₦airaland Forum

Power sector operators and experts have raised concerns, expressed fears and projected opportunities as some states assumed responsibilities for regulating electricity markets within their various domains.

This follows the recent revelation by the Nigerian Electricity Regulatory Commission that seven states now control their electricity markets in accordance with the Electricity Act 2023.

The states are Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi. Other states, including Lagos, Ogun, Niger, and Plateau, are expected to complete their transitions between June and September.

Anambra, having recently passed its electricity law, is also gearing up to join the list.

Before President Bola Tinubu signed the new Electricity Act in 2023 with the Federal Government, through the Nigerian Electricity Regulatory Commission, the only agency regulating electricity in Nigeria.

However, the decentralisation of the sector by the Act has now given states the authority to control and regulate electricity within their domains, granting them the freedom to generate, transmit, and distribute power.

This marks a historic shift in Nigeria’s electricity governance, from a centrally regulated structure to one where states are empowered to generate, transmit, distribute, and regulate electricity within their borders and only submit to national oversight by the NERC.

This shift, while hailed by stakeholders as a leap towards energy decentralisation and market competitiveness, is already raising questions over capacity gaps, regulatory clarity, subsidy management, and potential friction between state and federal oversight. This is because NERC appears to be losing relevance in the very sector it was created to govern.

While officials at NERC expressed reservations about some states’ ability to manage their power markets, some industry experts said the development had created opportunities with challenges.

The PUNCH reports that the seven states who now have the power to generate, transmit, and distribute electricity, will as well regulate the same and grant approval to licensees without the influence of NERC.

The regulator also disclosed during a presentation at the power stakeholders’ meeting in Lagos recently that 11 out of the 36 states had commenced the process of transitioning to self-regulation of electricity.

Discussions at the meeting focused on the transition to state electricity markets, with participants highlighting current sector challenges and proposing practical and collaborative solutions.

“So far, 11 states have commenced the transition process, with seven states — including Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi — already transitioned,” NERC stated in its presentation.

The stakeholders emphasised the importance of capacity building, regulatory coordination, and investment readiness to ensure sustainable, state-led electricity markets under the framework of the Electricity Act 2023.

Once regulatory functions are transferred from the NERC, the states will regulate their electricity markets.

Similarly, the electricity distribution companies operating in the seven states and other licensees would be controlled by the states, instead of the Federal Government’s regulatory commission.

In states where NERC has ceased to operate, the Discos hitherto operating in those states would be mandated to incorporate a subsidiary company to assume responsibilities for intrastate supply and distribution of electricity in those states.

For instance, as the Enugu Electricity Regulatory Commission commenced operations, the Enugu Electricity Distribution Company set up a subsidiary named Mainpower Electricity Distribution Limited, which was licensed by the state regulator.

This means that the main Enugu Electricity Distribution Company is now operating under different regulations. While some experts expressed worries over the development, others said it could be a positive turnaround for the power sector.

In line with the Electricity Act, the NERC has since April 2024 issued 11 transfer orders to states that have applied and met the necessary conditions. Each order comes with a six-month timeline for full operational handover.

For instance, Lagos and Ogun are set to complete the transition this month, Niger in July, and Plateau in September. Meanwhile, Anambra has formally set the ball rolling with the establishment of the Anambra State Electricity Regulatory Commission, following the passage of the state’s electricity law signed by Governor Charles Soludo.

Despite the optimism, industry sources warn that many of the states may not be adequately prepared for the complex regulatory and operational responsibilities ahead.

Operators worry
A senior official at NERC, who spoke to The PUNCH on condition of anonymity due to lack of authorisation to speak on the matter, said, “The new electricity market is more likely to impact distribution, which is also a stronghold in the value chain. Managing the new change in the electricity market is going to overwhelm the state governments.

“They actually don’t understand the implication of it yet, but NERC is doing everything in its power to make it easy for these states. A major issue is manpower; you need experienced hands to handle some issues, and if you can’t find someone to do that in your team, there will be issues.

“An issue as simple as setting a tariff, which is the most important thing for revenue generation, will be very difficult for the states because not many people in the whole of this country can set tariffs. Globally, only about 2,000 people have the expertise to set electricity tariffs correctly. Most states don’t have that expertise yet.”

