For decades, Nigeria has lived in a bitter contradiction: one of Africa’s largest economies, abundant energy resources, and a globally acclaimed entrepreneurial people. Yet, one of the lowest electricity access rates in the world. Every home, every office, every school, every medical centre, every place of worship, feels the crushing weight of this failure. The hum of generators plays the soundtrack of our lives; the diesel supplier and the generator mechanic have as much influence, perhaps more, on our lives than government policy. The cost, in lives avoidably lost, cash going up in diesel smoke, failed investments, lost savings and productivity, environmental damage, and wasted human potential, is staggering and utterly impossible to quantify.
The Fifth Alteration to the 1999 Constitution, as well as the Electricity Act, 2023, together offer an unprecedented opportunity to break free from this cycle of despair. It rewrites the rules of the game, empowering states to take full and exclusive responsibility for electricity distribution and the establishment of wholesale (generation and transmission) electricity markets within their respective territories. States are now responsible for designing and implementing the path to their energy security while preserving a coordinated national framework.
It was not a hasty reform; it was the product of years of debate, stakeholder engagement and constitutional change that goes back at least to February 2010, when the then governors of Akwa Ibom, Bayelsa, Cross River and Rivers states wrote to then acting president Goodluck Jonathan to ask that they be allowed to take over and decentralise the Port Harcourt Electricity Distribution Company Limited that provided (and sadly still provides) a grossly inadequate quantity and quality of supply, despite being the Disco that has the largest concentration of thermal generation within its area of operations.
Read also: Rejoinder: The Electricity Act 2023 – A path to northern empowerment, not disempowerment
But just as this new legal and policy architecture comes into force, some voices have emerged to cast doubt on its wisdom. They argue, openly or implicitly, for a return to the centralised, one-size-fits-all model that has failed us consistently. One such critique, describing the “Iniquities” of the Electricity Act, 2023, is couched in the language of national interest and technical necessity. It also sought, rather cynically, to provoke a backlash by Northern States against the Act, on the pretext that it pauperises the North in favour of the Southern States. It also reflects an attachment to what Peter Drucker famously called “yesterday’s logic”: the instinct to protect familiar institutions, practices and narrow interests, even when they have long outlived their usefulness or were never even useful in the first place.
Fortunately, a rejoinder was published, also by BusinessDay, titled “The Electricity Act 2023 – A Path to Northern Empowerment, Not Disempowerment”. This rejoinder, thankfully written by another Northerner, deconstructed the “Iniquities” article with a comprehensive marshalling of the constitutional and legislative history that led to the Electricity Act, 2023, and the technical and economic reasons why the Electricity Act, 2023, particularly its provisions on State Electricity Markets, is a seminal piece of legislation to be acclaimed by anyone who wishes to see Nigeria achieve its massive potential.
This resistance is not new. Globally, every major decentralisation of infrastructure governance, from telecoms to rail to energy, has met pushback from those accustomed to holding the levers of control and appropriating key infrastructure assets to their narrow, parochial interests. In Nigeria’s case, the centralisation of electricity regulation and market operation under the Federal Government and NERC (the Nigerian Electricity Regulatory Commission) was born of an era when states were treated as little more than administrative outposts, not as economic actors in their own right. That era is gone for good. The constitutional amendment of 2023 is explicit in reasserting that electricity is now a concurrent responsibility with no fetter on the states’ exclusive responsibility for distribution. States can legislate, regulate, and operate electricity markets within their territories, and they can do so on their own or in partnership with private investors and communities. While one would not advocate the former option, it is within a state’s rights to choose that path.
Why centralised control failed
It is important to recall the track record of the old model. For two decades after the Electric Power Sector Reform Act (EPSRA), 2005, created NERC and began the long process of privatisation, the promise was that a single national regulator and market operator would deliver efficiency, attract investment, and steadily expand access. Instead, for reasons beyond this piece, the sector stagnated. The national grid remained fragile and underinvested. Distribution companies (DisCos) struggled to collect revenue, reduce losses, and expand coverage. Tariff setting became a political football, slow-moving and unable to match the realities of cost-reflective pricing.
