The plot against the Electricity Act 2023

Introducing The Electricity Act (Amendment Bill), 2025

Even before President Bola Ahmed Tinubu assented to the Electricity Act on 6 June 2023, the plot to strangle this cherished baby had begun. Barely two years after the Act gave statutory recognition to the most important restructuring of Nigeria’s electricity sector since privatisation, the Senate’s Electricity Act (Amendment) Bill, 2025, was finally unveiled in late 2025. It is presented in reassuring language: coordination, clarification, emerging issues, sectoral financing, consumer protection and transitional certainty. But in electricity, as in politics, the title of a thing is not always the truth of it.

The truth is simple. This bill seeks to claw back, by mere legislative drafting, what the Constitution deliberately gave to the states by constitutional amendment. It seeks to restore, in new vocabulary, the unitary electricity governance architecture that failed Nigeria for decades. It seeks to make the Nigerian Electricity Regulatory Commission, NERC, the master and commander of state electricity regulators, not the counterpart, collaborator and mentor that it ought to be. It seeks to preserve federal agencies in spaces where the Constitution no longer gives the National Assembly power to legislate. It seeks to make state electricity markets appear autonomous while ensuring that the key regulatory levers remain in Abuja.

This bill is therefore a bad idea. It is an assault on the logic of the 5th Alteration to the 1999 Constitution, 2023, and the Electricity Act, 2023; on the fragile investor confidence now gradually forming around state electricity markets; and on the only reform pathway that offers Nigeria a realistic chance of escaping the repeated failure of its electricity sector, especially the distribution side.

A little history

The Electricity Act, 2023, is not an accident. It is the statutory expression of a deliberate constitutional shift. In 2019, a group of governors questioned, at the National Economic Council under then Vice President Yemi Osinbajo, the abject performance of electricity Discos after the 2013 privatisation. A committee of six governors constituted to examine the matter concluded that unless states took responsibility for their energy security, federalism, devolution and economic progress would remain dead letters. The first step was a constitutional amendment to remove the constraints on the powers of states to make laws for electricity within their territories.

This led to the move to amend Paragraph 14 of the Concurrent Legislative List, Part II, Second Schedule to the 1999 Constitution, ratified by the States and assented to by President Buhari as part of the 5th Alteration to the 1999 Constitution in March 2023. It removed the old limitation that confined state legislative competence to electricity areas “not covered by a national grid system”. That phrase mattered. It was added in the 1999 Constitution to a similar Paragraph 14 inherited from the 1979 Constitution. This vague phrase was then used to justify the fiction that once electricity touched the national grid, its regulation belonged to NERC alone. The result was a centralised electricity sector in a federal country that reduced states to spectators in a matter vital to their individual economic wellbeing.

The 5th Alteration ended that constitutional aberration. The Electricity Act, the first legislation assented to by President Tinubu, then gave it statutory effect. It is important to recall that the Act was not originally conceived to be reformist. It was intended to consolidate existing electricity-sector statutes and federal agencies and reinforce the powers of the minister and the various federal regulators; it aimed to re-establish, much like the intent of the Petroleum Industry Act.

Its reform essence — Sections 2(2) and 230(2)–(9) — was inserted through the efforts of the Nigerian Governors’ Forum, led then by Governor Kayode Fayemi working with governors from across the six geopolitical zones. The House of Representatives, under Speaker Femi Gbajabiamila, ensured these reform provisions went into the Senate version. The harmonised bill became the Electricity Act, 2023. This history matters because state electricity markets are not an afterthought, a personal agenda, or an accidental drafting outcome. They were the deliberate product of constitutional amendment, states’ ratification, legislative negotiation and presidential assent – precisely how laws are made. The purveyors of this amendment bill appear to have forgotten, or chosen to ignore, this history.

Thus, the substance is clear. States can now legislate exclusively and fully for electricity within their territories. They can establish electricity markets and state regulators. They can design policy and legal frameworks for whatever electricity activity is carried on within their boundaries.

This bill is a constitutional law non-starter.

State markets do not eliminate Nigeria’s national grid, national system operator, interstate trade, cross-border transactions, or federal responsibilities. It means only that Nigeria’s electricity reform can no longer be delivered from a single regulatory command centre. It also means, and we must be clear-eyed about this, that the Amendment Bill has a serious constitutional law problem from the onset. Paragraph 13 of Part II of the Second Schedule gives the National Assembly power over generation and transmission in relation to the national grid and over interstate and international electricity matters. It is careful about what it says. It does not refer to “electricity distribution” or confer on the National Assembly even a vague or general power over electricity distribution within states. It simply does not mention it. This has consequences. Paragraph 14, on the other hand, in the clearest terms confers on states the power to make laws for electricity within their territories. As simple as that, the boundaries are crystal clear.

