…. Ogun, Imo, Edo Among States Yet To Establish Functional Regulators
… Illegal Permits, Coordination Gaps Deepen Sector Uncertainty
Daud Olatunji
Nigeria’s push to decentralise electricity regulation is facing serious headwinds as at least 16 states struggle to establish effective regulatory systems, raising fears of worsening power supply challenges for consumers across the country.
Findings from the sector indicate that several states, including Ogun, Imo, and Edo, are yet to operationalise their State Electricity Regulatory Commissions (SERCs), despite formally assuming regulatory powers under the Electricity Act 2023.
The situation has sparked concern within the industry, with the Nigerian Electricity Regulatory Commission (NERC) warning that some subnational governments are issuing licences outside the legal framework, while others lack the technical capacity to manage their new responsibilities.
Regulatory Gaps, Illegal Licensing Raise Alarm
According to industry sources, the transition to decentralised regulation—though designed to improve efficiency—has exposed structural weaknesses in Nigeria’s power governance system.
In Ogun State, for instance, there are reports that electricity-related permits were issued by political appointees rather than a properly constituted regulator.
Similarly, in Imo State, questions have been raised over the licensing of a new entity, the Orashi Electricity Company, without clear adherence to regulatory procedures.
Experts warn that such actions could trigger legal disputes and destabilise the already fragile electricity market, especially as the judiciary lacks adequate experience in handling complex power sector disputes.
A power sector analyst, Adetayo Adegbemle, noted that some states are bypassing legal processes, warning that licences issued outside proper regulatory structures could be challenged in court.
“In some states, officials are issuing permits without legal authority. This threatens the credibility of the decentralisation process,” he said.
The ongoing reforms have also raised concerns over jurisdictional overlaps between federal and state regulators.
While states are empowered to regulate electricity within their territories, NERC maintains oversight over generation plants feeding into the national grid, creating grey areas that have already led to operational confusion.
Reports from sector stakeholders indicate instances where newly licensed distribution companies have connected additional customers to existing infrastructure without the knowledge of original operators, resulting in discrepancies in billing and consumption records.
NERC has called for stronger coordination through a proposed Forum of Regulators to clarify roles and prevent conflicts between federal and state authorities.
Lagos, Abia Make Progress Amid Challenges
Despite the challenges, some states have made notable progress in implementing decentralised electricity frameworks.
In Lagos, Governor Babajide Sanwo-Olu recently inaugurated the Lagos State Electricity Regulatory Commission (LASERC), a key step towards building a more autonomous electricity market.
Similarly, in Abia State, the Abia State Electricity Regulatory Authority (ASERA) has licensed multiple sub-distribution companies, including Geometric Power Limited and Aba Power Limited, marking a significant milestone in subnational power development.
However, even in these states, experts say long-term success will depend on technical capacity, clear regulations, and proper coordination with federal agencies.
Stakeholders Divided on Decentralisation
While some stakeholders believe decentralisation is essential to fixing Nigeria’s power challenges, others argue that states are not yet equipped to manage the entire electricity value chain.
Managing Director of Azura Power West Africa, Edu Okeke, cautioned that generation and transmission require long-term planning and financial capacity that most states currently lack.
“We support state-level regulation of distribution, but generation and transmission should remain under federal oversight,” he said.
In contrast, proponents of decentralisation argue that it could improve access to electricity, especially in underserved communities that have been neglected under centralised control.
Investment Boost as $15m BII Funding Targets Renewable Energy
Amid the regulatory uncertainties, new investment is flowing into Nigeria’s power sector, particularly in renewable energy.
Starsight Energy Africa Group has secured $15 million in mezzanine debt financing from the UK-based development finance institution, British International Investment (BII), to expand its solar energy solutions across West Africa, with Nigeria as a key focus.
The funding is expected to support commercial and industrial (C&I) customers, many of whom rely heavily on diesel generators due to unreliable grid supply.
Industry estimates suggest that up to 40 gigawatts of electricity in Nigeria is currently generated from fossil-fuel-powered generators, underscoring the scale of the country’s off-grid dependence.
Stakeholders say the investment could help bridge Nigeria’s energy gap by accelerating the adoption of renewable energy systems.
Group CEO of Starsight, Paul van Zijl, said the partnership would enable the company to scale its operations and deliver more reliable and sustainable power solutions.
British Deputy High Commissioner in Lagos, Jonny Baxter, described the investment as a step towards supporting Nigeria’s transition to clean and affordable energy.
Similarly, BII officials said the funding aligns with efforts to promote sustainable growth and reduce dependence on polluting energy sources across Africa.
Despite ongoing reforms and fresh investments, experts warn that Nigeria’s electricity sector remains at a critical juncture.
Without stronger regulatory frameworks, clearer jurisdictional boundaries, and improved technical capacity at the state level, stakeholders fear that the decentralisation effort could deepen existing inefficiencies rather than resolve them.
Nevertheless, analysts maintain that if properly implemented, decentralisation and renewable energy investments could significantly transform Nigeria’s electricity landscape in the coming years.
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