The result? As of 2023, Nigeria’s per capita electricity consumption from the formal, grid-connected market is by far the lowest amongst its perceived peer BRICS countries and among the lowest in Africa, despite enormous latent demand. Large swathes of rural Nigeria remain unconnected to the grid. An unspoken but huge concern amongst policymakers is that the successors of the African Development Bank/World Bank Mission 300 programme to bring electricity access to 300m Africans who still do not have it can be regarded as a success if it does not bring sustainable connections to the estimated 86m Nigerians currently without electricity access.
Across Nigeria, particularly in the urban areas but also in rural communities, grid and Disco reliability is so poor that many consumers self-generate more than they draw from the DisCos. It is so much so that the alternative, captive genset market, at an estimated 50 GW of capacity, is ten times the daily capacity on the grid. The central control model has proven both brittle and blind — incapable of meeting diverse local needs or creating the conditions for local, regulatory accountability.
Read also: The Iniquities of the Electricity Act of 2023 – South vs. North, Rich vs. Poor
The promise of the Electricity Act
The Electricity Act 2023 does not destroy the national electricity market. Instead, it creates room for new subnational markets to grow alongside and be connected to it. It preserves the role of NERC in regulating the National Wholesale Electricity Market, but it allows states that are ready to establish their own electricity laws and regulators to take over intrastate electricity regulation. How can this be wrong?
This is not a theoretical notion. It is how electricity markets function in the large federal jurisdictions of Brazil, Chile, the USA, the EU, Australia, India and Canada. Indeed, in Canada, the province of Alberta operates a multi-level electricity market. Nigeria’s Electricity Act provides a clear transition mechanism: once a state enacts its own electricity law and establishes a regulator, and gives notice, NERC cedes regulatory authority over intrastate activities to that state body. Section 230(9) even provides for structured collaboration between NERC and state regulators to ensure smooth handover and ongoing coordination. Far from creating chaos, the Act institutionalises cooperation.
The “Iniquities” critique treats this framework as if it were a threat to national stability. It assumes that multiple regulators will inevitably lead to conflict and inefficiency. This is a false choice. As noted above, many federal systems operate with coordinate jurisdiction in infrastructure sectors, using cooperative mechanisms to manage boundaries that are always quite clear technically, legally, economically and commercially. There is no record to date of a federal jurisdiction whose electricity governance models have resulted in states with regulatory powers leading to fragmented markets.
The deeper flaw in this resistance to reform is its failure to acknowledge how badly the current centralised regime has served Nigerians. If the old logic had worked, the case for keeping it might be stronger. But when a model produces chronic underperformance, doubling down is not prudence; it is inertia and a selfish clinging to the status quo dressed up as caution.
Se ction 230(9): Collaboration, not confrontation
One of the most ignored provisions of the Electricity Act, perhaps deliberately, is Section 230(9), which enjoins NERC and state regulators to “foster and maintain a beneficial inter-institutional relationship amongst themselves”. This writer happens to be aware that the entire S.230(9) was proposed and drafted by a full-fledged Northern Nigerian legislative adviser to the House of Representatives Committee on Power. So much for “North vs. South, Rich vs. Poor”. This provision is a device that recognises that state regulators will have teething challenges.
Obviously, it would be up to NERC, in the spirit of collaborative federalism, to act as a senior partner and provide guidance and assistance to state regulators taking over intrastate responsibilities. If managed with maturity, transparency and good faith, the outcome will be bridge-building that enables states to benefit from NERC’s institutional memory, technical expertise and the huge cache of data that it has amassed during the past 19 years. This provision can shorten the learning curve for state regulators, ensure regulatory decisions remain consistent with national standards where appropriate, and prevent duplication of effort. But for it to work, both sides must see it as a partnership of collaborators, not as a hierarchy or an opportunity to talk down.
The economics of reform
The political case for decentralisation is compelling, but the economic case is even stronger. Electricity is a capital-intensive sector. Investors look for clarity, stability, and proximity to decision-makers who can address issues quickly. In a centralised system, regulatory bottlenecks are magnified. It can take months or years for a project proposal in a given state to be processed in Abuja. In a state-regulated market, timelines can be shorter, and regulation can be tailored to local realities.
