Eight big changes to expect with Lagos electricity law

Lagos State Governor, Babajide Sanwo-Olu, has signed the Lagos Electricity Bill 2024 into law, a pivotal step towards ensuring 24-hour electricity supply across the state.

The new law replaces the Lagos State Power Sector Reform Law of 2018 and aligns with the Federal Government’s 2023 approval allowing states to generate and distribute electricity.

“The bill is a major step by the state government to ensure a 24-hour electricity supply to every corner of the state, following the Federal Government’s approval for states to generate and distribute energy in 2023,” said Gboyega Akosile, the governor’s special adviser on media and publicity on X.

Read also: Sanwo-Olu signs Lagos electricity bill into law

Here are eight major changes to watch for under this landmark legislation:

Creation of a localised electricity market

The law establishes the Lagos Electricity Market, a state-governed system that will oversee the generation, transmission, and distribution of electricity within Lagos State.

This move reduces dependence on the national grid, offering Lagos more autonomy in addressing its energy demands. This restructuring could improve efficiency and reliability in power supply for the state’s industries and residents.

Establishment of Key Regulatory Bodies

It also creates four new agencies to promote off-grid solutions and enhance electricity access in underserved areas.

The four new institutions will drive the implementation and governance of this law:

Lagos State Electricity Regulatory Commission will regulate market players, issue licenses, and ensure compliance with industry standards.

Lagos Independent System Operator (ISO) will manage operational efficiency and grid reliability.

Lagos State Electrification Agency will lead efforts to electrify underserved areas.

These bodies provide a regulatory and operational framework to ensure the market runs smoothly and fairly.

Electrification of underserved communities

With the establishment of the Electrification Fund, Lagos will prioritise expanding electricity access to underserved and unserved areas.

This initiative aims to bridge the energy equity gap, empowering communities that have historically lacked reliable electricity access. This change supports sustainable urbanization and reduces inequality across the state.

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Promotion of renewable energy

The law strongly encourages a shift towards renewable energy sources. By promoting diverse energy generation, including solar, wind, and waste-to-energy solutions, Lagos aligns itself with global environmental sustainability goals. This transition not only reduces dependence on fossil fuels but also positions Lagos as a leader in green energy development in Nigeria.

Strengthening energy security and infrastructure

The establishment of a Power Enforcement Unit aims to combat electricity theft and protect critical infrastructure. This proactive measure is expected to reduce financial losses in the electricity sector, deter vandalism, and ensure reliable service delivery. For a state with growing industrial demands, safeguarding infrastructure is critical.

Host community development obligations

The law mandates that licensed power-generating companies allocate a percentage of their operating expenditure to developing host communities. This policy introduces a Community Trust Fund to ensure these areas benefit directly from energy projects, fostering goodwill and sustainable development.

Improved private sector investment

By fostering competition and innovation, the law creates an attractive climate for private-sector investment in the electricity sector. This move could lead to increased capital inflow, the establishment of new generation plants, and the modernization of Lagos’s power infrastructure. More importantly, it signals Lagos’s readiness to create a financially viable electricity market.

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Emphasis sustainability

The law’s core mandate emphasises delivering affordable, reliable electricity to all citizens while promoting energy efficiency. Through cost-reflective tariffs and investments in renewable sources, the law seeks to balance financial sustainability with consumer affordability, enhancing the overall quality of life for Lagos residents.