Energy Law :- Notable Provisions of The New Electricity Act 2023

In June 2023, the Electricity bill was passed into law, effectively repealing the Electric Power Sector Reform Act (EPSRA) 2005 and providing a new legal framework for the regulation of the Nigerian power sector especially in the areas of electricity generation, transmission, system operation, distribution, supply, trading, enforcement of consumer rights and obligations as well as providing a composite resource plan & policy that recognizes all sources for the generation, transmission and distribution of electricity including the integration of renewable energy to Nigeria’s energy value chain and the attraction of investments.

This article will be looking at this new law in detail, with a deeper focus on :-

– Its objectives.

– Its applicability scope.

– Its implementation and execution framework.

– The status of the minister of power.

– Licensing. 

What are the objectives of the Electricity Act 2023?

1. To provide an ideal legal & institutional framework to leverage on the modest gains of the privatization phase of the electric power sector in Nigeria to accelerate growth in power generation capacity and to improve utilization of generated power through increased investments in new and efficient power generation technology and revamping existing power plants.

2. To promote policy and regulatory measures to ensure the expansion of power transmission networks in Nigeria to address any imbalance in the existing transmission infrastructure.

3. To promote the development of a complete electricity market.

4. To provide a clear legal and institutional framework for the formulation and adoption of a national integrated  electric policy and implementation plan.

5. To promote policies and regulatory measures to increase geographic coverage in generation, transmission, distribution & related sub-sectors in the Nigerian electricity industry.

6. To recognize 3rd party investments in NESI(Nigerian Electricity Supply Industry) infrastructure by the private and public sectors.

What is the application & scope of the Electricity act 2023?

The jurisdiction of the Electricity Act applies throughout Nigeria and with respect to all aspects and segments of the power sector value chain in Nigeria. 

However, nothing in this act shall invalidate the following :-

– Any law passed by a state house of assembly regarding all aspects of generation, transmission, system operation, distribution, supply and retail of electricity within that state.

– Any law by a state house of assembly regarding the establishment, promotion and management of state electricity power stations.

– Any law passed by a state house of assembly to sanction the establishment of a state electricity market, the establishment of a state electricity regulatory authority or any entity by whatever appellation with powers to regulate such markets.

– Any collaboration between state or local governments and the Federal government for rural electrification, or between the states and local governments and distribution licensees to ensure electricity access to rural, unserved and underserved areas, promote investments in electricity or provision of electricity within states or local government areas.

– Any law passed by the state house of assembly to sanction the establishment of a state electricity market and state integrated electricity policy and strategic implementation plan.

Who is vested with the authority to ensure the implementation of the act and compliance with policies made pursuant to the act?

The minister of power is under this act responsible for the determination, formulation and monitoring of government policy for the Nigerian electricity supply industry and to perform the following functions :- 

– To advise the Federal government on all matters pertaining to the Nigerian electricity power sector.

– To issue general policy directions to the commission on matters concerning electricity, including direction on overall system planning and coordination, which the commission shall take into consideration in performing its functions under the relevant provisions of the Electricity act, provided that such directions are not in conflict with the act or the Constitution of the Federal Republic of Nigeria.

– To promote the development of local content in the NESI.

– To issue policy directives on cross border electricity trading in conjunction with the NERC(Nigerian Electricity Regulatory Commission) and other relevant ministries, departments and agencies to ensure energy security and energy self-sufficiency.

– In consultation with the ministry responsible for women affairs and other relevant ministries as the minister may determine, promote gender mainstreaming in the design and implementation of electricity projects and programs.

Are power generation, transmission and distribution still within the exclusive jurisdiction list of items/objects exercisable by the Federal Government under this act?

No, they aren’t any longer . States and even local governments can now engage in all aspects of power generation, transmission, system operation, distributionsupplyand retail of electricity within their states or local government areas.

What is the status of the Transmission Company of Nigeria (TCN) under the Electricity Act 2023?

The TCN PLC was the successor company licensed by NERC to handle transmission &market/system operation services under the repealed EPSRA 2005.

The NERC under the Electricity Act 2023 shall now create an entity called the ISO to take over from the functions of the TCN regarding System Operations (SO) as stipulated by the act and the terms and conditions of its license.

The TCN under the new act shall however retain its transmission service provider license.

What are the functions of the ISO?

1. Power generation, scheduling, commitment & dispatch.

2. Transmission scheduling and generation outage coordination.

3. Transmission congestion management.

4. International transmission coordination.

5. Procurement and scheduling of ancillary services and system planning for long term capacity.

6. Administration of the wholesale electricity market, including the activity of administration of settlement payments, in accordance with the market rules.

What is the status of the Nigerian Electricity Regulatory Commission (NERC) under the Electricity Act 2023?

The NERC under the new act is defined as a body corporate with perpetual succession which can sue and be sued in its corporate name and subject to this Act, perform all functions that body corporates may by law perform.

The NERC under the Electricity Act 2023 remains the spec regulator of the NESI and shall be an independent body in the performance of its functions and exercise of its powers under this act. 

The functions of NERC are :-

– To create, promote and preserve efficient electricity industry and market structures and to ensure the optimal utilization of resources for the provision of electricity services.

– To ensure adequate supply of electricity to consumers.

– To ensure the safety, security, reliability and quality of services in the production and delivery of electricity to consumers.

– To present quarterly reports to the president and National Assembly on its activities.

– To promote gender mainstreaming and local content requirements within the NESI.

– To maximize access to electricity services, by promoting and facilitating consumer connections to distribution systems in both rural and urban areas.

