MUCH ADO ABOUT ELECTRICITY ACT, 2023

The Amendment Bill will undermine the vision of a decentralised electricity market

Electricity regulators under the aegis of State Electricity Regulatory Commissions (SERCs) have warned that the proposed Electricity Act 2023 Amendment Bill 2026, could reverse hard-won reforms in the sector and defeat the idea of a federal structure. In a memorandum submitted to the Senate Committee on Power, these regulators argued that the amendment bill “threatens the constitutional and regulatory foundations” that enabled states to begin building their own electricity markets and the constitutional amendments that expanded sub-national powers in the sector.

We recall that on 17 March 2023, late President Muhammadu Buhari assented to the 5th Alteration Bills, 2023, thus devolving power from the Exclusive Legislative List to Concurrent Legislative List. Combined with the consequential Electricity Act enacted same year, that presidential assent fully decentralised electricity supply industry in Nigeria, making it possible for states to participate in its generation, transmission, and distribution. Since then, no fewer than 16 states have passed laws to establish their state electricity markets, with Enugu taking the lead.

Despite the huge resources poured into the sector by successive administrations over many decades, a nation of well over 200 million people is still struggling to break the 4,000MW jinx. Not even the privatisation of the sector has helped matters. Meanwhile, many businesses have been forced to fold, while some have relocated to neighbouring and rival African countries to produce and ship back to Nigeria’s large market. The Electricity Act 2023 therefore represents the much-touted restructuring in action and a very welcome development for the Nigerian power sector, especially for a country that is writhing in the pains of power poverty.

However, this glimmer of hope in the power sector appears to be dimming with the Electricity Act (Amendment) Bill, 2026, which has already passed a Second Reading in the Senate and awaiting a public hearing. The regulators, representing electricity commissions and bureaux from Abia, Anambra, Bayelsa, Edo, Ekiti, Enugu, Gombe, Imo, Kogi, Lagos, Nasarawa, Niger, Ogun, Ondo, Oyo and Plateau States, contend that the proposed amendments amount to a return to centralised control when many of the states were already attracting investments and establishing independent frameworks to address the challenge of electricity supply in Nigeria.

Indeed, a critical review of the Electricity Act (Amendment) Bill would reveal clear attempts to erode or dilute the regulatory independence and/or powers of the SERCs as well as undermine the vision of a fully decentralised, contract-based electricity market as envisaged under the Electricity Act 2023. For instance, Section 63 of the proposed Amendment Bill erodes the authority of SERCs by removing their explicit power to license mini-grid operators and allied institutions. Worse still, the Bill seeks to return NERC as the exclusive authority over activities on the national grid system and interstate electricity operations.

Section 230C (1) (a) provides that states may regulate electricity fully within their borders only if the supply is not linked to the national grid. Section 230(c) (2) of the Amendment Bill equally restores to NERC the sole authority in critical areas like tariffs, consumer rights, technical codes, and anti-trust issues. Besides, the safety role of the National Electricity Management Services Agency (NEMSA) will become national and override state efforts as can be inferred from Section 230(c) (3) of the Amendment Bill.
Other concerns are the implied supremacy of NERC in dispute resolution, ambiguity and uncertainty in existing licenses and contracts in Section 230C (4–6), and the potential erosion of investor confidence arising from a rollback of state powers and the re-centralisation tendencies that would naturally signal regulatory instability and policy reversals. This is especially so for investors that have already committed resources based on the decentralised framework of the Electricity Act 2023.
We agree with the concerns being expressed by the states. The Amendment Bill has indeed arrogated more powers and control to the NERC by way of approval, making rules, setting out guidelines and participating in the distribution and trading of electricity space that is strictly for the SERCs. The Amendment Bill will recentralise control under NERC and stall the growth of truly subnational electricity markets. We note that the law is still very young and has done so well so far. Why the hurry to fix what is not broken?