Experts at Nextier’s 95th Power Dialogue, hosted by the Electricity Hub, have evaluated the impact of the Electricity Act one year after it was signed into law. They observed that the Act has invigorated the electricity market, fostering competition among market players.
According to the experts, the Act has created a more dynamic and competitive electricity market, but further efforts are needed to overcome existing barriers and fully realize its potential.
The Power Dialogue session was moderated by Atiku Jafar, a partner at Bowyard Partners, and featured a panel of experts, including Dafe C. Akpeneye, Commissioner for Legal Licensing and Compliance at the Nigerian Electricity Regulatory Commission, Osefan Anegbe, Associate at the Energy and Natural Resources practice of Streamsowers and Kohn, and Damilola Alada, Executive Associate at Bloomfield Law Practice.
During the dialogue, Jafar highlighted that President Bola Ahmed Tinubu signed the Electricity Act into law on June 8, 2023. This ambitious legislation revamps and re-enacts the 2005 Electricity Power Reform Act, introducing a new legal and institutional framework for Nigeria’s electricity supply industry.
The Act aims to decentralize electricity to state players, promote renewable energy adoption, separate distribution and electricity trading roles, and unbundle the Transmission Company of Nigeria (TCN).
Akpeneye outlined the power sector’s evolution from pre-privatization through enacting the 2005 Electric Power Sector Reform Act to the present Electricity Act. He noted that while the sector still faces challenges, the Act is promising.
A significant improvement is that it empowers regulators to assert their responsibilities, stabilizing the market and enhancing efficiency. Akpeneye emphasized the need for a unified legislative framework and noted that investor concerns are more focused on political and governmental risks than regulations.
He discussed the importance of evolving electricity markets to set appropriate tariffs and the establishment of the Nigerian Independent System Operator (NISO) to enhance market transparency, particularly in transmission. The integration of technology is expected to transform the sector significantly.
Anegbe stated that the Electricity Act mandates the Ministry of Power to develop an integrated national electricity policy and strategy covering various energy sources, including gas, nuclear, coal, and renewables. She identified policy inconsistency as a barrier to investment in the power sector and stressed the need to diversify energy sources.
She emphasized the importance of states attracting and retaining investors by providing incentives for renewable energy products, offering human capital development opportunities, and ensuring access to land for power sector investments.
Alada pointed out that addressing transmission and distribution constraints is crucial, as the electricity sector operates as a value chain. Key steps include increasing generation capacity by leveraging diverse fuel sources and improving distribution systems.
She highlighted states’ ability to generate power based on local fuel sources under the new Electricity Act. Addressing distribution challenges, such as metering, technology use, and energy theft enforcement, is essential.
Alada also noted that states can attract investment by conducting market feasibility studies, implementing business-friendly laws, and collaborating with local and federal governments.