A fresh institutional conflict is emerging over the future of Nigeria’s power sector as state electricity regulators accuse the National Assembly of attempting to reverse constitutional reforms that decentralised the electricity market.

The dispute centres on the proposed Electricity Act (Amendment) Bill 2026, which state regulators say could weaken powers already devolved to sub-national governments under the constitution and the Electricity Act 2023.

In a memorandum submitted to the Senate Committee on Power, regulators from 16 states warned that the bill risks undermining ongoing reforms designed to attract investment and expand electricity access across Nigeria.

According  to The Punch report, the document was signed by electricity regulatory agencies from states including Lagos, Enugu, Abia, Edo, Oyo, Ogun, Ondo, Ekiti, Kogi, Bayelsa, and others.

States accuse lawmakers of “recentralisation” attempt

The regulators argued that several provisions in the amendment bill seek to restore federal oversight over areas they say are now constitutionally under state jurisdiction following the Fifth Alteration to the 1999 Constitution.

That constitutional reform and the resulting Electricity Act 2023 allowed states to generate, transmit, and distribute electricity within their territories, leading to the creation of sub-national regulators and state electricity markets.

State agencies said they had already begun engaging investors and implementing reforms based on the current legal framework, warning that policy reversal could destabilise the sector.

Legal and investment concerns raised

In their submission, the regulators identified at least 17 disputed provisions in the amendment bill, including proposals affecting:

• State legislative authority over electricity regulation
• Control of intra-state electricity markets
• Federal oversight of grid-related activities
• The role of the Nigerian Electricity Regulatory Commission (NERC)
• Structure of the wholesale electricity market
• Consumer protection and tariff-setting powers
• Regulation of mini-grids and independent distribution systems

They argued that the bill wrongly assumes that state powers derive from the National Assembly rather than directly from the constitution, describing this interpretation as inconsistent with Nigeria’s federal structure.

“The constitutional division of powers is fundamental to federalism,” the memorandum stated, warning that any attempt to redefine state authority through ordinary legislation could be unconstitutional.

Warning over investor confidence and market stability

The regulators also cautioned that the proposed amendments could create uncertainty for investors already committing capital to Nigeria’s emerging sub-national electricity markets.

They said states had begun implementing reforms and signing investment deals under frameworks established by the Electricity Act 2023, and that sudden regulatory changes could disrupt market confidence.

“The intention appears to reconsolidate powers at the federal level, reversing decentralisation before it has fully taken root,” the document noted.

Dispute over regulatory hierarchy

A key point of contention is the proposed expansion of NERC’s supervisory authority, including provisions that would allow it to retain final appellate jurisdiction over disputes involving state regulators.

State agencies argued that both federal and state regulators operate within distinct constitutional spheres and should not be placed in a hierarchical relationship.

They further opposed proposals allowing the Nigerian Electricity Management Services Agency and other federal bodies to extend oversight into state electricity markets.

Industry structure and market implications

Other disputed clauses include proposals to classify electricity services as essential services across all jurisdictions, regulate consumer contribution funds at the federal level, and impose transition timelines for states establishing independent electricity markets.

State regulators argued that coordination between federal and state bodies should be achieved through agreements rather than statutory imposition, warning against what they described as “top-down restructuring” of decentralised markets.

Broader reform tension

The disagreement highlights growing friction over the direction of Nigeria’s electricity sector reform, one of the country’s most significant infrastructure liberalisation efforts in decades.

The Electricity Act 2023, enacted following the constitutional Fifth Alteration, marked a shift away from centralised control and enabled states such as Lagos, Enugu, Edo, Ekiti, and Ondo to begin building independent electricity markets.

Energy analysts say the decentralisation drive has been seen as key to attracting private investment, improving grid reliability, and expanding access, but warn that regulatory uncertainty could slow progress.

Outlook

As the Senate continues deliberations on the amendment bill, the outcome is expected to determine whether Nigeria deepens its decentralised electricity market model or reverts to a more centralised regulatory structure.

For investors and operators, the decision carries significant implications for policy stability, tariff regulation, and the long-term structure of Africa’s largest power market.