Moreover, states can compete to attract investment by offering credible regulatory regimes, transparent processes, and targeted incentives. This competition is healthy; it forces all players to improve. As perhaps the only Nigerian to have the dubious honour of having been consecutively Commissioner for Market Competition & Rates and then for Consumer Affairs at NERC, I can honestly testify that in a country as large, populous and diverse as Nigeria, the idea that a single electricity regulator can optimise its work for every local context, after 19 years of repeating the same things and getting the same results, is simply unrealistic.
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Drucker’s warning: Yesterday’s logic
Peter Drucker’s insight is worth repeating: “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” The turbulence in Nigeria’s electricity sector is obvious — chronic shortages, unreliable supply, and weak investor confidence. The danger is thinking that the institutions and structures that presided over this failure can somehow be tweaked into success without changing the underlying locus or allocation of policymaking and regulatory authority and operational responsibility.
Yesterday’s logic says that states are too inexperienced to regulate electricity and that only a central authority can be trusted. Today’s reality is that several states, Lagos, Edo, Ondo, Ekiti, and Akwa Ibom among them, are already more advanced in their energy planning and investment mobilisation than the federal system was at equivalent stages. It is inevitable that as lessons are learnt and templates of good practice are established, more states will follow. Denying them the authority and scope to act and grow is to punish capacity, innovation and entrepreneurial initiative, and ultimately punish Nigeria, rather than reward these qualities.
“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” — Peter Drucker
The subnational imperative
One is by no means sugarcoating the challenge. State-level electricity markets are not a panacea. Some states will falter and make mistakes. All will face challenges — from building regulatory capacity to ensuring financial sustainability and protecting consumers. But the alternative is to keep all eggs in a national basket that has already dropped them too many times. The Fifth Alteration and the Electricity Act together mark a constitutional and legislative pivot: they restore to states a role that was theirs in the early decades after independence, when regional governments drove much of Nigeria’s infrastructure development. The choice now is whether to seize that role with seriousness and integrity or to watch it wither under the weight of centralising nostalgia.
Passing a law is the easy part. Disciplined, consistent, capable and sustained execution is where all reforms succeed or fail. For states, that means:
• Building credible institutions—independent regulators with technical capacity and transparent processes.
• Designing fit-for-purpose markets—tariff structures, licensing frameworks and dispute resolution mechanisms that work in local contexts.
• Attracting investment—through bankable projects, predictable rules, and active engagement with capital providers.
• Protecting consumers—ensuring that expanded access does not come at the expense of affordability and fairness.
It also means collaborating with the federal system where interests align, such as on interstate transmission, national commercial and technical rules and standards, and shared infrastructure. Section 230(9) of the Act anticipates this. The Federal Government and the States should embrace it.
Read also: Enugu’s Band A tariff slash aligned with Electricity Act 2023 – Power Commissioners
Conclusion: The future is local
The debate over the Electricity Act speaks to a choice between two futures: one in which we cling to the comfort of familiar failures, and the other in which we recognise that decentralisation is logical and necessary, and we work together on building something bold and new. Those who call for rolling back the advent of state electricity markets in the name of unity or efficiency, or avoiding disruption, are deliberately asking Nigerians to keep paying the price of a failed model. The true unity worth preserving is that which comes from delivering electricity to our people as a fundamental right, no matter which level of government gets it done.
In the end, the market and history will judge — not in abstract terms, but in megawatts delivered, hours of supply restored, and communities lit up. If subnational markets perform better, they will gain legitimacy by results. If they fail, their citizens will hold them accountable more directly than they can ever hold a distant federal government or regulator.
The Electricity Act 2023 is an invitation to states to prove what they can do when given the tools and the mandate. Accepting that invitation is not just a legal option; it is a moral and economic imperative. Denying states the opportunity to make their electricity markets work is quite simply wrong and unconscionable. As Peter Drucker might say, the future belongs to those who are willing to let go of yesterday’s logic and act with today’s possibilities for tomorrow’s promise. In Nigeria’s electricity sector, tomorrow’s promise lies in the hands of our states, if only they would take it.
“The true unity worth preserving is that which comes from delivering electricity to our people as a fundamental right.”
Eyo O. Ekpo, a past Commissioner for Market Competition & Rates and for Consumer Affairs at NERC, is currently Component Leader – Power, United Kingdom-Nigeria Infrastructure Advisory Facility (UKNIAF).
