President Bola Tinubu on Friday signed the Electricity Act (Amendment) Bill, 2024, into law.
The bill, which was passed by the House of Representatives on July 27, 2023, and the Senate on November 14, 2023, was sponsored by Hon. Babajimi Benson, who represents Ikorodu Federal Constituency of Lagos State.
The Electricity Act (Amendment) Bill, 2024 seeks to address the development and environmental concerns of host communities, and sets aside five percent 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 infrastructure 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 and 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 license (excluding captive generation); electricity transmission license; electricity distribution license; electricity supply license; electricity trading license; and system operation license.
These licenses 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 license, 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 license, 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.
(Thisday)