The source added that manpower shortage, lack of technical experience, and poor institutional memory could derail the transition if not urgently addressed.

“Every month, we meet with the states and provide guidance. But challenges like asset delineation, where a single transmission line passes through multiple states, are already emerging. It’s a work in progress, but there will be hiccups,” the official warned.

Proponents of the Act argue that decentralisation is long overdue and necessary to attract private investment into Nigeria’s struggling power sector. But critics fear that the balkanisation of regulatory oversight could lead to confusion, conflicting standards, and even exploitation of consumers.

Another issue flagged is the subsidy. Under the new structure, each state governor would determine whether their administration will subsidise electricity for residents or allow market-based pricing. This could widen inequalities in electricity access across states.

Electricity theft and enforcement of penalties are also areas of concern. Under the new regime, NERC must hand over theft cases to state commissions, which don’t have trained enforcement teams on such issues.

“Delineation of assets is another challenge because one transmission line can pass through multiple states. It is a work in progress, but there will be hiccups on the way. Eleven states have applied. Subsidy is also another issue because it is the governor of each state who will determine if they will be paying the subsidy on behalf of citizens and how much they can pay. These are the loopholes.

“If the governor declines, it means everyone will pay for their power usage. Then electricity theft, will they have the capacity to handle it? The law says we have to hand over the case to them, and we can only hope they will handle it well. We are also sharing our experiences,” the NERC official noted.

Some states appear better positioned than others. Enugu State, for example, is regarded as the most prepared, having appointed an experienced regulator who was part of the founding of NERC. It has already issued operational regulations and begun enforcement.

A recent example is the sanctioning of MainPower Electricity Distribution Limited in Enugu. Following customer complaints of overbilling, the Enugu State Electricity Regulatory Commission ordered the company to refund overbilled units for April 2025, citing Section 35 of the state’s Electricity Law 2023.

Lagos is also said to be making steady progress, leveraging its previous experience in embedded generation and independent power projects. The LASERC has also released its first major order on the provision of electricity services by individuals or entities in Lagos State without a licence or permit

The directive, titled ‘’LASERC ORDER/001/2025’’ and released recently, formally brings electricity market operations under the agency’s exclusive control.

The Convener and Executive Director of PowerUp Nigeria, a power consumer advocacy group, Adetayo Adegbemle, raised concerns over the pace and seriousness of states that have taken up regulatory autonomy in the electricity sector following the decentralisation of electricity governance.

Speaking on the unfolding development, Adegbemle said while the decision to decentralise electricity regulation was a welcome and progressive one, many of the states that sought autonomy seemed unprepared for the practical responsibilities that come with it.

“From the onset, it was clear that any state seeking to assume electricity regulatory oversight within its domain would be taking on a heavy burden,” he said. “Yes, we’ve seen 11 states obtain approval for autonomy, but the truth is many of them are yet to move beyond the paperwork. It’s one thing to declare interest, it’s another to actually roll up your sleeves and get the work done.”

Adegbemle noted that out of the 11 states that had secured autonomy, only four have gone ahead to establish any form of regulatory framework or policy direction, while the rest have remained inactive.

“There’s no visible sign of regulatory activity in most of these states. They’ve written to the Nigerian Electricity Regulatory Commission, received the green light, but stopped there. No laws. No institutions. No implementation. It appears many of them are only playing to the gallery,” he said.

According to him, the decentralisation process is not an easy path and requires significant groundwork, from setting up institutions to training personnel and developing regulatory models tailored to local realities.

“This is not a walk in the park. It’s a technically intensive space. Some states are only just realising that once they take on this responsibility, electricity from the national grid will be invoiced at full cost, and they’ll need to decide whether to pass that cost to their residents or offer some form of subsidy. That realisation has caused many to pause,” he stated.

“It’s a healthy thing. It allows others to learn before they leap. But we must also be realistic — this is a journey, not a sprint. States will mature into it at different paces. It’s an evolution,” he said.

On what decentralisation meant for electricity generation and distribution companies (Gencos and Discos), Adegbemle dismissed fears of disruption, saying the reform should actually lead to a better investment climate and corporate governance.

