The Nigerian power sector is undergoing a seismic shift as seven states have officially taken over regulatory control of electricity markets within their jurisdictions, following the implementation of the Electricity Act 2023 signed into law by President Bola Tinubu.
This landmark decentralisation, revealed by the Nigerian Electricity Regulatory Commission (NERC), grants states the authority to generate, transmit, distribute, and regulate electricity independently — a historic departure from the longstanding centralised system previously overseen solely by NERC.
The seven states that have already assumed control are Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi. According to NERC, additional states — including Lagos, Ogun, Niger, and Plateau — are on track to finalise their transitions between June and September. Anambra, which recently passed its own electricity law, is also preparing to join the list with the establishment of its State Electricity Regulatory Commission.
Under the new arrangement, states now have the power to license electricity market operators without federal interference. Consequently, electricity distribution companies (Discos) operating in these states are required to establish subsidiaries registered within those states to handle intrastate operations under the supervision of the newly created state electricity commissions.
For example, in Enugu State, the Enugu Electricity Distribution Company has incorporated a subsidiary, Mainpower Electricity Distribution Limited, which now operates under the authority of the Enugu State Electricity Regulatory Commission.
Opportunities and Concerns
Industry experts have described the move as a potential game changer for Nigeria’s long-troubled electricity sector. Stakeholders view the devolution of regulatory powers to the states as a step towards energy liberalisation, market competitiveness, and improved efficiency.
However, the transition has not been without apprehension. Concerns are mounting over issues such as regulatory clarity, coordination between federal and state agencies, and whether many states possess the institutional capacity to effectively manage power generation and distribution.
Some officials at NERC have privately expressed doubts about the readiness of certain states to fully handle electricity regulation, particularly in the areas of licensing, tariff setting, enforcement, and subsidy administration.
Nonetheless, others argue that the new system encourages innovation, attracts localised investment, and compels states to become more accountable for their electricity supply challenges and solutions.
At a recent stakeholder meeting in Lagos, NERC confirmed that 11 states had begun the transition to state-controlled electricity markets, with seven already completing the process. Discussions at the event focused on practical strategies for a smooth transition, including capacity building, infrastructure financing, and regulatory harmonisation.
“The transition to state-level electricity markets is on course. So far, 11 states have commenced the process, and seven have fully transitioned,” NERC said in its presentation at the meeting.
To guide the handover process, NERC began issuing "transfer orders" to qualifying states in April 2024. Each order provides a six-month timeline for states to establish legal and operational frameworks before assuming full regulatory responsibility.
Lagos and Ogun are expected to complete their transitions this June, followed by Niger in July and Plateau in September. Meanwhile, Anambra’s recent creation of the Anambra State Electricity Regulatory Commission — signed into law by Governor Charles Soludo — marks its formal entry into the decentralised electricity regime.
A Turning Point for Nigeria’s Energy Future?
The Electricity Act 2023 represents a bold legislative effort to overhaul Nigeria’s troubled power sector by empowering sub-national governments to take charge of their energy destinies. Though the road ahead is riddled with both promise and pitfalls, many believe the Act could pave the way for improved electricity access, more efficient service delivery, and greater accountability in the long run.
Still, the success of this decentralisation will depend on how well states adapt to their new regulatory roles, attract private sector investments, and coordinate effectively with national institutions like NERC.
As the power landscape evolves, Nigerians and investors alike will be watching closely to see whether this reform delivers the stable and reliable electricity supply that has long eluded the country.
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