Nigeria’s ongoing electricity sector reforms hinge on clearer regulatory frameworks and stronger coordination between federal and state authorities.
This is according to a new report by PricewaterhouseCoopers (PwC) in its report titled “Priority actions for the successful evolution of Nigeria’s multi-tier electricity market”.
The report comes as Nigeria continues its transition toward a multi-tier electricity system with expanded roles for state governments and sub-national regulators.
PwC’s analysis highlights growing policy and operational tensions as reforms deepen, particularly around jurisdiction, investment certainty, and market coordination.
What the firm is saying
PwC argues that regulatory uncertainty and overlapping mandates between federal and state authorities remain one of the biggest risks to Nigeria’s electricity reforms. The firm stresses that without clear rules, the transition to a decentralised electricity market could create confusion for operators and investors.
- “Regulatory clarity and federal and state alignment… As states exercise authority over intra-state electricity activities, overlap with federal institutions is unavoidable,” the report stated.
- “Where transition arrangements are unclear or inconsistent, uncertainty rises for utilities, investors and consumers. Clear boundaries and agreed transition rules provide the foundation on which all other elements of reform depend,” it added.
- “Data shared by utilities and reinforced by the Honourable Minister highlighted persistent liquidity stress, legacy debt, metering gaps and ageing infrastructure,” PwC noted.
- “Where consumption data is unreliable, billing disputes persist, collections weaken and regulatory decisions become harder to sustain,” the report said.
The firm concluded that clarity in governance, data systems, and transition rules is essential for stabilising the reform process.
More Insights
Beyond regulatory overlap, PwC points to structural weaknesses in Nigeria’s electricity distribution system as a major bottleneck to reform success. These issues, it noted, continue to affect liquidity, efficiency, and investor confidence despite ongoing policy changes.
The report also highlights that decentralisation alone will not resolve long-standing inefficiencies in the power sector.
- Persistent liquidity challenges continue to weaken distribution companies
- Legacy debt and inadequate metering remain unresolved structural constraints
- Ageing infrastructure continues to limit service reliability
- Investment outcomes depend heavily on governance quality and project structure
PwC further observed that while reforms are underway, the underlying financial and operational weaknesses in the distribution segment still require coordinated intervention.
Get up to speed
President Bola Ahmed Tinubu, in June 2023, assented to the Electricity Act 2023, a landmark legislation originally passed by the National Assembly in July 2022.
- The new Act replaces the Electric Power Sector Reform Act 2005 and introduces a comprehensive framework to guide the post-privatisation phase of the Nigerian Electricity Supply Industry (NESI). It is also designed to attract increased private sector investment into the power sector.
- A major feature of the law is the removal of electricity from the Exclusive Legislative List, effectively decentralising the sector.
- This reform allows state governments, private companies, and individuals to generate, transmit, and distribute electricity independently, thereby breaking the long-standing monopoly at the national level.
- The Act is expected to drive competition, improve service delivery, and expand access to electricity across the country by enabling subnational and private participation in power infrastructure development.
What you should know
Nairametrics earlier reported that DisCos are facing renewed financial pressure following a directive by the NERC requiring them to refund N20.33 billion to customers who purchased prepaid meters under the Meter Asset Provider (MAP) scheme.
- NERC previously directed that all refunds under the amended order must be completed within 12 months, with reimbursements applied directly to customer electricity bills.
- In February, the Federal Government announced plans to share the electricity subsidy costs with other tiers of government, like the state and local governments, from 2026, thereby ending the burden of carrying the subsidy in the power sector.
