Electricity Act 2023 liberalizes the sector and promotes renewables
09 Jun 2023
On 9 June 2023, the Government of Nigeria adopted Electricity Act 2023, which repeals the Electricity and Power Sector Reform Act of 2005. The Act introduces a range of key features including the following:
• Liberalization of Nigeria’s electricity generation, transmission, and distribution at the National level, empowering States, companies and individuals to generate, transmit and distribute electricity. Under the Act, States can issue licenses to private investors who may operate mini-grids and power plants within their territory. The Act, however, precludes interstate and transnational electricity distribution. The Act also permits private investors to obtain (i) generation licenses, (ii) transmission licenses, (iii) system operations licenses, (iv) trading licenses, and (v) distribution and supply licenses.
• Prioritization of the development and utilization of renewable energy. The Act encourages the integration of renewable energy technologies into the existing grid system. Under the Act, electricity generation licensees are obligated to meet renewable energy generation obligations as may be prescribed by the Nigerian Electricity Regulatory Commission. The Act also introduces mechanisms to incentivize investment in renewable energy projects, such as feed-in tariffs - a policy that guarantees a fixed price for renewable electricity fed into the grid-and tax incentives. It also offers a range of incentives, including tax incentives, to investors in the power sector.
• Establishment of clear guidelines for the licensing, monitoring, and supervision of market participants. These guidelines provide a framework to prevent anti-competitive practices and ensure a level playing field for all players in the industry.
• Finally, the Act guarantees asset protection, the right to sell or transfer a licensee’s undertaking in the event of revocation of licenses, or compensation in the event of any forceful takeover in the interest of national security.
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Type:
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Entry and establishment (Ownership and control)
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Treatment and operation (Nationalizations and expropriations)
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Promotion and facilitation (Investment facilitation , Investment incentives)
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Industry:
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Not industry specific (SDG)
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Services (Electricity, gas, steam and air conditioning supply)
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Sources:
