By Oyetola Muyiwa Atoyebi, SAN

INTRODUCTION

On the 8th of June, 2023, the Electricity Bill, now referred to as the Electricity Act 2023 was enacted. This step was taken after an extensive and robust examination of the Electricity and power sector birthed the Electricity Bill which was targeted towards identifying the problem areas and proffering plausible solutions in the industry. In light of this, stakeholders are highly expectant that the Act would be an answer to many of the lacunas plaguing the Energy and power sector in Nigeria.

THE ELECTRICITY ACT 2023

The main aim of the Act is to promote the efficiency of the Electricity sector and this has led to the introduction of many legal and institutional system policies to ensure that the privatized energy industry of Nigeria is at its optimal creed.

This Act became necessary as the post privatized Electricity supply sector lacked a definite structural framework for its existence, largely due to the fact that the only legal reform made by the government under the Administration of the Past president, President Muhammadu Buhari was the removal of electricity from the exclusive list[1].

Notable amongst the policies and guidelines introduced by the Act is the new Tariff which is expected to be accurate, or at the very least, near accurate representation of power consumed and the equivalent cost. What this means is that tariff would now be charged more strictly as it should be expected to cover the cost for the provision of the power expended periodically.

There is also the introduction of contracts and rules in the Electricity sector, which would further boost the competitiveness of the industry, discourage monopoly and ensure consumer protection from baseless inflations and cost misrepresentations.

It should be noted that all the foregoing introductions have become necessary owing to the fully privatized nature of the sector. That being said, the Act is tailored to the obtainable structure in the industry and there are several expected impacts being forecasted by stakeholders, consumers inclusive. Some of these expectations and likely impacts shall be briefly discussed below.

POSSIBLE IMPACTS OF THE ELECTRICITY ACT 2023

  1. Consolidation Of Electricity Regulations

Foremost among the impacts of the enactment of the Act is the consolidation of all energy laws in Nigeria. Prior to the introduction of this Act, the industry was rife with several regulations and legislations.

The key legislations among these laws were the Electric Power Sector Reform Act, 2005, Hydroelectric Power Producing Areas Development Commission (Establishment, Etc.) Act, No. 7, 2010, Hydroelectric Power Producing Areas Development Commission {Establishment, Etc.) Act, 2010 (Amendment) Act, 2013, Hydroelectric Power Producing Areas Development Commission (Establishment, Etc.) Act, 2010 (Amendment) Act, 2018. The Nigerian Electricity Management Services Agency (Establishment) Act, 2015.

The enactment of the Electricity Act 2023 automatically repeals all the aforementioned legislations and consequently remedies the issue of multiplicity of rules and regulations in the electricity sector. The likely or projectable impact of this consolidation is the reduction in conflict or friction that accompanies multiple laws.

  1. Renewable Energy

The Electricity Act 2023 expressly provides that companies in the power sector that ventures into the generation of electricity must ensure that they do the same with renewable energy. This means that power-generating companies must either generate power from renewable sources or buy instruments that generate power through renewable energy or in the alternate, purchase renewable energy-generated power.

What this project is that in the absence of the mal-implementation of this Act, clean energy sources would be highly utilized and investment in clean energy would greatly increase.

  1. Decentralization Of The Energy Industry

The Act introduces state-owned and regulated electricity market, leading to the decentralization of the otherwise centralized power sector.

The likely impact of this introduction is the heavy reduction of state reliance on the national grid which has over the years failed to adequately meet the power needs of Nigerians due to the imbalance in the demand and supply ratio.

The decentralization of the sector and establishment of state markets would further ensure that rural areas that had been cut off from the national grid or have had inadequate access to power supply enjoy the ease of access to power. This is not independent of the fact that the state can better reach its interior parts, having a better knowledge of the terrain and adequate information on areas that are plagued with lack of power supply. eliminating lack of service or under-service of power[2].

The existence of state-owned market would also encourage competition among states and result in innovations and ingenuity which would, in turn, guarantee competitive prices and services.

