Former President Muhammadu Buhari signed the Fifth Constitution Alteration Bills into law prior to his departure in 2023. Among other things, these bills moved electricity from the Exclusive Legislative List to the Current Legislative List, allowing state governments to invest in electricity generation, transmission, and distribution in areas that were connected to the national grid.
This should allow state governments to give energy to their citizens in the same manner that they provide water, even though it would make obsolete the Federal Government-owned Nigeria Rural Electrification Agency (REA), which has been supplying electricity to some rural (and urban) areas.
Seye Opeleye, Director General of Development Agenda for Western Nigeria (DAWN) Commission stated that “No legislation, since 1999, has excited Nigerian development stakeholders as this.”
State governors must now be more bold in establishing and managing their own electricity companies or persuade private organizations to do so within their states as a result of the devolution of power sector management in the nation.
Beyond what President Buhari did, President Bola Tinubu has escalated the situation. In addition to allowing state governments to control power generation, transmission, and distribution inside their borders, he has signed the power Amendment Bill, 2023.
Tinubu’s modest move is a huge step that should help decentralize the electrical industry even more, give states greater authority over their energy infrastructure, attract private investment, and increase the nation’s electricity supply’s regularity.
Electricity markets are already dominated by seven states: Edo, Ekiti, Enugu, Imo, Kogi, Ondo, and Oyo. Before September 2025, it is anticipated that Lagos, Niger, Ogun, and Plateau States will have finished their own transitions.
Naturally, the development is already being criticized by wet blanket skeptics. Oddly, some so-called industry experts also seem to have a very pessimistic perspective of the entire situation, while officials from the Nigerian Electricity Regulatory Commission (NERC) are voicing concerns about some states’ capacity to control their markets.
However, the most optimistic observers stress the significance of NERC and state regulatory collaboration, staff and agency capacity improvement, and the latter’s financial preparedness to make sufficient investments.
Read Also: Japa Syndrome: BANC Urges FG to Tackle Youth Unemployment and Irregular Migration
We remember with fondness the boldness of former Governor Tinubu to build a power plant in Lagos State, even though we dare hope that the Niger Dam power facility can be turned over to the Niger State government under established payment protocols.
In an agreement worth $800 million, he persuaded Enron to operate a 90 megawatt independent power plant in the first phase and a 5409 megawatt thermal plant in the long run. Olusegun Obasanjo, however, ruined this magnificent attempt since his military background interfered with his ability to fulfill his duties as Nigeria’s democratically elected president.
President Obasanjo’s centralized strategy thwarted Governor Tinubu’s attempts to regularly supply energy to Lagos State’s residents and businesses.
However, state governors are now in a difficult position as a result of the president’s recent actions. They might have no justifications for not building or expanding power infrastructure in their states given the additional funding they currently get from the Federal Accounts Allocation Committee following the elimination of the gasoline subsidy.
The creation of jobs is the most direct benefit of increasing state capacity to generate electricity. Of fact, as a result of greater economic activity, the states will eventually start to receive more Internally Generated Revenue.
The structure that divides generation, transmission, and distribution into silos is the reason why the electrical sector, which was partially privatized during the government of President Goodluck Jonathan, is not doing properly. The investors who purchased the legacy electricity companies also exhibited obvious managerial, financial, and technical incompetence.
It should be feasible for each market to have a single company that produces, transmits, and distributes its own electricity in order to facilitate the operationalization of the new law.
To provide consistent electricity within their geopolitical zones, states should combine their resources. For example, by pooling resources to create a massive electricity company, the Southwestern states could benefit from economies of scale.
We urge the media and civil society organizations to closely monitor the new electricity policies’ implementation and hold state governments accountable for supplying electricity.