It is elementary that the National Assembly cannot, by ordinary legislation, reinsert limitations that the Constitution has removed. It cannot, by calling a thing coordination, recover powers it no longer has. It cannot, by expanding NERC or NEMSA’s role, amend the Constitution through the back door. The National Assembly does not have the constitutional power to enact this Electricity Act (Amendment) Bill to the extent that it touches on electricity distribution or anything connected therewith and the conduct of generation, transmission and ancillary business solely within the boundaries of a state. Yet that is what the Amendment Bill attempts.

So, put simply, most, if not all, of this amendment bill is liable to be declared unconstitutional by a court of law. This is where the discussion should end, but, out of caution, we should also discuss the substance of the bill’s proposed amendments.

Seven hills to climb

First, the proposed amendment to Section 2. On its face, it appears to restate the constitutional powers conferred on states. It says State Houses of Assembly may make laws on generation, transmission, system operation, distribution, supply and retail electricity within state boundaries. So far, so good. But then comes the proviso. State laws must not conflict with federal provisions relating to the national grid, the National Wholesale Electricity Market, technical standards, operational codes, consumer protection, antitrust, and climate change mitigation and adaptation. That provision negates the express provisions of Paragraphs 13 and 14 of the Concurrent Legislative List. By what power can the Senate insert it without another constitutional amendment? None.

National standards are important. No serious state electricity market should operate unsafe networks, undermine grid discipline or create regulatory chaos. The problem is that this proviso is not drafted as cooperation. It is drafted as a federal override. It takes matters that may arise wholly within a state market — consumer protection, technical standards, operational codes and competition rules within state markets — and places them under a federal supremacy formula. That is not federalism. It is unsubstantiated arrogance and a superiority complex disguised as conditional delegation. The States did not receive their electricity lawmaking powers from NERC, NEMSA or the minister of power. They received them from the Constitution. Federal legislation cannot downgrade unconditional constitutional authority into delegated statutory authority.

Second, regulatory confusion. Section 63(7) of the Electricity Act currently preserves the integrity of state licensing and market operations in respect of mini-grids. The bill proposes to delete it. It looks like clearing up ambiguity but is actually the direct opposite. In a sector where investors need to know who licenses, who regulates, who approves tariffs, who enforces performance standards, who resolves disputes and who bears political responsibility, ambiguity is poisonous. State markets are already difficult enough to build. Apart from law, institutions, people, data, tariffs and contracts, they require certainty. To delete a provision that affirms state licensing authority is to invite uncertainty precisely when certainty is most needed.

Third, the proposed transition regime. This is the heart of the Bill. Proposed Sections 230A to 230C introduce a 12-month period within which States must meet transition conditions, with a possible six-month extension at NERC’s discretion. If a state fails to satisfy NERC, NERC may determine interim arrangements. NERC is also positioned to review state progress, adjust implementation frameworks and determine regulatory boundaries.

This is not a transition. It is an imposition. What makes these provisions even more curious is that what is to be transited to state regulators by NERC is essentially intellectual property, all of which is in NERC’s absolute control. Obviously, it is NERC that has the obligation to respond to a state seeking transfer of authority with a programme for the transfer of that IP. Instead, the amendment makes an unclear reference to “conditions precedent stipulated under the Principal Act” and imposes a compulsory period of 12 months during which the State must fulfil these “conditions precedent”.

The Electricity Act already created a transition process, which the new sections do not delete or replace. That means the Act would, when amended, provide for two diametrically opposed transition processes. Under Section 230(2)–(4), a state that has enacted its electricity law and established its regulator with a governing body and staff may engage NERC and the NCP and request the transfer of regulatory oversight and the establishment of an electricity distribution subsidiary in the state. Following this engagement, NERC issues a transfer order any time within six months following notification by the state. This is sensible because states are not all at the same point. Some have moved quickly. Some will move slowly. Some have policy capacity but no regulator. Some have laws but no staff. Some have strong political will but weak technical support. Some will initially rely on embedded expertise from NERC, licensees, consultants or development partners. This is how institutional reform works.

The proposed 12-month-plus-six-month timeline solves a problem that does not exist and creates another that no state needs. The real challenge is not that states are refusing to transition. It is that they must build capacity responsibly. They need market rules, licensing frameworks, tariff methodologies, inspection arrangements, consumer redress processes and grid-interface rules. They must decide how to deal with legacy DisCos, embedded generation, industrial clusters, rural electrification, franchising, mini-grids, state assets, federal assets and commercial off-take. These are not ceremonial tasks, and they cannot be executed by imposed timelines.

