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…. Ogun, Imo, Edo among the states yet to establish functional regulators
… Illegal permits and coordination gaps exacerbate sector uncertainty
Daud Olatunji
Nigeria’s push to decentralize electricity regulation faces serious obstacles as at least 16 states struggle to set up effective regulatory systems, raising fears of worsening energy supply challenges for consumers across the country.
Industry findings indicate that several states, including Ogun, Imo and Edo, are yet to operationalize their State Electricity Regulatory Commissions (SERCs), despite having formally assumed regulatory powers under the Electricity Act 2023.
The situation has sparked concern in the industry, with the Nigerian Electricity Regulatory Commission (NERC) warning that some subnational governments are issuing licenses outside the legal framework, while others lack the technical capacity to handle their new responsibilities.
Regulatory gaps and illegal licensing raise the alarm
According to industry sources, the transition to decentralized regulation, while designed to improve efficiency, has exposed structural weaknesses in Nigeria’s power governance system.
In Ogun State, for example, 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, Orashi Electricity Company, without clear adherence to regulatory procedures.
Experts warn that such actions could trigger legal disputes and destabilize the already fragile electricity market, especially because the judiciary does not have adequate experience in handling complex disputes in the energy sector.
An energy industry analyst, Adetayo Adegbemle, noted that some states are bypassing legal processes, warning that licenses issued outside of proper regulatory frameworks could be challenged in court.
“In some states, officials issue permits without legal authorization. This threatens the credibility of the decentralization process,” he said.
The ongoing reforms have also raised concerns about jurisdictional overlaps between federal and state regulators.
While states have the power to regulate electricity within their territories, NERC maintains oversight over generating plants that feed into the national grid, creating gray areas that have already led to operational confusion.
Reports from industry stakeholders indicate instances where newly licensed distribution companies have connected additional customers to existing infrastructure without the knowledge of the original operators, resulting in discrepancies in billing and consumption records.
NERC called for stronger coordination through the proposal of a Regulators Forum to clarify roles and prevent conflicts between federal and state authorities.
Lagos and Abia are making progress despite challenges
Despite the challenges, some states have made notable progress in implementing decentralized electrical panels.
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 granted licenses to several sub-distribution companies, including Geometric Power Limited and Aba Power Limited, marking a significant milestone in the development of sub-national power.
However, even in these states, experts say long-term success will depend on technical capacity, clear regulations and adequate coordination with federal agencies.
Stakeholders divided on decentralization
While some stakeholders believe decentralization is essential to solving Nigeria’s energy challenges, others argue that states are not yet equipped to manage the entire electricity value chain.
Azura Power West Africa CEO Edu Okeke has warned that generation and transmission requires long-term planning and financial capacity that most states currently lack.
“We support regulation of distribution at the state level, but generation and transmission should remain under federal oversight,” he said.
In contrast, supporters of decentralization argue that it could improve access to electricity, especially in underserved communities that have been neglected by centralized control.
Increased investment as $15 million BII financing targets renewable energy
Amid regulatory uncertainties, new investments are flowing into Nigeria’s energy sector, particularly in renewable energy.
Starsight Energy Africa Group has secured $15 million in mezzanine debt financing from 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 financing 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 by fossil fuel-fired generators, underlining the extent of the country’s reliance on off-grid.
Stakeholders say the investment could help close Nigeria’s energy gap by accelerating the adoption of renewable energy systems.
Paul van Zijl, CEO of Starsight Group, said the partnership will enable the company to expand its operations and provide more reliable and sustainable energy solutions.
The British Deputy High Commissioner in Lagos, Jonny Baxter, described the investment as a step towards supporting Nigeria’s transition to clean, affordable energy.
Similarly, BII officials said the funding is in line with efforts to promote sustainable growth and reduce dependence on polluting energy sources across Africa.
Despite ongoing reforms and new investments, experts warn that Nigeria’s electricity sector remains at a critical juncture.
Without stronger regulatory frameworks, clearer jurisdictional boundaries, and better technical capacity at the state level, stakeholders fear that the decentralization effort could exacerbate existing inefficiencies rather than resolve them.
However, analysts argue that, if properly implemented, decentralization and investment in renewable energy could significantly transform Nigeria’s electricity landscape in the coming years.
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