Policy Details
What Changes
Repealed the Electric Power Sector Reform Act 2005. Removed electricity from the Federal Exclusive Legislative List, granting all 36 states constitutional authority to generate, transmit, distribute and regulate power within their territories. Mandated unbundling of the Transmission Company of Nigeria into two entities — the Nigerian Independent System Operator (NISO) and the Transmission Service Provider (TSP). Opened transmission and distribution to private actors under NERC or State Commission licensing. Legalised independent electricity transmission networks, mini-grids, embedded generation and renewable energy investments.
Introduced service-based tariffs and cost-reflective pricing. Established the framework for state-level electricity regulatory commissions to replace NERC oversight at subnational level.
Who Is Affected
All electricity generation companies (GenCos), distribution companies (DisCos), the Transmission Company of Nigeria, independent power producers, state governments, private investors in Nigerian power, and every residential and commercial electricity consumer in Nigeria. Directly affects the DARES programme, the Nigeria Electrification Project, all IPP development, and smart metering programmes.
Why It Matters
Nigeria's most significant electricity sector reform in 20 years and the policy anchor for all energy project, capital and corporate intelligence in Nigeria. Without understanding this Act, no investment decision in Nigerian power makes sense — it defines who regulates what, who can invest where, what tariffs are permissible, and how private capital enters the sector. Every energy project in your database that touches Nigeria operates within this framework.
Expected Impact
16 states have already transferred electricity regulation to their own State Electricity Regulators as of August 2026. Three states — Enugu, Ekiti and Ondo — are fully operating their own electricity markets. Lagos completed its transition on 4 June 2025. Over time, all 36 states are expected to establish independent electricity markets, creating 36 distinct sub-national investment environments within Nigeria's power sector. The National Integrated Electricity Policy, approved by the Federal Executive Council on 5 May 2025, sits as the implementing framework beneath this Act.
Risks / Uncertainties
Implementation is deeply uneven — 20 of 36 states have not yet transitioned, meaning most of Nigeria still falls under NERC. Cost-reflective tariffs risk civil unrest in states with inadequate supply hours to justify pricing increases. The national grid collapsed at least 12 times in 2024, a trend continuing into 2025, creating systemic reliability risk that undermines investor confidence regardless of the regulatory framework. The Federal Government has acknowledged Nigeria lacks half the skilled workforce needed to operate and expand the power sector, which is a structural bottleneck for implementation at both federal and state level.
What Happens Next
More states completing their transition to State Electricity Regulators; further unbundling of DisCos at the state level; new IPP licensing rounds under state commissions; NISO becoming fully operational and taking over market and system operations from TCN