Once upon a time in Nigeria (well, before March 17, 2023), electricity regulation was a strictly federal affair. The big boss, the Federal Government, held the reins of power, making all the key decisions for the entire country through the Nigerian Electricity Regulatory Commission (NERC). States? Well, they basically had to sit on the sidelines and hope NEPA, PHCN, or the DisCo-du-jour would sort things out.
But then came a plot twist.
On that historic March Day, Nigeria amended its Constitution and gave states their moment to shine. This amendment did something game-changing: it officially handed over the power (pun intended) to state governments to regulate electricity generation, transmission, and distribution within their own borders. Think of it as decentralisation with a spark!
Before this amendment, the law only allowed states to legislate on electricity matters in areas not connected to the national grid. So, if your state had dreams of building its own power empire, but everyone was plugged into the national grid, tough luck. But now? The new law says states can regulate everywhere within their boundaries. Grid or no grid, if it’s within your state, you can legislate it. Freedom, at last!
And the new Electricity Act (EA) of 2023 wasn’t left behind either. It embraced this change like a long-lost sibling and clearly said: “Hey, if a state wants to run its own electricity show – go ahead!” The EA essentially says, “Dear State Government, if you pass a law about electricity in your state, we won’t fight you. In fact, we’ll support you.”
The Act gives states full backing to set up their own electricity laws, build and run power stations, start state electricity markets, and even create their own electricity regulatory authorities. So now, if Lagos or Kano wants to play boss in their backyard, they legally can. It’s not rebellion. It’s now in the rule book!
But (and there’s always a “but” in legal land), there are still rules to follow. For example, if a state hasn’t set up its own regulatory body or framework, or if its electricity operations still rely on the national grid, then NERC still steps in. It’s like saying, “You’re free to run your house, but don’t touch the main switchboard until you know what you’re doing.”
Here’s where things get spicy. The EA goes into serious detail about how this power transfer should work. If a state wants to be fully in charge:
- It must pass a law to create its own electricity market and regulatory body.
- Then, it has to notify NERC and the electricity distribution company (DisCo) operating in that state.
- NERC has 45 days to prepare a transition plan and hand over the regulatory duties.
- The DisCo must then create a state-specific subsidiary company (a kind of electricity spin-off).
- That company takes over the assets, liabilities, staff, and contracts of the original DisCo, minus any shady business with creditors.
- And no, the state doesn’t have to inherit the DisCo’s debt problems. Thank goodness.
The Act also gives the new “Additional Successor Company” a tax break (no stamp duties or capital gains tax on the transfer). Once the handover is done, NERC steps back, and the state takes full control.
But if a state doesn’t want to take the plunge just yet, no pressure. NERC keeps the lights on until they’re ready. It’s basically a regulatory “you snooze, we rule” setup.
Finally, the law encourages both federal and state regulators to play nice. They’re expected to form a kind of inter-governmental WhatsApp group (okay, maybe not literally) to collaborate, reduce regulatory confusion, and harmonise the electricity market nationwide.
In a Nutshell …
Nigeria’s electricity game has officially entered its federalism era. States can now take control of their own electricity markets, set up rules, regulate providers, and ensure their people have a reliable (and hopefully steady) power supply. But they’ve got to follow the playbook: pass the right laws, inform the right people, and build the right institutions.
So yes, the power shift is real but like with every great superhero moment, with great power comes great paperwork.