What NERC could be doing is intentionally sharing with states the IP it has gathered on each state since 2006: data, records and lessons from historical interactions with market participants in each state, collated, indexed, placed in secure locations, updated regularly and awaiting notices from the states. NERC could also have ordered all DisCos since 2023 to restructure into HoldCos and state subsidiaries, establish state technical boundaries with appropriate metering at relevant 132kV/33kV substations, and report on technical, commercial and financial performance thenceforth.

Instead, this amendment seeks to establish NERC not as a partner, collaborator or mentor, but as an overlord. For instance, in proposed Section 230C, the Bill revives the language the constitutional amendment removed in a rather unclever manner. It proposes that state exclusive jurisdiction applies only to intra-state electricity activities “not connected to, or reliant on, the national grid system”. Activities relying on the national grid or interstate generation would remain subject to overriding NERC regulation. This is the discarded formula in new clothes. It says to states: You may regulate your market, but only if your market is electrically isolated from the national grid.

This is electrically absurd. Distribution is, by nature, connected to transmission. Indeed, distribution can be explained to a non-engineer as “very low-voltage transmission”. The point at which distribution is transformed into transmission voltage is technically unmistakable and physically well defined. So, the fact that public electricity supply in states comes through the national transmission grid does not make distribution a federal subject. Almost every serious state market will interface with the national grid, the system operator, interstate generation or wholesale procurement. The point of the 5th Alteration was not to create 36 isolated electrical islands. It was to create federalised markets capable of interfacing with one another and with the national grid under clear technical and commercial rules that distinguish between state and national markets.

Fourth, NEMSA. The bill seeks to preserve and expand NEMSA’s nationwide inspectorate and technical certification role, including over distribution networks and installations within state markets. Of course, safety, standards and inspections matter. But if a state has constitutional authority over distribution and intra-state electricity operations, it also has authority to determine how inspection, certification and safety enforcement will be carried out within that state. It may retain NEMSA. It may create its own electrical inspectorate. It may accredit independent inspectors. It may adopt national standards voluntarily. But NEMSA cannot be imposed on state markets as if the constitutional amendment never happened.

Fifth, the proposed Forum of Electricity Regulators in Sections 228A–228F. Cooperation among regulators is necessary. Nigeria needs a forum where NERC, state regulators, the system operator and other institutions align on grid-interface rules, market settlement, cross-border transactions, model codes and dispute avoidance. But in a federation, such a forum must be one of coordinate institutions, not a hierarchy disguised as consultation. The bill’s proposed forum goes too far. It creates a federally constituted body in which NERC plays the only active, obviously dominant role. It moves from advice to control and confers on NERC final administrative appellate jurisdiction over disputes involving state regulators and state markets. That is constitutionally offensive and institutionally unwise because state regulators are not NERC branch offices. They are regulators established under state laws pursuant to constitutional authority exclusive to the states. They must cooperate with NERC where markets interface, but they are not subordinate to NERC within their own jurisdiction.

The sixth problem is fiscal hypocrisy. The Federal Government cannot insist on re-centralising electricity regulation and then ask states to share electricity subsidy costs, as Director-General of the Budget Office of the Federation, Dr Tanimu Yakubu, did recently. Reports of proposed deductions from FAAC allocations raise a fundamental question: who owns the problem? If Abuja wants control, Abuja should bear the fiscal consequences. If States are expected to share the burden, they must have genuine authority to determine whether they want to subsidise their citizens’ electricity access and, if so, how. They must have scope to shape markets, investments, tariffs and service delivery within their territories. It cannot be centralised control and federalised costs.

An electricity subsidy is not an accounting entry. It affects tariffs, investment, service quality, liquidity, fuel supply, public trust, DisCo incentives and fiscal sustainability. A riverine state, an industrial state, a rural state, a megacity state and a hydro-host state do not have identical electricity problems. Each must decide whether its citizens are best served by a consumption subsidy or a capex subsidy or perhaps both. A single subsidy mechanism controlled from Abuja cannot solve these different problems. That is probably why the Power Consumer Assistance Fund established by EPSRA 2005 and continued in the 2023 Act has never been physically established.

Seventh, timing. The Electricity Act is barely settling. States are still learning. Institutions are being formed. Regulators are being staffed and trained. Market rules are being developed. Some states are considering concessions or outright sales of their operating assets. Commercial and financing counterparties are assessing pre-investment risk. NERC is yet to gain the trust of the states to work with them to establish procedures and precedents for transferring IP from itself to states. NISO and NBET are still coming to grips with their successor arrangements. State players and regulators are beginning to learn about market settlement, tariff reform, gas-to-power obligations, off-grid growth, embedded generation and planning state-level reforms. This is not the moment for destabilising amendments that tell investors Nigeria may reverse its most important electricity reform yet.

What lies behind all this plotting?

