When President Bola Tinubu signed the Electricity Act into law in 2023, it was celebrated as a transformative move to decentralise Nigeria’s power sector. The law removed electricity from the Exclusive Legislative List, granting states the authority to generate, transmit, and distribute electricity within their borders. It also empowered them to regulate their electricity markets independently, licensing players across the value chain.

Beyond decentralisation, the Act amended key statutes governing Nigeria’s electricity industry. The Nigerian Electricity Regulatory Commission (NERC) moved quickly, issuing new regulations aimed at reforming the sector and attracting private investment. The legislation was hailed by many stakeholders as a turning point for Nigeria’s electricity challenges — a bold step by the Tinubu administration, even though the bill itself did not originate from the presidency.

However, just two years later, the Act is facing turbulence. The very decentralisation it introduced has sparked legal and regulatory tensions, raising fears that, if not carefully managed, the law could worsen the sector’s problems. The Act is now undergoing a second round of amendments in the Senate — facing stiff opposition from state governments and labour unions alike.

State Power Surge: NERC Hands Over to States

NERC has begun transferring regulatory authority over intra-state electricity markets to 10 states — Edo, Ekiti, Enugu, Imo, Kogi, Lagos, Niger, Ogun, Ondo, and Oyo — with Plateau next in line for full handover by September 12. Abia and Delta have also expressed readiness to take control.

These transfers follow provisions under Section 230 of the Electricity Act, which lays out the orderly devolution of power sector oversight to sub-national regulators.

Tariff Tussle in Enugu

A recent flashpoint emerged in Enugu State, where the state’s electricity regulator, the Enugu Electricity Regulatory Commission (EERC), slashed tariffs for Band A customers from N209/kWh to N160/kWh — effective August 1, 2025. The order applied to MainPower Electricity Distribution Ltd., the new utility firm that replaced Enugu Electricity Distribution Company after the state took over market regulation.

EERC Chairman Chijioke Okonkwo defended the reduction as “cost-reflective,” citing federal generation subsidies that lower actual costs. He noted that MainPower’s average cost stood at N94/kWh — due to the Federal Government covering N45 out of the N112/kWh generation cost — allowing a lower Band A rate while freezing rates for other customer bands.

But Okonkwo warned that this rate would be unsustainable if the federal subsidy were removed, potentially pushing tariffs above current levels.

Industry Backlash

The tariff cut provoked swift backlash from power generation and distribution companies. Gencos accused Enugu of worsening sector debt by relying on a non-guaranteed federal subsidy. They argued that the state must fund any tariff shortfall itself if it insists on lowering prices below market cost.

Joy Ogaji, CEO of the Association of Power Generation Companies, criticised the move as based on unrealistic assumptions. She warned it set a troubling precedent and ignored the massive sector debt — now over N4 trillion, with N1.2 trillion added in just the first half of 2025.

“The EERC has assumed the Federal Government will cover 60% of the cost gap without a firm subsidy policy in place,” she said. “This undermines investor confidence and contradicts the purpose of state-level regulation.”

The Association of Nigerian Electricity Distributors echoed similar concerns, with CEO Sunday Oduntan urging states to bear the financial burden of any tariff adjustments. NERC also reminded EERC that generation and transmission remain under federal control.

Enugu officials pushed back. Joe Aneke, the governor’s power adviser, insisted that the tariff review only applied to distribution costs, not generation or transmission.

Other states — including Lagos, Ondo, and Plateau — are reportedly considering similar tariff reductions.

Senate Showdown Over Amendments

Before the tariff controversy, tensions had already emerged over a proposed amendment to the Electricity Act. The Forum of Power and Energy Commissioners expressed strong opposition, calling the bill premature and lacking consultation with states.

They noted that over 16 states have passed their own electricity laws since the 2023 Act and warned that the proposed changes would roll back key decentralisation gains. The commissioners accused the bill of undermining constitutional federalism and reviving limitations removed by the 1999 Constitution’s fifth amendment.

“If passed, the bill will provoke legal conflicts between the federal and state governments and erode the principle of cooperative federalism,” the forum said. “This is not the right time for amendments, as many states are still in the early stages of implementing their electricity laws.”

Lagos State’s Commissioner for Energy, Biodun Ogunleye, went further, accusing power distribution companies (Discos) of pushing for the amendment to undermine state reforms. “The Discos are behind this bill because they oppose the states taking control,” he claimed.

Labour Unions Resist Strike Ban

Labour groups have also raised red flags over provisions in the amendment bill that would restrict strikes in the electricity sector. The bill classifies electricity generation, transmission, and distribution as essential services, banning industrial action without a formal Minimum Service Agreement.

Violators would face fines of up to N2 million or five years in prison.

Nigeria Labour Congress President Joe Ajaero rejected the proposal, calling it oppressive and unworkable. “You can’t silence workers when their wages are withheld or conditions worsen. That’s a violation of basic human rights,” he said.

Ajaero argued that the Act was designed to reform the power market, not regulate labour relations.

A Sector on the Brink

What was once seen as a landmark reform is now mired in controversy. Legal battles, regulatory disputes, political infighting, and labour unrest have cast a shadow over the Electricity Act’s future.

Observers warn that without clear rules, cooperation, and respect for constitutional boundaries, Nigeria risks squandering another opportunity to fix its ailing power sector. Stakeholders are calling for dialogue — not division — to chart a sustainable path forward.