What does the act say on Business Licensing for services within the NESI?

The act states that without prejudice to the right of states to make laws and establish markets for the generation, transmission, system operations, distribution and supply of power within their territories/geographical jurisdictions, no person except in accordance with a license issued under the Electricity Act 2023 shall construct, own and/or operate any business in :-

– Power generation (minus captive generation)

– Distribution

– Supply

– Power trading

– System operations

HOWEVER, a person can do the following:-

– Construct, own or operate an undertaking for generating power not exceeding 1MW or a distribution capacity not exceeding 100KW on site in aggregate without a license.

– Construct, own, or/and operate an undertaking for generation, transmission, distribution, supply and sale of power, including building, owning and operating a mini-grid, an IEDN(Independent Electricity Distribution Network), or an IETN(Independent Electricity Transmission Network) within a state under a law enacted by a state house of assembly, provided that such a license does not permit its holder to provide interstate or transnational distribution of power in Nigeria. 

Lagos State government in conjunction with the Federal Road Safety Commission (FRSC) has begun to implement the proof of vehicle ownership initiative recently announced by the federal government.

Lagos becomes the first state to issue the Proof of Ownership Certificate, which has raised concerns that the federal government is desperately seeking to expand the tax net.

The Permanent Secretary, Ministry of Transportation, Engr. Abdulhafiz Toriola, announced the move on Tuesday, in a media briefing at Alausa.

According to his statement, the newly introduced Proof of Ownership Certificate (POC) does not serve as a replacement for existing vehicle documents like driver’s licenses or roadworthiness certificates. Instead, it aims to establish a comprehensive database of vehicles entering and operating within the state. The primary objectives are to enhance the safety and security of Lagos residents.

Furthermore, he mentioned that this initiative will be extended to other states, allowing for standardized vehicle data collection for both commercial and private vehicles. This data will facilitate easier tracking of vehicles and their owners in the event of any criminal activities.

He also disclosed that individuals can obtain the POC at their nearest licensing office when renewing their vehicle documents. The certificate requires an annual fee of N1000. 

“I am pleased to announce the implementation of a new initiative that aims to streamline and enhance the process of vehicle ownership verification which is the annual Proof of Ownership Certificate, in line with compliance with legal requirements fundamental to transparency, security, and accountability within the transportation network,” Toriola said.

He added: “This certificate will serve as official documentation of a vehicle’s legal owners upon successful completion of the necessary requirements and procedures.

“The POC will contain vital information including the vehicle’s registration details such as license number plate, model, year of manufacture in addition to owner’s name and address.”

Highlighting other benefits of the initiative, Toriola said it was adopted in collaboration with the Joint Tax Board as a way to ensure the promotion of safety and security of lives and property given the current rate of crimes committed using vehicles.

He said the initiative also aims “at tracking the real-time status and guarantees the integrity of all vehicles registered on the National Vehicle and Identification Scheme (NVIS) database.”

Although the secretary debunked the insinuation that the initiative is a new avenue the government seeks to expand the nation’s tax net amid dwindling revenue, Nigerians have decried the move, calling it exploitation.

The initiative was announced on the heels of fuel subsidy removal, the floatation of the forex market, and a purported 40% hike in electricity tariff, which have orchestrated a spike in the cost of goods and services. 

Some Nigerians who spoke on social media believe there is enough hardship on the plate of the people for the government to impose further levies.

“Nigerian drivers are already required to have a driver’s license & other car documents, there’s no need for a Proof of Ownership Certificate. The N1k being imposed on motorists by the govt. is ridiculous; It seems like little, but the govt. will make millions. This is exploitation,” Daniel Regha said. 

Nigerian drivers are already required to have a driver's license & other car documents, there's no need for a Proof of Ownership Certificate. The N1k being imposed on motorists by the govt is ridiculous; It seems like little, but the govt will make millions. This is exploitation.

— Daniel Regha (@DanielRegha) June 27, 2023

“Renewed hope seems to be about continuously taking from the citizens and giving nothing back.

Renewed hope has taken: 500 per liter for fuel

40% increment on power tariffs.

Annual renewal of Proof ownership

VAT payment on diesel

Nothing has been given in this time,” a Twitter user named Eleazar wrote.

Renewed hope seems to be about continuously taking from the citizens and giving nothing back.

Renewed hope has taken:

500 per litre for fuel
40% increment on power tariffs.
Annual renewal of Proof ownership
VAT payment on diesel

Nothing has been given in this time.

— Eleazar (@eleazar_elc) June 28, 2023

“How is paying for a “Proof Of Ownership Certificate” every year not ridiculous when you have documents showing that the property is yours? It seems they did not know what to name the extortion. Why don’t you increase the minimum wage and improve the standard of living first?”

How is paying for a "Proof Of Ownership Certificate" every year not ridiculous when you have documents showing that the property is yours?

It seems they did not know what to name the extortion. Why don't you increase the minimum wage and improve the standard of living first?

— Sotonye Horsfall ?? (@SotyBrave) June 28, 2023

There are at least 11.8 million vehicles driven on Nigerian roads, according to the latest data from the National Bureau of Statistics. This means that the POC will be a huge revenue source for the government.

The Sector Commander, FRSC, Lagos, who was represented by Tajudeen Mafe, at the briefing assured the government of the agency’s support in ensuring vehicle owners comply with the initiative.

“We would come out to ensure its implementation. It is within our vision to regulate traffic management. The initiative will enhance our national security and for planning. It will also help easy verification of vehicles irrespective of any part of the state a vehicle is coming from,” he said.