Tinubu signs Electricity Act 2023. Here’s what it means and how it affects you
Less than three months after Muhammadu Buhari moved electricity from the exclusive list to the concurrent list, President Bola Tinubu, on Friday, June 9, 2023, signed the Electricity Act 2023, his second piece of legislation since taking the oath of office as Nigeria’s 16th president on May 29, 2023.
According to the Constitution, the “Exclusive Legislative List” comprises matters on which only the National Assembly has the right to make laws, excluding State Houses of Assembly. The “Concurrent Legislative List” comprises matters on which both the National Assembly and State Houses of Assembly are allowed to make laws.
The signed bill, which the Nigerian Senate passed on June 20, 2022, is a further step in the privatisation of the Nigerian power sector, initiated on November 1, 2013, by the administration of ex-president Goodluck Jonathan. With the new bill, states can generate and enact power generation and transmission laws.
How the Electricity Act 2023 bill will affect Nigerians
Despite the supposed deregulation of the power sector that began in 2013, electricity remains a major issue in Nigeria. Between January 2022 and July 2022, the national grid collapsed seven times, disrupting business activities across the country. Small business owners who have to rely on generators are mostly affected by the impact of Nigeria’s ailing power sector. This frequent grid collapse persists despite former Vice President, Prof Yemi Osinbajo’s declaration in 2019 that the Buhari administration had invested ₦1.5 trillion in power in the previous two years. Despite significant investments in electricity over the years, around 85 million Nigerians still lack access to grip electricity.
Prior to Buhari’s transfer of power to the concurrent list, the generation and transmission of electricity were solely the responsibility of the federal government, which many believed hindered communities and private individuals from generating and transmitting power within their localities.
However, with the newly signed Electricity Act, Nigerians, including foreign investors, can now generate electricity up to one megawatt in total at a site or distribute a capacity not exceeding 100 kilowatts without a license. With an average consumption of 44 kilowatt-hours (kWh) per day, one megawatt (MW) of electricity can power nearly 7,000 homes in a specified location.
In Nigeria, the power sector is divided into three segments: Generation Companies (GenCos), Transmission Company of Nigeria (TCN), and Distribution Companies (DISCOs).
The GenCos are responsible for generating power, usually measured in megawatts (MW), primarily through hydro and gas plants. While the 23 generating plants in Nigeria have the capacity to produce over 11,000 MW, a significant amount of the electricity generated is lost during transmission. The frequent collapse of the national grid in the country is believed to be due to the inability of the government-run Transmission Company of Nigeria to transmit over 5,000 MW to the substations.
While the act does not permit interstate transnational electricity distribution, states, firms, and individuals are allowed to transmit electricity. State governments, through state regulatory boards, when established, can issue licences to private investors to operate mini-grids and power plants within the state. Across the country, there are three states, Lagos, Edo, and Kaduna, with existing state regulatory bodies which can start regulating their markets.
With 133 million Nigerians multidimensionally poor, according to the National Bureau of Statistics (NBS), electricity has been considered the catalyst needed to drive Nigeria towards production and lift millions out of poverty. Due to regular power outages, many small-scale business owners resort to generating their own electricity using generators, which increases their production costs. This is amidst high inflation, fluctuating fuel pump prices, and occasional fuel scarcity.
