Politically speaking, the electricity sector was operating under the Electricity Power Sector Reform Act 2005 that allows only the federal government to regulate policies and guidelines for the sector until President Bola Tinubu signed the Electricity Act 2023 (the Act) on 8 June 2023 into law to replace the Electric Power Sector Reform Act 2005 (EPSRA), which aims to consolidate the laws relating to electricity in Nigeria across the entire value chain of the Nigerian Power Sector, including the integration of renewable energy to Nigeria’s energy mix.

In addition, the Act aims to encourage state government participation in the power sector and increase private sector investment.

There are Regulators at different levels in the electricity sector to carryout regulatory functions For instance, at the sub-regional level of ECOWAS, the ECOWAS Regional Electricity Regulatory Authority (ERERA) regulates the regional electricity market while at the national level in Nigeria, the Nigerian Electricity Regulatory Commission (NERC) is the regulator. With the decentralization of the sector, there will be the creation of several regulators at state levels.

Although there are fears that this new law could breed unhealthy conflicts between the central regulator and states regulating agencies, clear lines of demarcation are necessary for seamless and healthy co-existence for the mutual benefit of all.

As expected, this new law will reduce reliance on the national grid and improve access to energy and electricity supply as it gives room for states to explore other means of electricity supply and attraction of investments for the development of their states.

It will also encourage healthy competition between states because the states will try to outdo each other in the provision of electricity for their citizens.

This new law will equally avail sub-nationals the opportunity to explore available local resources for electricity generation. States like Enugu, Kogi, Delta, Kwara, Plateau, Anambra, Abia, Bauchi, Edo, Ondo Adamawa, Imo and Benue can tap into their coal deposits while northern states may use their abundant sun, wind, water bodies for power generation. This tendency will expand the generation mix thereby making electricity more abundant for domestic and industrial uses.   

For now Lagos, Kaduna, and Edo states have established their electricity markets while Ekiti and Oyo states have commissioned their Independent Power Projects (IPPs) and Enugu state has unveiled a futuristic ambitious plan to generate 690MW of electricity by 2030.

With the huge energy gap in Nigeria, more states should be in a hurry to establish their electricity markets in order to attract urgently needed funds into the electricity sector.