“It shouldn’t negatively affect the operations of Gencos or Discos. In fact, it could reduce the size of regulatory bottlenecks and encourage more targeted investments. But what is concerning is the immediate vacuum that occurs once the national regulator, NERC, pulls out of a state. Consumers are left without any protective framework, no enforcement of service standards or customer rights.”

He warned that while autonomy gives states the power to regulate, they must not neglect their duty to protect electricity consumers and ensure fair market practices.

“We can’t have a situation where regulatory autonomy becomes regulatory abandonment. States must urgently develop and implement frameworks that protect consumers, ensure transparency, and promote accountability. Otherwise, this reform will backfire,” he cautioned.

Adegbemle called on sub-national governments to prioritise capacity building and consumer protection as they transitioned into electricity market regulators.

“State-level competition is good; it fosters innovation and responsiveness. But it must come with robust consumer protection policies, clear rules, trained manpower, and an understanding of the market dynamics. Otherwise, we risk fragmenting the sector into 36 regulatory islands with no real governance,” he added.

Also, the President of the Nigeria Consumer Protection Network, Kunle Olubiyo, commended the reform, describing it as a true reflection of federalism.

He said, “The idea of the presidential system of government, which I believe embeds true federalism, means that there is co-federation, and what it means is that issues of economic landmark in the constitution that were hitherto exclusively reserved to the Federal Government. What the constitution has given birth to is to make sure the sub-national and the federal arm can co-exist and operate in areas of landmark in the Constitution.

“In the United States of America, where we copied the presidential system from, the issue of common currency, national security, borders, and related concerns are things that are reserved for the Federal Government, but states have their own jurisdiction.

“In the electricity sector, what we intend to do is operate concurrently. That means with clear lines of sight and delineation. The sub-nationals, comprising the 36 states of the federation and the Federal Government, can operate side by side without any fear of contradiction or crises.

“We already have in existence; the national grid and what it means is that we are not going to balkanise the grid or split and cut them in pieces but because we don’t have a regional system of government, states couldn’t get licenses for electricity generation, transmission and distribution licenses due to bottlenecks. This used to discourage investors who just wanted to operate in the state.”

He, however, warned that the system must be carefully managed to avoid outright anarchy.

“This shift means the states and the Federal Government can now operate concurrently within clearly defined roles. States can license off-grid, embedded, or mini-grid power projects to serve their unique economic needs, without necessarily connecting to the national grid,” he said.

He noted that while the national grid remains under federal control, states can now create localised energy solutions, grant sector-specific licenses, such as for agro-industrial clusters, and implement customer-centric models tailored to their realities.

“This is not about breaking up the grid; it’s about giving states the power to fill gaps in power supply where the national system has failed. It will create competition, expand energy access, and improve service delivery,” Olubiyo added.

He, however, cautioned that the supremacy of the Constitution must be respected where state and federal laws conflict, to avoid jurisdictional chaos.

“States can now, under the Electricity Act 2023, develop embedded mini-grid or captive generation. The states could, within a senatorial district, give sector-specific licenses for a particular area. They can now grant a license for up to 5 megawatts, guided by the regulatory framework created by the state, which is what the 11 state electricity regulatory authorities have been established to do.

“They are to look into that legal, institutional, and regulatory framework that would suit the peculiarity of the state. So when a license is given, the generation, transmission, and distribution of such captive power is not going to be linked to the national grid. We have challenges with liquidity, market settlement, and structure in the national grid, so nobody is even advised at the sub-national level and linked to the national grid.

“The licenses could be for a local government, where agro or industrial clusters would be the final off-takers. So the state and national tariffs are going to be distinctly different from each other. We would now have competition, and consumers would now have the choice as we have in the Jos Area,” he said.

On his part, the National Coordinator, All Electricity Consumers Protection Forum, Adeola Samuel-Ilori, said the sector would get better on distribution and supply if the state had solid regulations that could not be circumspect by the Discos “as they did with NERC regulations which more like operates in a letter, not on spirit.”

Samuel-Ilori argued that a state with firm regulation compliance would help the sector to progress and be more believable by the other stakeholders in service delivery, making more money once the issue of metering is solved and adhered to.

