Seven Nigerian states have officially taken over the regulation of their electricity markets, marking a significant shift in the country’s power sector governance. Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi states are now empowered to generate, transmit, distribute, and regulate electricity within their borders, with minimal federal oversight.
This development follows the implementation of the Electricity Act 2023, signed into law by President Bola Tinubu, which decentralizes electricity regulation and gives states the authority to control their electricity markets. Eleven states have commenced the transition process, with Lagos, Ogun, Niger, and Plateau expected to complete their transitions between June and September.
While stakeholders hail this development as a leap towards energy decentralization and market competitiveness, concerns have been raised over capacity gaps, regulatory clarity, subsidy management, and potential friction between state and federal oversight. Some states may struggle with complex regulatory and operational responsibilities, and manpower shortages, lack of technical experience, and poor institutional memory could derail the transition.
On the other hand, decentralization could attract private investment into Nigeria’s struggling power sector. Each state governor will determine whether to subsidize electricity for residents or allow market-based pricing, which may widen inequalities in electricity access across states.
The Nigerian Electricity Regulatory Commission (NERC) has issued 11 transfer orders to states that have applied and met the necessary conditions, with a six-month timeline for full operational handover. Lagos and Ogun are set to complete the transition this month, Niger in July, and Plateau in September. Anambra has formally established its electricity regulatory commission and is gearing up to join the list.
Once regulatory functions are transferred from NERC, the states will regulate their electricity markets, and electricity distribution companies operating in these states will be controlled by the states. The Discos will be mandated to incorporate a subsidiary company to assume responsibilities for intrastate supply and distribution of electricity.
A senior NERC official noted that managing the new electricity market will be challenging for state governments, particularly in setting tariffs and handling electricity theft cases. The official emphasized the need for capacity building, regulatory coordination, and investment readiness to ensure sustainable state-led electricity markets.
