The importance of electric energy to a nation is far-reaching. Almost all other sectors rely on the energy sector – a part of which is the electric sector – for their own operations, productions and performance. Equally, private individuals depend on electricity for their day-to-day subsistence and enterprise. Therefore, considering the high dependence on this sector, it is necessary that its regulatory laws and policies must be proactive to facilitate constant power supply as well as strengthen the electricity industry of the nation. To this end, a new electricity bill was passed and signed into law on the 10th of Jan., 2023.
To understand the innovations introduced by the 2023 electricity bill, the previous electricity and its limitations should be briefly examined.
Electric Power Sector Reform Act (EPSRA) 2005
The Electric Power Sector Reform Act, 2005, was an offshoot of the efforts taken to reform the power sector that started in the year 2000. In the year 2000, a committee was established to look into the electrical sector and formulate policies which were to translate into the Electrical Power Sector Reform Act, 2005 (hereinafter referred to as EPSR Act, 2005). Accordingly, the Nigerian Electric Power Policy, formulated in 2001, passed into law as the ESPSR Act.
The purpose of the act was to develop the supply of electricity across the nation. But the purpose was not singular. It sought to recreate the power industry as a profitable market. However, despite the promises it held, it fell short of developing the power industry. It failed, amongst other reasons, because it erred in making provisions for the exploitation of other sources of renewable energy.
It overlooked other means of generating power, leaving those means and industries weak at their roots. Also, the 2005 electric reform failed in its bid to completely privatize the power industry. Due to these gaps, it became pertinent to enact a new legislation that would provide for the shortcomings while introducing vital innovations.
Overview of the the 2023 Electricity Act and Key Innovations
At the basic level, the newly signed electricity act promotes the spirit of the law. One of the long-standing attributes of law is its dynamism. Laws cannot remain stagnant. It evolves as time and the society, which it is meant to regulate or improve, develops and grows. Laws must therefore keep up with changes and development in order to accomplish full functions. The last electricity bill was signed in 2005. Ever since, the nation has undeniably developed in the size of its population and economies. As such, it is befitting that a new bill is implemented to meet up with the present state.
Furthermore, a key innovation of the Act is that it provides an extensive legal structure for the power industry. This development will engender a country-wide supply of electricity. For aeon years now, large parts of Nigeria have suffered unstable and inadequate power supply. Thus, this new Act promises to facilitate an improvement in the administration of the electric sector is much needed. .
By enabling alternative means of power-generation, such as the use of renewable resources, the 2023 Electricity Act aims to promote diversification within the power sector. Renewable energy simply refers to the alternative means of generating power from natural sources. These sources are self-replenishing and thus, cannot run out of supply. So far, there has been excessive pressure on the conventional means of power-generation, one of which is petroleum. This has resulted in an overload on the electricity industry, resulting in recurring power grid collapse and excessive consumption of petroleum which does great ecological damage. However, with the pivot towards renewable energy, the power industry of the country will be revived and further sustained.
The liberalization of the power sector is another innovation of the 2023 Electricity Act. Although the 2005 ESPSR Act focused on decentralizing the power sector, it failed to adequately accomplish this. The new act seeks to create state-level markets in the power industry. In accomplishing this goal, the 2023 bill has enabled both states and private individuals capable of generating power to come into the power industry. Essentially, this will create a competitive market environment which will foster developments and further innovations.
By virtue of the provisions of Sections 2(2) and 230 (2-9), different states have it within their jurisdiction to grant licenses to private investors. Notably, this decentralization will open doors to investment, especially foreign investment within the power generating sector. This ultimately means increased yields and greater revenue for the country. Besides this, it also means better accessibility. In other words, residents of each state can better access and enjoy power supply. This singular move obliterates the excessive pressure at the national grid.
By sustaining the powers of the National Electric Regulatory Commissions (NERC), the Commission will regulate the sector, grant and administer private Individuals’ licenses to operate within the industry and their performance standards, as well as related issues. Through standard-setting the NERC is empowered to task private investors and other licensed corporate bodies to generate energy via renewable sources, or contribute, through any other means as stated by the commission, to the generation of power via renewable resources.
However, it is noteworthy that the administrative authority of the NERC will cease to operate over a state-market where such states adopt its own electricity laws. For such states, a transitory process is provided for in the Electricity Act, 2023. One of the transitory processes requires that the NERC is notified of the establishment of a state’s regulatory body. After such notification, the NERC will give a transitory plan to such state’s regulatory body within 45 days for the transfer of management. In essence, this development gives an avenue to states to operate and regulate its electricity market based on its own peculiarity.
Conclusion
The adoption of the electricity bill 2023 is a laudable move. It adequately repositions the power sector on a viable path to positive transformation. However, it is necessary that adequate efforts must follow this move to ensure its comprehensive implementation. One of the problems of the EPSR Act 2005 was implementation or the lack of it. The bulk does not stop at policy formulation; it must be comprehensively implemented and sustained.
