The Electric Power Sector Reform Act of 2005 was the first serious attempt to break that cycle
By Inyali Peter
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Published on June 17, 2026
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6 min read
Nigeria’s relationship with electricity is one of the longest-running stories of promise deferred. For decades, the National Electric Power Authority, NEPA, was the singular custodian of a sector that consistently failed the people it was meant to serve. Epileptic supply, crumbling infrastructure, and a bureaucratic monopoly that stifled investment became defining features of daily Nigerian life.
Nigeria’s relationship with electricity is one of the longest-running stories of promise deferred. For decades, the National Electric Power Authority, NEPA, was the singular custodian of a sector that consistently failed the people it was meant to serve. Epileptic supply, crumbling infrastructure, and a bureaucratic monopoly that stifled investment became defining features of daily Nigerian life.
The Electric Power Sector Reform Act of 2005 was the first serious attempt to break that cycle. It unbundled the unwieldy Power Holding Company of Nigeria, PHCN, into 18 successor companies, created the Nigerian Electricity Regulatory Commission, NERC, and laid the groundwork for private sector participation. By 2013, the privatisation of generation and distribution components of the sector was complete. The promise was enormous. The delivery, unfortunately, was uneven.
What the 2005 reforms could not fully address was the structural concentration of power at the federal level. Electricity remained a federal preserve, governed from Abuja, regulated from Abuja, and chronically underfinanced from Abuja. The sector needed not just new owners, but a new architecture.
That architecture began to take shape with the constitutional amendments that moved electricity from the Exclusive to the Concurrent Legislative List, culminating in the historic Electricity Act of 2023. For the first time, states were empowered to establish their own electricity markets, create state regulatory commissions, licence private operators within their borders, and develop solutions tailored to their local realities. It was a decisive shift from centralisation to federalism and from uniformity to innovation.
The impact has been tangible and swift. As of early 2026, more than 20 states have enacted electricity laws, with regulators established in Lagos, Enugu, Ekiti, Ondo, Imo, Oyo, Edo, Abia and others. Governor Bassey Otu of Cross River State signed the Cross River State Electricity Bill into Law in August 2025, even though the state is yet to establish its own regulatory authority.
Solar mini-grids have expanded. Embedded generation projects are being licenced by state regulators. In communities like Araromi-Okeodo in Osun State, electricity arrived for the first time in 90 years through a hybrid solar mini-grid. These are not mere statistics but signs of a sector stirring to life.
But, into this emerging ecosystem comes the proposed Electricity Act (Amendment) Bill 2026, and with it, a controversy that threatens to unsettle the progress already made.
State electricity regulatory commissions from 16 states have filed a strongly worded memorandum with the Senate Committee on Power. They have identified some contentious provisions in the bill. Their central alarm is that the proposed amendments seek, whether by design or otherwise, to claw back at the federal level the very powers that constitutional reform and the 2023 Act devolved to states.
The concerns are specific and serious. The bill introduces a “non-conflict” clause that would subordinate state electricity laws to federal provisions, even within intrastate markets. It proposes expanding federal oversight over activities connected to the national grid, including operations that terminate entirely within state boundaries. It seeks to increase NERC’s authority over state regulators on matters that states now hold constitutional jurisdiction over. And it would impose rigid conditions that effectively allow NERC to retain overriding authority even where states have assumed full regulatory control.
The state regulators challenging the amendment have maintained that the general intention appears to be to reverse the devolution of legislative, governance and regulatory powers in favour of reconsolidating authority at the federal level. They warned further that investment decisions have already been taken on the basis of the Electricity Act 2023, and that those investments are now at risk.
That last point deserves particular emphasis. Investment follows certainty. Investors, financiers, and independent power producers do not commit capital in environments where the laws are in flux. When legal frameworks shift after investment decisions have been made, the consequences are not just legal but financial, reputational, and long-lasting. A country that reverses electricity sector reforms midstream will find it harder to attract the next wave of capital, at the moment when that capital is most needed.
The state regulators have also raised a constitutional argument that goes to the heart of Nigeria’s federal compact. They argue, correctly, that the National Assembly cannot, through ordinary legislation, withdraw legislative powers from state governments that are derived from the Constitution. Those powers derive from the 5th Alteration to the 1999 Constitution, not from the Electricity Act itself. Any attempt to redefine or curtail them through a federal statute would invite judicial challenge and create the very legal uncertainty that investors fear most.
Nevertheless, it is worth asking: what problem is the 2026 amendment bill solving? If the answer is coordination gaps between federal and state regulators, there are better instruments like inter-governmental frameworks, joint technical committees, and harmonised standards that do not require dismantling state authority. If the answer is inadequate electricity supply, then the history of this sector shows that the problem was not caused by decentralisation. It predates it by decades. It was born of insufficient investment, weak infrastructure, poor tariff policy, and implementation failures at the federal level. Restoring federal dominance will not fix what federal dominance created.
Every law can and should be improved. The Electricity Act 2023 is not above review. There are legitimate questions to be addressed around grid coordination, national technical standards and the transition framework for states assuming regulatory control. These are conversations worth having. But there is a meaningful difference between refining a law to improve its implementation and amending it in ways that fundamentally reverse its direction.
The reforms provided in the 2023 Electricity Act are barely three years old. The state regulatory commissions are nascent. The investment pipelines are early-stage. The mini-grids and embedded generation projects are still being commissioned. This is exactly the moment to strengthen implementation, not to introduce structural uncertainty.
The National Assembly should engage in consultation with stakeholders, state governments, electricity regulators, investors, and civil society before advancing provisions that carry this level of consequence. The concerns of the 16 states challenging the amendments are not a minority position; they represent the majority of the subnational regulatory framework that the 2023 Act was designed to activate.
Unarguably, Nigeria’s power crisis is and was never a problem of federalism. It has been a problem of insufficient will, capacity, and investment over many decades. The Electricity Act 2023 charted a new course, one that enlists the energy, ambition, and accountability of state governments in solving a national problem. That course must be protected.
Methinks, the lights are beginning, slowly, to come on. This is no time to reach for the switch.
