The landscape of Nigeria’s electricity sector has undergone a dramatic transformation under President Bola Tinubu’s Electricity Act 2023, which has empowered seven states to independently regulate their power markets. Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi now oversee electricity generation, transmission, and distribution within their jurisdictions.
This move marks a departure from the previous centralized system, where the Nigerian Electricity Regulatory Commission (NERC) held exclusive regulatory authority. Now, states can issue licenses, set tariffs, and manage subsidies, while NERC transitions to a more supervisory role.
The reform is seen as a step towards energy decentralization and increased competitiveness. However, it also raises concerns about states’ readiness, regulatory clarity, and the risk of conflicting standards. Industry experts caution that many states lack the technical expertise and institutional capacity required for effective regulation.
A senior NERC official highlighted the challenges ahead, noting, “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.”
The transition process involves the creation of state-level regulatory bodies and the formation of subsidiary companies by existing distribution companies (Discos) to handle intrastate operations. For example, Enugu’s Mainpower Electricity Distribution Limited now operates under the state’s regulatory framework.
Stakeholders emphasize the importance of capacity building, regulatory coordination, and investment readiness. Consumer advocates, such as Adetayo Adegbemle, warn that many states have yet to establish effective regulatory frameworks, risking a vacuum in consumer protection and service standards.
The reform also introduces new complexities, such as the management of subsidies and the delineation of assets that cross state boundaries. Each governor will determine subsidy policies, potentially leading to disparities in electricity access.
Despite these challenges, proponents argue that decentralization will attract private investment and enable states to develop tailored energy solutions. The success of Tinubu’s Electricity Act will depend on states’ ability to build robust institutions, protect consumers, and foster a competitive market.