States Accuse FG of Sabotaging Power Sector Decentralization

State governments have accused the Federal Government of attempting to sabotage power sector decentralisation, warning that proposed amendments to the Electricity Act 2023 could reverse the gains of Nigeria’s electricity reform trajectory and undermine their newly granted regulatory autonomy.

The Forum of Power Commissioners, speaking through its Chairman Prince Eka Williams and Secretary Omaley Omaley, has demanded the immediate establishment of a joint federal-state coordination committee to address mounting tensions and create a harmonized framework for electricity sector governance. The commissioners emphasized that successful power sector reform requires genuine collaboration between federal and state authorities, with clear respect for subnational regulatory powers over electricity tariffs, licensing, and distribution systems.

The forum’s intervention comes amid escalating disputes between federal regulators and state electricity commissions, most notably the clash between the Nigerian Electricity Regulatory Commission and the Enugu Electricity Regulatory Commission over Band A tariff adjustments. State representatives argue that without proper stakeholder engagement and the promised coordination mechanisms, Nigeria’s electricity sector risks fragmenting into competing regulatory jurisdictions that could undermine the very decentralization objectives the 2023 Act was designed to achieve.

The commissioners have outlined a pathway forward that includes immediate operationalization of the stalled federal-state coordination committee, transparent dialogue on state equity in power assets, accelerated regulatory harmonization processes, and respect for constitutional power devolution. They insist that any amendments to the Electricity Act must strengthen rather than weaken state autonomy, while ensuring that all stakeholders work within a framework that promotes synergy over supremacy in electricity governance.

The controversy erupted when EERC reduced Band A electricity tariffs from ₦209 per kilowatt-hour to ₦160 per kilowatt-hour, a decision that NERC immediately challenged as exceeding state regulatory authority and threatening market stability. This confrontation represents the first major test of Nigeria’s new decentralized electricity regulation model against the backdrop of mounting operational challenges facing the sector.

Lagos State residents are currently experiencing a 25-day scheduled power outage as the Transmission Company of Nigeria conducts critical maintenance on the Omotosho-Ikeja West 330kV transmission line from July 28 to August 21, 2025, between 8:00 AM and 5:00 PM daily. This planned disruption, affecting Nigeria’s commercial capital, underscores the fragility of the national grid infrastructure and the cascading impact of maintenance activities on economic productivity.

The Federal Government currently owes Power Generation Companies over ₦4 trillion in unpaid debts, comprising ₦1.2 trillion for the first half of 2025, ₦2 trillion unpaid in 2024, and ₦1.9 trillion in legacy debts dating back to 2015. This staggering debt burden has prompted GenCos to threaten sector-wide shutdowns, which would precipitate a national electricity crisis far beyond the current regulatory disputes.

In response to the mounting crisis, President Bola Tinubu on Friday, July 25, 2025, held a crucial meeting with members of the Association of Power Generation Companies, appealing to GenCos to give the federal government more time to complete the verification and validation of longstanding debts owed to them. The presidential intervention came after Minister of Power Adebayo Adelabu proposed the high-level meeting to address the debt crisis and avert power sector collapse.

The dispute centers on competing interpretations of the Electricity Act 2023, which was designed to decentralize electricity regulation and empower states to manage their own electricity markets. NERC maintains that states lack authority over the national grid and federally licensed power stations, while EERC argues that the Act grants states comprehensive autonomy to regulate electricity within their borders, regardless of supply source.

The regulatory tensions escalated dramatically during a high-level engagement on Tuesday between Minister of Power Adebayo Adelabu and state commissioners of energy, where state governments accused the Federal Government of attempting to reverse the gains of power sector decentralization. State representatives warned that proposed amendments to the Electricity Act could erode their newly granted autonomy and undermine Nigeria’s electricity reform trajectory.

Prince Eka Williams, Chairman of the Forum of Power Commissioners and Cross River State Commissioner for Power, criticized the ministry for stalling earlier agreements reached with the Nigeria Governors’ Forum, including the formation of a joint federal-state coordination committee on electricity. “That committee has yet to be constituted. If it had, we wouldn’t be here going back and forth,” Williams said. “We must work within a framework that respects our traditional roles and ensures that all stakeholders are heard.”

Minister Adelabu has taken a proactive stance in managing the crisis, stating that “we recognize the urgency of this matter. The government is committed to resolving this debt to stabilize the sector and prevent further crisis.” Adelabu has indicated that the federal government may resort to borrowing to settle part of the debt, while committing to clear ₦2 trillion of the total ₦4 trillion debt before the year ends. The Minister has also highlighted operational improvements, noting that there have been no national grid collapses in 2025, a direct result of interventions under the Presidential Power Initiative, which has added over 700MW of transmission capacity.

