With the implementation of the 2023 Electricity Act, Nigeria is witnessing an unprecedented devolution of power sector regulation from the centre to the states. Seven states — Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi — have assumed full control of their electricity markets, and at least four more are on the path to follow. This decentralisation allows them to generate, transmit, distribute, and regulate electricity autonomously, a responsibility once held solely by the Nigerian Electricity Regulatory Commission (NERC).....KINDLY READ THE FULL STORY HERE▶

Seven Nigerian states have officially assumed control of electricity regulation within their jurisdictions following the Nigerian Electricity Regulatory Commission’s (NERC) recent confirmation of the transition enabled by the Electricity Act 2023.

The states—Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi—are now fully in charge of their respective electricity markets. Others, including Lagos, Ogun, Niger, and Plateau, are expected to complete their transitions between June and September 2025, while Anambra, having just enacted its electricity law, is also preparing to join.

Prior to the enactment of the Electricity Act in 2023, only the Federal Government, through NERC, had the exclusive authority to regulate power in Nigeria. The Act, signed by President Bola Tinubu, marked a watershed moment by decentralising control, granting states the legal right to independently generate, transmit, distribute, and regulate electricity within their borders.

A New Dawn, New Questions

This landmark shift from a centralised to a decentralised energy regulatory system has sparked both optimism and caution among stakeholders. While many see this as a step toward energy reform and enhanced competitiveness, there are growing concerns over capacity gaps, regulatory clarity, subsidy frameworks, and the potential for conflict between federal and state authorities.

According to NERC, 11 states have initiated the transition process, but only seven have fully taken over their markets. These states now have the authority to license operators, approve tariffs, and oversee operations without federal interference.

In line with the transition, power distribution companies (Discos) previously overseen by NERC are now being required to create state-level subsidiaries for intra-state operations. For example, in Enugu, the Enugu Electricity Distribution Company has launched a subsidiary—MainPower Electricity Distribution Limited—which is now licensed and regulated by the Enugu State Electricity Regulatory Commission.

Concerns Over Readiness and Capacity

Despite progress, officials and experts warn that many states may not yet be fully equipped for the complex regulatory, operational, and technical demands of power market management.

An anonymous senior NERC official told The PUNCH, “The real impact will be on distribution, a critical segment of the value chain. State governments may be overwhelmed by the new responsibilities. There’s a manpower deficit—especially in tariff-setting, which is technically complex and globally limited to a few thousand experts.”

He added that challenges such as asset delineation, where a transmission line runs through multiple states, remain unresolved and could hinder smooth operations.

While NERC continues to engage transitioning states, some worry that the federal regulator’s relevance is diminishing in a sector it was originally created to govern. Subsidy administration, enforcement against electricity theft, and regulatory overlap are among the unresolved issues.

Under the new structure, each state governor will decide whether to subsidise electricity for residents or allow market-determined pricing—raising fears of regional disparity in electricity access.

Varying Levels of Progress

Not all states are moving at the same pace. Enugu is widely seen as the most advanced, with a seasoned regulator and early enforcement of operational standards. In April, Enugu’s regulator ordered MainPower to refund consumers for overbilling—signalling that enforcement is already underway.

Lagos, leveraging its experience with independent power projects (IPPs) and embedded generation, is also making steady progress. The Lagos State Electricity Regulatory Commission (LASERC) has already issued a regulatory directive—LASERC ORDER/001/2025—placing electricity service operations under its exclusive jurisdiction.

Critics: Many States Unprepared

Power consumer advocate and PowerUp Nigeria Executive Director, Adetayo Adegbemle, praised the decentralisation move but lamented the slow and superficial adoption in many states.

“Only four out of the 11 states have moved beyond paperwork,” he said. “Most have no operational frameworks, institutions, or implementation plans. Many seem more focused on optics than outcomes.”

He stressed that decentralisation is technically demanding, involving everything from institutional setup to tariff design and subsidy strategy. “Some states are only now realising they’ll receive power at full cost from the grid and must decide whether to absorb or pass that cost to consumers.”

Adegbemle also warned of a regulatory vacuum: “Once NERC exits a state, there’s a gap in consumer protection and service standards unless the state steps up immediately.”

He cautioned that without trained manpower, robust consumer protection, and investor-friendly regulations, the reform could backfire. “We risk ending up with 36 regulatory islands, each lacking coherence.”

Federalism in Practice

President of the Nigeria Consumer Protection Network, Kunle Olubiyo, welcomed the development as a true application of federalism.

“In a true presidential system, states should have concurrent powers with the Federal Government,” he explained. “The electricity sector now allows states to address local needs—especially in off-grid and mini-grid applications—without being tethered to the national grid.”

He said states can now license up to 5MW generation projects for agro-industrial zones or local governments. However, Olubiyo warned that the supremacy of the Constitution must be respected to avoid conflict between national and state laws.

Ekiti and Ondo Provide Roadmap

Ekiti State has established its Electricity Regulatory Bureau, led by Dare David, and is actively engaging stakeholders for a smooth transition. Commissioner for Infrastructure, Prof. Mobolaji Aluko, called for the formation of subnational Discos and urged that existing NERC regulations be domesticated to minimise disruptions.

He emphasised, “You can’t regulate what you haven’t licensed. Constant dialogue among market players is essential for success.”

Ondo State, meanwhile, is already operating under its Power Sector Law 2020, making it the first state to enact such legislation. According to Johnson Alabi, Chairman of the Ondo State Power Company Limited, the state now has both a regulatory bureau and a state-owned power company actively managing the market.

“We’ve had several meetings with Benin Electricity Distribution Company, which has now set up Benin Electricity Ondo Limited to serve the state,” Alabi revealed.