The Federal Government of Nigeria has suspended the issuance of electricity regulatory autonomy to state governments, initiating a review of the policy.
Power Minister Adebayo Adelabu announced this change, citing a lack of preparedness among state governments and stakeholders to operate an electricity market effectively.
Previously, in line with the amended Constitution and the Electricity Act 2023, regulatory oversight of the electricity markets in Ondo, Ekiti, and Enugu states had been transferred from the Nigerian Electricity Regulatory Commission (NERC) to state regulatory bodies. However, Adelabu emphasized the necessity of reevaluating the policy to ensure states understand the complexities of managing an electricity market.
Speaking at the 8th edition of the Africa Energy Market Place (AEMP) conference in Abuja, Adelabu stressed the importance of a cautious approach. “The market is not mature enough. We must tread carefully and systematically,” he stated.
The minister suggested piloting the transfer of regulatory oversight in selected states across different geopolitical zones. This pilot would allow for a period of three to six months, or up to a year, to identify and address potential issues before expanding regulatory autonomy to more states.
Adelabu highlighted that state regulatory autonomy encompasses the entire electricity value chain, including generation, transmission, distribution, and tariff setting within the state’s territory. Using Lagos State as an example, he pointed out the financial and operational responsibilities states would assume under full regulatory autonomy.
Bart Nnaji, Chairman of Geometric Power, echoed Adelabu’s concerns, noting the challenges state governments might face in building the capacity required for regulatory functions. He emphasized the need for a gradual handover process and collaboration with existing DisCos (distribution companies) to avoid conflicts over infrastructure ownership.
Folake Soetan, Managing Director of Ikeja Distribution Company, added that state-level regulatory oversight would require robust policy frameworks to attract sustainable investments and address liquidity issues in the power sector.
The Electricity Act 2023, signed into law by President Bola Tinubu on June 8, 2023, allows states to regulate electricity generation, transmission, and distribution within their territories. The Act also provides for the establishment of State Electricity Markets and Regulatory Authorities.
As the Federal Government reassesses the policy, the goal remains to ensure a mature, competitive, and sustainable electricity market that meets Nigeria’s energy needs.
