Article summary
- President Bola Ahmed Tinubu recently signed the 2023 Electricity Act into law, de-monopolizing Nigeria’s electricity sector.
- Meanwhile in March 2023, former president Buhari signed a constitutional amendment. Both actions are different from each other.
- There is a three-step process at play and the state governments hold the final piece.
President Tinubu recently signed the Electricity Act of 2023 into law, marking an important development in Nigeria’s electricity sector. This Act aims to break the monopoly in electricity generation, transmission, and distribution at the national level.
The Act grants the power to generate, transmit, and distribute electricity to states, companies, and individuals. To fully grasp the significance of this Act, it is essential to understand the distinction between this action and the constitutional amendment signed by former President Muhammadu Buhari in March 2023.
Recall that in March 2023, Nairametrics reported that Nigeria’s former President Buhari, signed a constitutional amendment allowing states to license the generation, transmission, and distribution of electricity.
Based on that amendment, Nigerian states can now participate in the electricity supply business, which was previously the exclusive preserve of the Federal Government as administered by the state regulator, the Nigerian Electricity Regulatory Commission (NERC).
To better comprehend the distinctions between the actions taken by both presidents, Nairametrics reached out to Odion Omonfoman, the Chief Executive Officer of New Hampshire Capital and the lead consultant on power for the Nigeria Governors Forum (NGF). Omonfoman clarified that Buhari’s action did not involve enacting a law; instead, he signed a bill to amend the constitution.
This amendment did not pertain directly to the electricity sector. Following this constitutional amendment, the national assembly and the states would need to create legislation.
The second step in this process, which President Tinubu has now completed, involved the signing of a law by the national assembly by the constitution. This law serves as a framework to govern the activities of the electricity market.
It is crucial to note that these two actions are distinct from each other. Omonfoman explains that this process consists of three steps. The third and final step will involve the states creating their laws and the state governors signing those laws.
With the constitution amended, and the national assembly has passed a law for the electricity sector in line with the amendment, the states will now proceed to establish their laws based on the constitutional amendment.
What you should know
Typically, after a state passes its electricity market regulation, the state as well as companies, and individuals within that state can generate, transmit and distribute electricity.
NOTE: The 2023 Electricity Act allows anyone to construct, own or operate an undertaking for generating electricity not exceeding 1 megawatt (MW) in aggregate at a site.
OR
An undertaking for distribution of electricity with a capacity not exceeding 100 kilowatts (KW) in aggregate at a site, or such other capacity as the Nigerian Electricity Regulation Commission (NERC) may determine from time to time, without a license.