  1. Integrated National Electricity Policy

The Integrated National Electricity Policy and Strategic Implementation Plan is a notable introduction by the Electricity Act 2023. The implication of this introduction is that the Federal Ministry of Power is expected within one year of the enactment of this Act, to cause an Integrated National Electricity Policy and Strategic Implementation Plan to be published which is meant to guide the power sector. This is renewable every five years.

Domestic power distribution, mini-grid installation in rural areas, rural electrification projects and bulk power purchases are all innovations emphasized by the plan to promote the development of the energy sector.

The possible impact of this plan is the diversification of the energy sector, ease of rural access to power, effective electricity distribution and improvement in the public-private sector collaboration in the energy industry.

  1. Regulatory Commissions

The Act provides a definite framework for a symbiotic relationship between national and state regulatory commissions.  The National Electricity Regulatory Commission (NERC) is saddled with the responsibility of regulating the electricity sector but is directed to transmit such powers to states that have adopted the Bill and established their own regulatory commission.

The establishment of state commissions and the mandatory regulation delegating regulatory duties to their care is likely to result in effective regulation of power generation and distribution within states. These commissions will have oversight functions that are adequately tailored to the specific needs and peculiarities of the state, like Lagos, Edo and Kaduna State, which already have power market regulations in place and may begin regulating their markets.

  1. Division Of Power Amongst The Federal And State Government

To prevent probable disputes and conflict between the Federal and state government in the regulation of the power sector, the Act further dichotomizes the powers and duties of the Federal and State government.

The power to establish standards in the energy sector is vested in the Federal Government, with state governments having the corresponding responsibility of implementing same subject to individual adaptations.

The transnational, interstate and the national grid are under the purview of the Federal government as no state can validly lay claim to any of these grids or exercise powers thereunto. However, Intrastate grids and Intrastate generation, distribution and supply of energy are regulated and administered by the State government.

OTHER LAUDIBLE PROVISIONS AND THEIR POSSIBLE IMPACT

The introduction of legal sanctions for electricity related illegal activities, the legislative oversight responsibility over the Nigeria Energy Supply Industry, and state licensing of privately owned mini intra state grids are all innovations of the Electricity Act 2023.

Effective implementation of these provisions would ensure electricity theft and other power-related illegal activities are effectively curbed while ensuring that the Nigeria Energy Supply Industry is effectively checked by the legislation, minimizing unchecked corrupt practices.

CONCLUSION

The Electricity Act 2023 is a necessary and welcome development, but the efficacy of the law is wholly dependent on its effective implementation. This is because a beautiful law is crippled and reduced to rubble when it cannot be effectively implemented. Of what good is a guard dog if it can neither bark nor bite?

SNIPPET:

The Electricity Act 2023 serves as a significant framework impacting the energy sector in numerous ways, chiefly as the post privatized electricity supply sector lacked a definite structure or framework for its existence.

KEYWORD:

energy sector, electricity act, power purchase, hydroelectricity, renewable energy, energy industry, electricity regulations.

AUTHOR: Oyetola Muyiwa Atoyebi, SAN

Mr. Oyetola Muyiwa Atoyebi, SAN is the Managing Partner of O. M. Atoyebi, S.A.N & Partners (OMAPLEX Law Firm).

Mr. Atoyebi has expertise in and vast knowledge of Energy Law Practice and this has seen him advise and represent his vast clientele in a myriad of high-level transactions.  He holds the honour of being the youngest lawyer in Nigeria’s history to be conferred with the rank of Senior Advocate of Nigeria.

He can be reached at atoyebi@omaplex.com.ng

CONTRIBUTOR: Bibiana A. Adeniji

Bibiana is a member of the Dispute Resolution Team at OMAPLEX Law Firm. She also holds commendable legal expertise in Energy Law Practice.

She can be reached at  bibiana.adeniji@omaplex.com.ng

[1] Mondaq “a review of the Electricity Act 2023” <http: /A Review Of The Electricity Act, 2023 – Renewables – Nigeria (mondaq.com)/ last accessed on 25th July 2023

[2] The Guradian National Newspaper publication, 13th of June 2023 “Electricity Act 2023: Ten important things to know” < Electricity Act 2023: Ten important things to know — Nigeria — The Guardian Nigeria News – Nigeria and World News> last accessed on 25th July 2023

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