abets, or counsels the commission of any of the offenses outlined in the Act will face the same penalties as the principal offender.
The Act also vests concurrent jurisdiction on both the Federal and State High Courts to handle cases related to the offenses established by the Act.
- Promotion of Clean and Sustainable Energy Sources:
The Act also aims to promote the adoption of clean and sustainable energy sources by mandating electricity-generating enterprises to generate power from renewable energy sources, purchase renewable energy, or purchase instruments needed for renewable energy generation. This provision encourages power generation companies to invest in renewable energy projects, thereby diversifying Nigeria's energy mix and reducing the country's carbon footprint.
- Clear Division of Regulatory Powers:
The Electricity Act clearly outlines the division of regulatory powers between the Federal Government and the Federating States. It grants the Federal Government the authority to establish standards that State Governments must adapt and implement. The federal government also oversees the national grid and transnational and interstate power distribution. The Federating States, on the other hand, are responsible for regulating intra-state power generation, transmission, and distribution in conformity with the provisions of the Federal Republic of Nigeria's Constitution.
- Cooperation and Coordination between Regulatory Commissions:
The Act establishes clear guidelines and mechanisms for cooperation and coordination between National Electricity Regulatory Commission (NERC) and the state regulatory commissions by mandating the NERC to regulate the sector in Nigeria and to transit regulatory duties to states that have adopted the bill and established their regulatory commissions.
- The establishment of the Integrated National Electricity Policy
The establishment of the Integrated National Electricity Policy and Strategic Implementation Plan is a notable feature of the Electricity Act 2023. The Act mandates the Ministry of Power to prepare and publish a comprehensive Integrated National Electricity Policy and Strategic Implementation Plan within one year of the Act's enactment. This plan will serve as a guiding framework for the overall development of Nigeria's power sector and will be subject to review every five years.
The primary objective of the plan is to promote the development of the electric power sector by maximizing the utilization of both renewable and non-renewable energy sources. It emphasizes the importance of various initiatives such as the deployment of mini-grids or stand-alone systems in rural areas, rural electrification projects, bulk power purchases, and localized power distribution. Furthermore, the plan highlights the significance of fostering public-private partnerships to drive the growth and sustainability of the power sector.
By implementing this Integrated National Electricity Policy and Strategic Implementation Plan, Nigeria aims to achieve a more balanced and diversified energy mix, expand electricity access in rural areas, enhance the efficiency of power distribution, and encourage collaboration between the public and private sectors.
In conclusion, the Electricity Act 2023 reflects Nigeria's determination to modernize its power sector, attract investments, and provide reliable and affordable electricity to its citizens. While challenges remain, the Act sets the stage for further progress and growth in the sector. It is crucial for all stakeholders, including government bodies, private investors, and consumers, to collaborate and work towards the effective implementation of the Act's provisions.
The Electricity Act, 2023
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