“There is no conflict as the mandate of the state is distinct and pursuant to Electricity Act provisions which specify that once a state takes over the regulatory affairs, the NERC will regiment themselves to the generation and transmission pending when the state will solve the ISO issues which will comprise of grid and generation of megawatts.

“Investors will be more interested in bringing their money once they realise the system is not porous like we witnessed with the NERC management,” he said.

However, Samuel-Ilori expressed concerns over the readiness of the states to run the electricity markets effectively.

“I’m particularly concerned about the states that are receiving freedom to regulate the sector as permitted by the Electricity Act. How ready are they? How viable will the sector be even though it’s lucrative? Would they not let political interests override the economy and public interest so as to do it to the benefit of the people and investors?

“Would the consumers not eventually prefer to be under the old order than the state provisions of the same? As we say, time will tell, but I hope it succeeds, especially in Lagos, where there is a market, buyers, and prospects to grow it,” the consumer activist added.

A Professor of Energy at the University of Lagos, Dayo Ayoade, cautioned against conflicts. The professor urged the Federal Government and the states to put mechanisms in place to foster the growth of the sector during the transition.

He urged the state regulators to be investor-friendly instead of putting up regulations that could scare investors away. The PUNCH reports that states like Lagos, Ogun, Niger, and Plateau are expected to complete their transitions between June and September while Anambra recently passed its electricity law.

Warrior99:
Very good one from the South West States, all must be on board.

God continue to bless YORUBALAND.

Amen! 🙏🏾

Zooposki:
I know say Delta state can never be among. Mtschewww.

kettykings:
The exclusive list of the constitution is the problem of Nigeria, do away with the exclusive list and peace, prosperity, unity, oneness will return. This was what Aburi was all about.

Cyberterror:
Asaba is the worst state capital in Nigeria in terms of power supply. Everybody is just blasting generator day and night.

The states are Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi. Other states, including Lagos, Ogun, Niger, and Plateau, are expected to complete their transitions between June and September

NewHe:
Those against Tinubu policies never or had never expected real reforms!
Nigeria is now in the process of being called a Federation where the states takes charge with less concentration on FGN!

ritababe:
And yet state police is still not allowed, that should be the first thing if he's serious

Warrior99:
Very good one from the South West States, all must be on board.

God continue to bless YORUBALAND.

Amen! 🙏🏾

pendy79:
Lagos State Governor, Mr. Babatunde Fashola, on Sunday evening boasted that he could provide uninterrupted power supply to Lagos residents between six and eight months.

Fashola spoke at the commissioning of 8.5 megawatts Lekki Independent Power Project (IPP), the fifth of such power projects in the last five years in the state.

The governor said the addition of the Lekki IPP was a testament to the fact that stable power does not require rocket science to achieve in the country.

While challenging power distribution companies in the state, Fashola said, “Let the Eko DISCOs sign a contract with me, giving part of their concessioning to the state government, in about six to eight months, there will be power in all homes in Lagos State,” Fashola said.

He added, “So, let no one say that he has no money to deliver power for the entire country. This is the limit to which the law allows us to do, but we have done this to make a statement that power can be generated. So, when they come with lies that power is impossible, you can tell them that we have power here; we make it possible”.

The project, courtesy of the state government, in partnership with Heritage Bank, is to serve Lagos State Water Corporations in Lekki Phase 1, Oniru, Victoria Island and Ikoyi, as well as over 25km of public lightening in the Lekki axis.

Commissioning the project, Fashola said he felt fulfilled with the conduct of youths that delivered the project, despite the difficulties in getting to the finishing point.

He said it also showed that the money to improve the Nigerian economy is here, “since we don’t need the World Bank to come and do this for us.”

Also, General Manager, Lagos State Electricity Board, Damilola Ogunbiyi, said the state had shown that reliable and sustainable power projects are possible through the youths.

Ogunbiyi said though it had been a successful story, the state was just scratching the surface in its “aggressive development plan” in the area of power.

Promoter of the project, Faruk Agoro noted that the new IPP was an innovative idea of world-class natural gas-fired power generating facility, sold to the government by youths and it was bought into, to support government institutions, especially in the area of water supply and security.

