The Federal Government has formally transferred the responsibility for electricity generation, transmission, and distribution to the 36 states of the federation under the framework of the Electricity Act 2023.
The reform represents a fundamental restructuring of the nation’s energy governance model, allowing states to regulate and manage their own electricity markets.
By decentralising authority, the Act seeks to enhance operational efficiency, attract state-level investment, and accelerate progress toward reliable and affordable power supply across the country.
According to senior officials at the Ministry of Power, the previous model of centralised regulation created inefficiencies that limited expansion and service delivery.
The new legal framework provides each state with the right to license power generation companies, establish regulatory commissions, and manage electricity distribution within their jurisdictions.
This shift is expected to open a new chapter for subnational energy markets, enabling state governments to tailor energy policies to their local industrial and residential needs.
Energy economists have described the change as a long-awaited correction to Nigeria’s outdated power structure. With the country’s population exceeding 200 million and demand for electricity rising steadily, the one-size-fits-all approach controlled from Abuja had become unsustainable.
Decentralisation, they noted, allows competition and accountability to flourish while unlocking private investment that can address the persistent generation and transmission gap.
Industry experts also predict that the reform will stimulate regional development. States with strong industrial bases—such as Lagos, Rivers, Ogun, and Kano—are expected to leverage their economic strengths to attract investors in renewable and off-grid power solutions.
Others may focus on smaller modular plants, mini-grids, and community-level supply networks to power local enterprises and improve rural electrification.
The Electricity Act further creates a policy environment that encourages private sector participation throughout the energy value chain.
It eliminates the long-standing monopoly of federal agencies over grid operations and empowers subnational regulators to set their own tariffs, monitor distribution companies, and ensure transparency in billing and service delivery.
Analysts believe the law could also pave the way for innovative financing models and strategic partnerships between state governments, development institutions, and private investors. Such collaborations are expected to strengthen local economies, enhance productivity, and reduce the overall pressure on the national grid.
While implementation challenges remain—particularly in states without existing technical capacity—the devolution of power sector responsibility signals a structural turning point in Nigeria’s economic reform agenda.
It reinforces the Federal Government’s commitment to building a liberalised, investment-friendly energy market where efficiency, competition, and accountability drive long-term sustainability.
If effectively implemented, the Electricity Act 2023 could redefine Nigeria’s energy landscape, transforming state governments from passive beneficiaries into active stakeholders in the nation’s power future.