At the very least 15 Nigerian states are at varied phases of growing operational electrical energy markets, marking a major shift within the nation’s energy sector panorama two years after the enactment of the Electrical energy Act 2023, BusinessDay’s findings have revealed.
The event represents a basic restructuring of Nigeria’s electrical energy structure, transitioning from a centralised federal system to a multi-tier market the place states can construct, regulate, and function their very own energy infrastructure.
Adebayo Adelabu, minister of Energy, confirmed on the final PwC roundtable that the transition has moved past coverage formulation into energetic implementation, with states demonstrating unprecedented initiative in taking possession of electrical energy entry inside their territories.
“Fifteen state electrical energy markets are at present at totally different phases of improvement. Nigeria has transitioned from a centralised, one-size-fits-all electrical energy system to a dynamic, multi-tier federation of electrical energy markets,” Adelabu said, emphasising that the shift was a ‘structural necessity,’ given the nation’s inhabitants of over 200 million folks.
Learn additionally: How Nigeria can utilise diaspora remittance to solve electricity, other critical sectors – Prof. Iskil Lawal
BusinessDay’s findings present that Edo, Ekiti, Enugu, Imo, Kogi, Lagos, Niger, Ogun, Ondo, and Oyo have established regulatory companies, with Plateau, Abia, Akwa Ibom and Delta not too long ago following swimsuit.
Regardless of the momentum, monetary sustainability stays a significant concern. The distribution phase continues to face extreme liquidity pressures, with the sector’s indebtedness exceeding N4 trillion by December 2024 and month-to-month subsidy accumulation averaging N200 billion.
Rekhiat Momoh, chief govt officer of Eko Electrical energy Distribution Firm, revealed that her firm alone carries excellent receivables exceeding N183 billion, comprising N66 billion from authorities Ministries, Departments and Businesses (MDAs), N96 billion from residential clients, and N20 billion from industrial and industrial clients.
“Legacy debt stays one of many heaviest burdens on the distribution phase,” Momoh mentioned, noting that many distribution corporations function with damaging capital positions and stay constrained by acquisition money owed from the 2013 privatisation train.
Business knowledge present that common mixture technical, industrial and assortment losses throughout the sector stay at roughly 40 %, whereas assortment effectivity averages solely 70 %, which means almost one-thirds of billed vitality income is misplaced month-to-month.
Lagos State has emerged because the frontrunner in implementing sub-national electrical energy regulation, having enacted its electrical energy market legislation and established a regulatory fee staffed with skilled trade practitioners.
Biodun Ogunleye, commissioner for Power and Mineral Sources in Lagos, defined that the state requires in extra of 6,000 megawatts of dependable electrical energy to satisfy present and near-term demand, necessitating aggressive infrastructure funding and personal capital mobilisation.
“Lagos has adopted a transitional, non-punitive engagement method with current utilities to stabilise operations and maintain investor confidence,” Ogunleye mentioned, highlighting the state’s give attention to speedy enhancements in provide reliability and full metering protection.
The Lagos regulatory mannequin consists of structured dialogue with utilities, joint efficiency benchmarking, and phased compliance, somewhat than speedy enforcement actions. The state can be growing embedded era property, franchising fashions, and getting ready for grid-connected renewable infrastructure, together with what can be Nigeria’s first hydrogen energy plant.
Nonetheless, Ogunleye cautioned that electrical energy sector financing have to be approached with fiscal accountability, warning towards “unguarded pledging of statutory income inflows” that might current materials sovereign danger to future administrations.
Learn additionally: Electricity subsidies hit 10-year high despite tariff hike
Human capital gaps
Human capital deficits, notably on the state stage, characterize a significant danger to profitable decentralisation. Replicating regulatory and operational experience throughout 36 states requires sustained funding in technical capability that many states can’t at present afford.
The federal authorities has strengthened collaboration with the Nationwide Energy Coaching Institute of Nigeria to increase the pipeline of expert personnel, with a focused programme to coach 100 power-sector engineers yearly. The ten-year goal is to develop no less than 1,200 extremely expert engineers for the trade.
Abba Aliyu, managing director of the Rural Electrification Company (REA), famous that the transition has triggered ‘unprecedented engagement’ between federal establishments and sub-national governments, with structured collaborations involving greater than 20 states on electricity-access mapping and state-specific electrification pathways.
“The passage of the Electrical energy Act has basically altered the behaviour of sub-national governments, creating each the authorized authority and institutional confidence for states to take direct accountability for electrification outcomes,” Aliyu mentioned.
Concrete outcomes are already rising.
In Adamawa State, the federal government has assumed possession of a renewable vitality coaching centre and partnered with a non-public supplier to equip 500 youths with renewable vitality expertise. Within the North-East usually, extra era capability from a 12-megawatt set up is being structured right into a industrial association to provide a state-owned water therapy facility.
Regardless of the challenges, investor curiosity in sub-national electrical energy markets is growing. Peter Olowononi, director of Shopper Relations for Anglophone West Africa at African Export-Import Financial institution, mentioned the emergence of state-driven end-to-end electrical energy methods has launched new credit-relevant constructions.
“States are more and more approaching improvement finance establishments with built-in, end-to-end vitality safety methods that hyperlink era, distribution and offtake inside a single funding framework,” Olowononi defined. “This structural coherence considerably strengthens challenge bankability.”
He revealed that no less than one superior state-level transaction is into account the place a sub-sovereign entity is leveraging statutory income inflows to amass a stake in a distribution firm, creating an built-in energy-security platform.
For lenders, these sub-national, vertically coordinated vitality methods materially enhance danger visibility, as smaller, well-defined market items permit for clearer evaluation of provide, demand, and cash-flow management.
Learn additionally: Electricity Act Amendment Bill propose sale of 11 DisCos over capital failure
BusinessDay’s findings present that system efficiency indicators present measurable enchancment. Sector income elevated from roughly N1 trillion in 2023 to about N1.7 trillion in 2024, with projections of N2.3 trillion by end-2025. Authorities subsidy obligations have decreased by about N700 billion.
Put in era capability has elevated to roughly 14 gigawatts, with a historic peak era of 5,801.44 megawatts recorded in 2025. Grid collapses declined from about 12 incidents in 2024 to 1 incident in 2025.
By the Presidential Metering Initiative and the Distribution Sector Restoration Programme, over 13 million meters are programmed for deployment to handle the persistent metering hole that has weakened client confidence and distorted billing accuracy.
“The transition to a multi-tier electrical energy market is now not non-compulsory; it’s a structural necessity and the pathway to a dependable, aggressive and economically viable energy sector,” Adelabu concluded.