The Lekki IPP is 8.5 megawatts, with the capacity for 30 megawatts.

This brings the Lagos IPPS to a total of 47 megawatts of electricity in total, powering several public institutions around the state.

The generated megawatts is however still a far cry from the over 10, 000 megawatts power deficit in the state.

On his part, the State Commissioner in the Ministry of Energy and Mineral Resources, Taofeek Tijani, said the new addition was about continuity in public infrastructure programme of the state government



http://dailyindependentnig.com/2015/03/can-provide-stable-power-eight-months-fashola-boasts/

izombie:
One policy i applaud tinubu for. This is good. States should generate and sell their own electricity then pay tax to the FG. Happy to see my state Anambra is almost there.

fergie001:
On 01st March 2022, the Senate and the House of Representatives separately voted for 68 proposed items.

(See the 35 items transmitted to the President):The National Assembly had in January transmitted 35 constitution amendment bills to the president for assent.

27 Houses of Assembly entered representation while nine (9) States: Gombe, Jigawa, Kebbi, Kwara, Oyo, Plateau, Sokoto, Taraba & Zamfara Assemblies did not participate.

Full list of 16 bills Mr Buhari assented to.

1. Fifth Alteration (No.1), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to change the names of Afikpo North and Afikpo South Local Government Areas; and for related matters.

2. Fifth Alteration (No.2), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to change the name of Kunchi Local Government Area; and for related matters.

3. Fifth Alteration (No.3), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to change the names of Egbado North and Egbado South Local Government Areas; and for related matters.

4. Fifth Alteration (No.4), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to correct the name of Atigbo Local Government Area; and for related matters.

5. Fifth Alteration (No.5), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to correct the name of Obia/Akpor Local Government Area; and for related matters.

6. Fifth Alteration (No.6), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to provide for the financial independence of State Houses of Assembly and State Judiciary; and for related matters.

7. Fifth Alteration (No.cool, the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to regulate the first session and inauguration of members-elect of the National and State Houses of Assembly; and for related matters.

8. Fifth Alteration (No.9), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to delete the reference to the provisions of the Criminal Code, Penal Code, Criminal Procedure Act, Criminal Procedure Code or Evidence Act; and for related matters.

9. Fifth Alteration (No.10), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to exclude the period of intervening events in the computation of time for determining pre-election petitions, election petitions and appeals; and for related matters.

10. Fifth Alteration (No.12), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to provide for the post-call qualification of the Secretary of the National Judicial Council; and for related matters.

11. Fifth Alteration (No.15), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to delete the item “prisons” in the Exclusive Legislative List and redesignate it as “Correctional Services” in the Concurrent Legislative List; and for related matters.

12. Fifth Alteration (No.16), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to move the item “railways” from the Exclusive Legislative List to the Concurrent Legislative List; and for related matters.

13. Fifth Alteration (No.17), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to allow States to generate, transmit and distribute electricity in areas covered by the national grid; and for related matters.

14. In Fifth Alteration (No.23), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to require the President and Governors to submit the names of persons nominated as Ministers or Commissioners within sixty days of taking the oath of office for confirmation by the Senate or State House of Assembly; and for related matters.

15. In Fifth Alteration (No.32), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to correct the error in the definition of the boundary of the Federal Capital Territory, Abuja; and for related matters.

16. In Fifth Alteration (No.34), the Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999 to require the Government to direct its policy towards ensuring the right to food and food security in Nigeria; and for related matters.

SOURCE

franchasofficia:
It's a good policy. But like someone rightfully said up there, Nigeria need to do away with the exclusive list that makes the federal government the sole controller of certain sectors. Do away with it and allow any interested state to venture into those areas.

The FG can't do away with it..cuz something are done for national security.....



All in all, this electricity act is a good one from Tinubu's regime

franchasofficia:
It's a good policy. But like someone rightfully said up there, Nigeria need to do away with the exclusive list that makes the federal government the sole controller of certain sectors. Do away with it and allow any interested state to venture into those areas.

All in all, this electricity act is a good one from Tinubu's regime

Sermwell:
What's the meaning of Tinubu Electricity act? This is dictatorship na