President Bola Tinubu has assented to the 2023 Electricity Act as a replacement for the Electricity and Power Sector Reform Act of 2005.
The law will de-monopolise electricity generation in the country, as well as transmission, and distribution at the national level.
It will also empower states, companies, and individuals to generate, transmit and distribute electricity across the nation.
Passed by lawmakers in July 2022, the Electricity Act 2023 is meant to allow states to issue licenses to private investors with the ability to 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 Energy Regulatory Commission (NERC) will be able to oversee the energy industry within Nigeria without undermining states' authority to pass laws, create electricity markets, and regulate those markets.
Also specified in the Act is how NERC can delegate regulatory authority to state regulators once they are constituted.
Furthermore, NERC will continue to regulate the energy business in the states until their electricity market regulations are passed.
Electricity-generating firms are also required to either create power from renewable energy sources, purchase power generated from renewable energy or purchase any instrument representing renewable energy generation.
The Electricity Act also mandates the imposition of renewable purchase obligations on distribution or supply licenses.
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