Legislation should solve real problems. What problem does this bill solve? Have states complained that the Act gives them too much autonomy? Has the federal government shown that state markets are creating chaos? Have consumers demanded that Abuja continue to control distribution inside states? The answer is no. What we have seen is the opposite: States taking responsibility, development partners supporting implementation, investors exploring State-level opportunities, and practical decentralised reform finally emerging. Have investors asked for NERC to be superior to state regulators? The answer could be yes. If so, which ones and why?

The bill misdiagnoses the sector. Nigeria’s electricity problem is not that states have too much power. It is that Abuja has had too much ineffective control for too long. The national market did not fail because states regulated it. States did not create the chronic liquidity crisis, metering failure, broken subsidy architecture, weak gas-to-power settlement chain, fiction of available capacity without commercial offtake, or politics-driven transmission expansion. These were failures of the centralised model. Why rush to restore that model?

The answer may lie in bureaucratic survival instincts. Federal agencies, even those originally established as reformers, that have grown to define their existence through their being and revenues, not their reform mandates, will resist any mandate requiring them to devolve and coordinate rather than command and contract. Legislators accustomed to treating electricity as federal may struggle to accept that states now have real authority. Some market participants may prefer the devils they know in Abuja to the new, uneducated ones in the States. Yet special interest discomfort is not a reason to vandalise reform.

To be clear, no serious advocate of state electricity markets argues for regulatory anarchy. Nigeria needs coordination, a strong national system operator, coherent grid codes and interoperability between state markets and the national wholesale market. It needs rules for interstate trade, cross-border transactions and grid-connected generation. It needs safety standards, consumer protection, anti-vandalism provisions and dispute resolution. It needs a national conversation in which federal and state policymakers and regulators together discuss reliable, sustainable interstate trade.

What remedies?

But cooperation must follow the Constitution. Collaboration is better than coercion. National standards can be developed in national workshops and adopted by states. NISO can define and enforce grid-interface rules for the national grid and regional grids serving groups of state markets. NEMSA can provide services when retained or recognised by states. A voluntary regulators’ forum can support model rules. The National Council on Power can become a real intergovernmental platform. The National Economic Council can address fiscal and subsidy questions. None of this requires subordinating states to federal agencies.

So, what should happen? First, the National Assembly should stop the bill in its current form. Not amend around the edges. Stop it, because its philosophy is wrong.

Second, the Nigeria Governors’ Forum should take a common position. This is not an Akwa Ibom, Enugu or Lagos issue. It is a constitutional federalism issue. If the National Assembly can claw back electricity powers by ordinary legislation today, it can do the same in other devolved sectors tomorrow.

Third, any future amendment must start with accepting the Constitution’s meaning, not institutional preference. The question is not what NERC, NEMSA, the Ministry or any committee would like to control. The question is what the Constitution permits.

Fourth, states must accelerate implementation, but wisely. The best defence of state electricity markets is performance. States must build credible regulators, avoid politicising tariffs, design bankable markets, protect consumers, attract investment, meter customers, support productive clusters, create rural access programmes and prove that decentralisation can deliver results. In this, the responsibility is shared with federal MDAs because they are custodians of the intellectual property — institutional memory, data and precedents — that states need to get their work started with. Federal MDAs, especially NERC, have an obligation to grandfather and not hold back this precious IP.

Consolidate. Not constrained.

It is a curious irony that this is a private member’s bill from the Senate Committee on Power, chaired by Senator Enyinnaya Abaribe, who represents the good and hard-working people of the Abia South Senatorial District. This constituency is the home of the Geometric Aba ringfence, Nigeria’s only functional state-based and state-focused utility. This IPP is now regulated by the Abia State Electricity Regulatory Authority and serves 9 LGAs of the old NEPA Aba and Osisioma business districts, including the world-famous Ariaria Market.

With the other 8 LGAs outside the Geometric ring fence now served by a disco called New Era, the natural next step is to build on the foundation of the Aba ring fence, think through and sort out commercial and technical issues, enable the Geometric IPP to expand to serve the New Era disco area, and establish a precedent for how an embedded generator can become a utility provider in a natural gas-rich state. Such precedent would provide learning that can be applied in a fuel-neutral manner in other areas where other types of fuel are prevalent.

The Electricity Act, 2023, is not perfect. No law is. But its central insight is correct: Nigeria’s electricity future will not be built by recentralising yesterday’s failure. It will be built by enabling states to exercise their constitutional duty to build electricity markets within their territories, accountable to their citizens, connected where necessary to the national grid, but not subordinate to Abuja.

This is the reform to protect. That is why this amendment bill, in its present version, ought to be redrafted to consolidate and build on the gains of the Electricity Act, 2023, and not to constrain the measurable progress it is already bringing.

Eyo O. Ekpo is the CEO, Excredite Consulting Limited and a past commissioner, Nigerian Electricity Regulatory Commission.