Home Business framework A look at the laws governing the electricity sector in Nigeria

A look at the laws governing the electricity sector in Nigeria


As in all other sectors in Nigeria, there are laws that regulate the electricity sector, which involves the generation, transmission and distribution of electricity.

The Nigerian Electricity Act consists of a body of laws that regulates the generation, transmission, distribution and trade of electricity in Nigeria.

The main law that regulates electricity in Nigeria is the Electricity Sector Reform Act 2005, CAP E7, Federal Acts of Nigeria 2004 (EPSRA).

This Act governs the Nigerian electricity industry, including electricity generation, transmission, distribution, trading and supply.

  • The law was enacted to allow the creation of companies to take over the functions, assets, responsibilities and personnel of the National Electric Power Authority, to develop competitive electricity markets and also to establish the NERC.
  • The law aims to enforce performance standards, it provides for the determination of tariffs and the protection of consumer rights. It also provides for licensing requirements to operate in the electricity sector.
  • The law was enacted in 2005 to “Create efficient market structures, within clear regulatory frameworks, which encourage more competitive markets for the production and sale of electricity (marketing), which, at the same time, are able to attract private investors and ensure economically sound development of the system.”
  • Section 62 of the law states that no one may produce, transport or distribute electricity without a license issued under this law. The section states that “No person, except pursuant to a license issued under this Act, shall construct, own or operate any business other than a business specified in paragraph 2 of this section, or engage in any way in the activity of;
  1. electricity generation, excluding captive generation;
  2. transmission of electricity;
  3. System operation;
  4. distribution of electricity; Where
  5. electricity trade.
  • Article 70 of the law defines the conditions for granting licenses to operate in the electricity sector for which NERC is the body responsible for issuing licenses.

Nigerian Electricity Regulatory Commission (NERC)

The Nigerian government body that regulates electricity is the Nigerian Electricity Regulatory Commission (NERC).

The news continues after this announcement

NERC was established under the EPSRA as an independent regulatory body established to undertake the technical and economic regulation of the Nigerian electricity supply industry.

While Section 31 of the EPSRA established the NERC, Section 32 listed the main purposes of the Commission.

The news continues after this announcement

The Board is responsible for licensing operators, determining operating codes and standards, establishing customer rights and obligations, and also setting cost-reflective industry tariffs.

Section 96 of the EPSRA gave NERC the power to make regulations necessary to give effect to the provisions of the EPSRA and, in exercising this function, NERC issued several regulations which gave effect to the provisions of the law.

Article 96 states that “To make regulations prescribing all matters which shall or may be prescribed and which, in the opinion of the Commission, are necessary or practical to prescribe to carry out or give effect to the Act”

Regulations issued by NERC

The various regulations issued by NERC include;

  • NERC Licensing and Operating Fees Regulations 2010
  • NERC (Embedded Generation) Regulations 2012
  • NERC Rules for Independent Electricity Distribution Systems (IEDN Rules) 2012
  • National Content Development Regulations for the Electricity Sector 2014
  • Regulation for investments in electricity networks 2015
  • NERC regulations for mini-grids 2016
  • NERC Eligible Customer Rules 2017
  • NERC Metering Asset Provider (MAP) Regulation 2018 and;
  • The Nigerian Handbook of Electrical Health and Safety Standards.

Other laws that regulate the electricity sector include: the National Electric Power Policy 2001 and the Nigerian Electricity Management Service Agency Act (NEMSA Act),

National Electric Power Policy 2001

Prior to the enactment of the EPSRA 2005, there was the National Electric Power Policy 2001 which provided the framework for the reform and liberalization of the Nigerian Electricity Supply Industry (NESI).

The objective of the policy was to ensure that NESI meets the demand for electricity in Nigeria. The policy also established a framework that provides for the restructuring of the former public service.

Nigeria Electricity Management Services Agency Act 2015 (NEMSA Act)

This Act established the Nigerian Electricity Management Agency as the regulatory body responsible for the enforcement of technical standards and regulations, technical inspection, testing and certification of all categories of electricity. electrical installations, electricity meters and instruments.

This is to ensure efficient production and delivery of safe, reliable and sustainable power supply and to ensure the safety of lives and property in the Nigerian Electricity Supply Industry (NESI) and other related industries/workplaces and premises.

NEMSA has a responsibility to ensure that Nigeria has stable, secure and reliable power grids.

What you should know

  • The same act that created NERC also created the Nigerian Bulk Electricity Trading Company (NBET) and paved the way for the creation of the Transmission Company Nigeria (TCN).
  • NBET was established in 2010 as a credible buyer of power generation companies.
  • The Federal Competition and Consumer Protection Commission (FCCP) also regulates the electricity sector as it protects the interests of consumers and is responsible for approving any merger or acquisition in the electricity sector.