Energy policy analyst Adetunji Iromini has criticized NERC’s position, arguing that it “renders the Electricity Act 2023 ineffective” by limiting state regulatory autonomy. However, other experts caution that uncoordinated state interventions without proper financial backing could create systemic risks across Nigeria’s interconnected power grid. EERC’s tariff reduction, implemented without a clear subsidy mechanism, could distort market dynamics and undermine cost recovery for distribution companies.

Williams raised concerns about the Federal Government’s handling of electricity sector reforms, warning against any move to centralize powers already devolved to the subnational level under the Electricity Act 2023. He cited the lack of clarity on state equity in power assets, insufficient collaboration, and the slow pace of regulatory harmonization despite repeated calls. “We cannot support any amendment that undermines the spirit or intent of the original Act,” Williams declared. “Especially those that seek to recentralize powers that were constitutionally devolved. That would be a huge step backward.”

Speaking on behalf of the Forum of Power Commissioners, Williams noted that while states have made significant progress with some enacting their own electricity laws and establishing independent regulators, gaps still remain. “Despite repeated calls and engagements, there has been no meaningful progress from NERC or relevant agencies addressing the actualization of state equity in Discos and NDPHC,” he added.

NERC has consistently argued that any deviation from cost-reflective tariffs must be supported by state-funded subsidies to prevent destabilizing the national electricity supply industry. The timing of this regulatory dispute is particularly concerning given the broader financial instability plaguing the sector. President Tinubu has approved a ₦4 trillion bond initiative to address the mounting debt crisis, yet with the 2025 government budget allocating only ₦900 billion for power sector obligations, questions remain about the adequacy of current financial interventions to resolve both legacy debts and ongoing payment shortfalls.

Rivers State Commissioner for Energy and Secretary of the Forum of Power Commissioners, Omaley Omaley, backed Williams’ position, emphasizing that states were not interested in creating regulatory chaos but in building an inclusive market that protects consumers, encourages investors, and delivers value. “We are not playing to the gallery. Each state has engaged rigorously with the law and with stakeholders like the REA and NERC. Many of us have passed electricity laws, and about 17 states have REA-conveyed mini-grid permits,” Omaley noted.

He stressed that 18 states have passed their electricity laws, with some establishing regulatory commissions. “If Enugu has done something different, it’s a learning curve, not a declaration of war,” Omaley observed. “What we want is synergy, not supremacy. Electricity is now a commodity, not just a utility. Our people expect value, and we must deliver it through dialogue and fairness.”

The absence of harmonized transition frameworks has created regulatory overlaps and market uncertainty. Without clear guidelines governing how states should engage with the national grid and federal licensees, similar conflicts are likely to emerge as more states assert their regulatory independence under the new Act. The current crisis demands immediate and coordinated action across multiple fronts, with the 25-day Lagos blackout highlighting infrastructure vulnerabilities that require sustained investment and better maintenance scheduling to minimize economic disruption.

The resolution of this dispute will set critical precedents for Nigeria’s power sector transformation. Success requires collaborative federalism where decentralization is matched with coordination, transparency, and shared responsibility between federal and state authorities. States must develop comprehensive electricity market laws that define tariff methodologies, establish transparent subsidy frameworks, and create protocols for grid access. The Power Consumer Assistance Fund, as provided in the Electricity Act 2023, offers a potential mechanism for sustainable subsidy implementation.

NERC must balance its responsibility for market stability with respect for state autonomy. The commission is urged to issue clear transition guidelines and provide technical support to emerging state regulators while avoiding regulatory overreach that contradicts the decentralization objectives of the 2023 Act. The debt crisis necessitates not only the proposed bond solution but also fundamental reforms to ensure sustainable payment mechanisms that prevent future accumulation of such massive liabilities.

Nigeria’s electricity sector faces a convergence of regulatory, operational, and financial crises that require comprehensive and coordinated solutions. The immediate priority must be preventing GenCo shutdowns through expedited implementation of the bond program while establishing transparent payment mechanisms to prevent future debt accumulation. Infrastructure resilience must be enhanced through strategic maintenance scheduling that minimizes economic disruption, particularly in commercial centers like Lagos.

The regulatory framework requires urgent clarification through joint NERC-state regulator working groups that can develop harmonized transition guidelines, establish clear jurisdictional boundaries, and create standardized subsidy implementation protocols. States must be supported in developing comprehensive electricity market laws while being held accountable for ensuring that tariff adjustments are backed by sustainable financing mechanisms.

Long-term sector sustainability demands diversification of generation sources, acceleration of the embedded generation program, and implementation of cost-reflective tariffs balanced with targeted social protection measures. Only through such coordinated federal-state collaboration can Nigeria transform its electricity sector challenges into opportunities for sustainable energy security and economic growth.

The Electricity Act 2023 represents a bold step toward democratizing Nigeria’s power sector, but its success depends on coherent execution that transforms potential sources of conflict into opportunities for meaningful reform. The current crises, though daunting, present an opportunity to build a more resilient, financially sustainable, and effectively regulated electricity sector that can drive Nigeria’s economic transformation.