Eighteen months after President Bola Tinubu signed the Electricity Act into law, only nine out of Nigeria’s 36 states have begun its implementation, leaving 27 states lagging behind,leadership reports.
The Act, signed in June 2023, decentralizes electricity generation and distribution, empowering states to create and regulate their own electricity markets. This reform removed electricity from the exclusive legislative list of the Nigerian Constitution, enabling states to oversee power generation and distribution within their jurisdictions.
To facilitate the Act’s implementation, Sanusi Garba, Chairman of the Nigerian Electricity Regulatory Commission (NERC), inaugurated several working groups, including the Legal and Regulatory Working Group, the Engineering and Technical Working Group, and the Commercial and Transaction Group, during a stakeholders’ meeting in Abuja. The objective was to support states in establishing legal frameworks to govern their electricity sectors.
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The new law introduces a two-tier regulatory system, with both federal and state-level oversight. While NERC remains responsible for inter-state and international electricity activities, states are empowered to issue licenses to private investors for mini-grids and power plants within their borders. This shift allows states to address specific energy needs, reduce power outages, and attract investments.
States Leading Implementation
Edo, Oyo, Enugu, Imo, Ekiti, Ondo, Ogun, and Kogi were the first states to establish relevant laws and receive NERC’s regulatory oversight to operate their electricity markets. Recently, Niger State became the ninth state to adopt the Act, marking a significant step forward. Niger is the second northern state, after Kogi, to embrace the reform.
NERC confirmed the transfer of regulatory oversight to the Niger State Electricity Regulatory Commission (NSERC) and directed electricity distribution companies operating in Niger to establish subsidiaries to handle intrastate electricity supply and distribution. These subsidiaries must obtain licenses from NSERC and complete all transfers by July 2025.
Federal and Regional Perspectives
Analysts suggest that the slow adoption of the Act by most states stems from concerns over financial implications and rising state debts. The federal government has urged governors to leverage the legislation to address chronic power shortages.
In the North East, Governor Bala Mohammed of Bauchi State highlighted regional efforts to utilize the North East Development Commission (NEDC) for electricity generation and distribution. The commission has engaged consultants to assess the region’s energy potential and financial requirements.
Experts Highlight Opportunities
Energy experts see the Electricity Act as a landmark reform poised to attract private investments and improve energy access. Former Minister of Power, Prof. Barth Nnaji, emphasized the Act’s potential to balance resource utilization and enhance electricity generation, transmission, and distribution.
Prof. Yemi Oke, a specialist in electricity law, described the decentralization as a transformative step, enabling states to address local energy needs effectively. He urged states to create strong governance and investment-friendly environments to attract private sector participation.
Mini-grids, off-grid systems, and renewable energy sources like solar and biomass were highlighted as practical solutions for states to meet their electricity demands. NERC has also worked to streamline the deployment of mini-grids by ensuring that tariffs are data-driven and regulatory hurdles are minimal.
Industry Perspectives
Kola Balogun, Chairman of Momas Electricity Meters Manufacturing Company Limited, praised the decentralization, describing it as long overdue. He noted that a decentralized system promotes competition, encourages innovation, and addresses the shortcomings of the national grid. Balogun added that regions rich in resources like gas, hydropower, or sunlight could attract investments and guarantee reliable electricity for industries.
A Path to Growth
The decentralization of energy regulation marks a pivotal moment in Nigeria’s journey toward a sustainable power sector. States like Lagos, Rivers, Kano, and Ogun are expected to leverage their energy potential to foster economic growth and attract investments. Experts predict significant developments in the power sector over the next decade, with governors using electricity reforms as political and economic strategies to boost their states’ revenues and infrastructure.
