President Bola Tinubu has given his approval to the recently passed Electricity Act, which replaces the previous 2005 Electricity and Power Sector Reform Act. The Act was initially passed in July 2022 during the administration of former President Muhammadu Buhari.The newly approved bill aims to encourage private sector investments in Nigeria's power sector and foster competition by decentralizing the generation, transmission, and distribution of electricity at the national level.1. The new Electricity Act allows individuals or entities to construct, own, or operate small-scale electricity generation or distribution projects without the need for a license, as long as certain capacity limits are not exceeded.

2. The Act imposes renewable generation obligations on electricity generation license holders, meaning they are required to meet specified targets for generating electricity from renewable sources, as determined by the Nigerian Electricity Regulatory Commission.

3. Electricity generation companies will be required to either generate power from renewable energy sources, purchase electricity generated from renewable sources, or acquire instruments that represent renewable energy generation. This promotes the adoption and integration of renewable energy into the power sector.4. The Electricity Act grants lawmakers the authority to conduct oversight and regulatory functions over the Nigerian Electricity Supply Industry (NESI) through dedicated Committees on Power in the Senate and House of Representatives.

5. The Act empowers states, companies, and individuals to participate in electricity generation, transmission, and distribution activities, promoting decentralization and diversification of the power sector.

6. States are given the ability to regulate their own electricity markets by issuing licenses to private investors for the operation of mini-grids and power plants within their respective states. However, interstate and transnational electricity distribution is excluded.

7. The Nigerian Electricity Regulatory Commission (NERC) is empowered to regulate and oversee the electricity sector within Nigeria, ensuring compliance with set standards and promoting fair competition.

8. NERC has the authority to transfer regulatory responsibilities to state regulators once they are established, allowing for more localized regulation and decision-making.

9. Until a state establishes its own electricity market laws, NERC will continue to regulate electricity businesses operating within those states, ensuring consistent oversight.

10. Currently, only three states - Lagos, Edo, and Kaduna - have enacted electricity market laws and can begin regulating their own electricity markets. For states without such laws, NERC will continue to regulate electricity generation and transmission activities.