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Repealed the Electric Power Sector Reform Act 2005.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
Commercial Opportunity Intelligence
Analyst Notes
The Policy:
President Bola Ahmed Tinubu signed the Electricity Act 2023 into law on 9 June 2023, barely ten days after his inauguration. The landmark legislation repealed the Electric Power Sector Reform Act of 2005 and fundamentally altered the governance of Nigeria's electricity sector by removing electricity from the Exclusive Legislative List of the Constitution. States now possess the constitutional authority to generate, transmit, distribute, and regulate power within their territories.
What It Changed From the Previous Regime:
Prior to the Act, the EPSRA saw to the unbundling of NEPA and enabled private sector participation through the further unbundling of the Power Holding Company of Nigeria into six generation companies, eleven distribution companies and the Transmission Company of Nigeria. However, eighteen years after the passage of the EPSRA and about ten years after full privatisation, not much significant progress had been made with regards to stability of power supply.
Key Structural Changes:
The Act supports further unbundling of the Nigerian Electricity Supply Industry, allowing more private actors to participate in transmission and distribution and encouraging open access to the national grid. Independent electricity transmission networks can now be established subject to licensing by NERC or State Commissions. The Act promotes mini-grids, embedded generation, and renewable energy investments. The Rural Electrification Fund is maintained to support access in underserved areas, with strong backing for solar, wind, hydro, and biomass solutions.
TCN Unbundling — Done:
NERC officially unbundled the Transmission Company of Nigeria into two entities: the Nigerian Independent System Operator Nigeria Limited (NISO) and the Transmission Service Provider (TSP), via Order No. NERC/20204/45 dated 30 April 2024. The TCN is required to transfer all market and system operation responsibilities to the newly formed NISO.
State Market Implementation — Current Status as of August 2026:
NERC has now transferred electricity market regulation to 16 states, with the Lagos transition — the most significant — completing on 4 June 2025. NERC directed Ikeja Electric and Eko Disco to incorporate subsidiaries to run intrastate supply and distribution, each licensed by the new Lagos State Electricity Regulatory Commission within 60 days.
As at June 2026, 12 states — Enugu, Ekiti, Ondo, Imo, Oyo, Edo, Kogi, Plateau, Ogun, Ebonyi, Taraba, Delta, Lagos, Nassarawa, Jigawa and Bayelsa — have enacted their state electricity acts. Of these, nine have officially notified NERC and transition arrangements are underway, with three — Enugu, Ekiti and Ondo — fully taking charge of their state electricity markets.
National Integrated Electricity Policy:
The Federal Executive Council approved the National Integrated Electricity Policy on 5 May 2025, marking a new era for Africa's most populous economy's electricity market.
Cost-Reflective Tariffs:
Full tariff implementation for Band A customers was introduced in 2024 to ensure market viability, alongside a new service-based tariff regime based on service quality and supply hours.