Nigeria: Tinubu Signs Game Changer Electricity Act Into Law

Bola Ahmed Tinubu, President of Federal Republic of Nigeria

Nigerian President Bola Ahmed Tinubu has signed the country’s Electricity Act (Amendment ) Bill 2024 into law.

The Bill was passed by the House of Representatives on July 27, 2023, and the Senate on November 14, 2023.

The Electricity Act (Amendment) Bill, 2024 seeks to address the development and environmental concerns of host communities, and sets aside five per cent of the actual annual operating expenditures of power generating companies (GENCOs) from the preceding year for the development of their respective host communities.

The Act further provides that the funds set aside for the development of host communities will be received, managed, and administered for infrastructural development in the host communities by a reputable trustee/manager to be jointly appointed by the respective GENCO and their host community.

The Act guarantees the de-centralisation and de-monopolisation of Nigeria’s electricity generation, transmission, and distribution at the national level. It authorises states, companies, and individuals to generate, transmit and distribute electricity.

Under the Act, states are empowered to issue licences to private investors who in turn would be permitted to set up and operate mini-grids and power plants within the State.

The licences obtainable include: electricity generation licence (excluding captive generation); electricity transmission licence; electricity distribution licence; electricity supply licence; electricity trading licence; and system operation licence.

These licences enable private entities to participate in different aspects of the electricity value chain, thereby promoting competition and encouraging innovation to solve the growing energy needs of Nigeria.

Furthermore, the Act stipulates that without a licence, a person may operate or construct an undertaking for the purpose of generating electricity not surpassing 1 megawatt (MW) in total at a site, or an undertaking for the distribution of electricity with a capacity not surpassing 100 kilowatts (KW) in total at a site or such other capacity as the Commission may determine.

In other words, it is possible for a person to construct, own, or operate an undertaking for the purpose of generating electricity or an undertaking for distributing electricity without obtaining a licence, provided that such construction, ownership, or operation undertaking shall not exceed 1MW or distribution undertaking shall not exceed 100KW.

However, the Act prohibits inter-state and transnational electricity distribution.