The Nigerian Power Sector has undergone significant structural transformation following the constitutional amendment and the enactment of the Electricity Act (the “Act”) in 2023. Since June 2023, over 14 States have initiated the transfer of regulatory oversight from the Nigerian Electricity Regulatory Commission (“NERC”) to their respective State Electricity Regulatory Commissions (“SERCs”), with some States, such as Enugu, having completed this transition.
While the decentralisation of regulatory authority within the Sector was widely welcomed as a step towards accelerating development in the Nigerian Electricity Supply Industry (“NESI”), it has also given rise to operational challenges and regulatory friction. Tensions have emerged between NERC and SERCs, as well as between SERCs and other market participants, largely centred on the scope of the States’ regulatory authority. Some key areas of friction include:
- Tariff regulation: In July 2025, the Enugu State Electricity Regulatory Commission issued Tariff Order No. EERC/2025/003, reducing the Band A tariff from N209/kWh to N160/kWh (effective 1 August 2025) and freezing tariffs for Bands B–E within the State. This development has raised questions regarding the extent of State authority over tariffs applicable to electricity supplied via the national grid. It was also met with resistance from the Enugu Electricity Distribution Company (“EEDC”) and MainPower Electricity Distribution Limited (EEDC’s subsidiary), which reportedly resulted in an intervention by the Nigerian Independent System Operator.
- Redistribution of Franchise Areas: Conflicts have also arisen between NERC-licensed Distribution Companies (“DisCos”), SERCs, and State-licensed operators over the redistribution of franchise areas. A notable example is the ongoing tension between the Imo State Electricity Regulatory Commission and the EEDC regarding the allocation of franchise areas previously served exclusively by EEDC to Orashi Electricity Company Ltd.
- Licensing concerns: There have been reports of SERCs issuing licences without clearly defined application procedures or requirements, and without alignment with wholesale market rules, which remain within NERC’s regulatory remit. The absence of clearly defined licensing procedures creates a risk of regulatory arbitrage, where operators gravitate towards less stringent regulatory environments and exploit regulatory loopholes, potentially undermining the stability of the NESI.
Anticipating such regulatory friction and gaps, Section 230(9) of the Act provides for the establishment of an intergovernmental coordinating body comprising NERC and the SERCs. This body is mandated to promote regulatory alignment and support the development of principles,
standards, and rules for the electricity market, thereby reducing overlaps, minimising conflicts, and mitigating the risk of regulatory arbitrage. On 25 March 2026, NERC announced the inauguration of the Forum of Nigerian Electricity Regulators (“FONER”) pursuant to Section 230(9). According to NERC, FONER is expected to serve as a platform for dialogue and coordination among regulators on key issues such as market operations, capacity building, consumer protection, and tariff regulation. It is also anticipated by industry experts that the FONER will provide an early-stage mechanism for resolving regulatory disputes, preventing escalation.
The establishment of FONER has, however, raised questions regarding the role of the Forum of Commissioners of Power and Energy in Nigeria (“FOCPEN”). While FOCPEN has played an active role in policy advocacy within the Sector, particularly in relation to the implementation of the Electricity Act, its mandate appears largely policy-oriented based on its composition. In contrast, FONER is a creation of statute, with a defined mandate of fostering regulatory coordination. It remains to be seen whether FOCPEN’s relevance and momentum will be sustained following FONER’s emergence, particularly in States that have completed their transition processes.
Overall, the inauguration of FONER is a commendable step towards improving coordination within Nigeria’s evolving multi-tier electricity market. Its effectiveness will, however, depend on the extent to which it can foster alignment between NERC and SERCs, and and ensure the clarity and stability required for the Sector’s continued development.