By Amieyeofori Ibim
President Bola Ahmed Tinubu recently made history by signing the Electricity Amendment Bill into law, officially liberalising Nigeria’s power transmission sector and completing the final phase of the nation’s long journey toward a fully privatised electricity market. This landmark legislation now allows states to generate, transmit, and distribute power within their borders — a move hailed as revolutionary for Nigeria’s economic growth and energy independence.
This development is more than just a legal milestone; it marks the first time in Nigeria’s history that all segments of the electricity value chain — generation, distribution, and now transmission — have been deregulated. With this single act, President Tinubu has done what no other administration before his dared to do: fully relinquish federal monopoly over electricity delivery.
To appreciate the significance of this reform, it is important to revisit Nigeria’s electricity history. Former President Olusegun Obasanjo initiated sector reforms in the early 2000s, unbundling the monolithic National Electric Power Authority (NEPA) into separate generation and distribution companies under the Power Holding Company of Nigeria (PHCN). He oversaw the first wave of power generation privatisation.
In 2013, President Goodluck Jonathan’s administration advanced the process by privatising the distribution companies. That decision was greeted with optimism but quickly mired in controversy, owing to claims of favoritism in the selection of investors, poor regulation, and a failure to deliver measurable improvements in power supply.
Despite these earlier efforts, the power sector remained hamstrung by the government’s firm grip on transmission — the segment that moves power from generating stations to consumers via the grid. This bottleneck limited the effectiveness of prior reforms and created a fragmented, underperforming system.
With transmission now in the hands of states and private investors, the electricity market can finally function as a true ecosystem, where each part of the chain is driven by efficiency, innovation, and market incentives. This bold move has shattered the decades-long myth that power transmission must remain a federal function to ensure stability.
The bill also empowers state governments to issue licenses to investors for local mini-grids, embedded generation, and distribution networks. Already, seven states — Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi — have taken over regulatory functions, while others such as Lagos, Ogun, Niger, Plateau, and Anambra are preparing to do the same.
This decentralisation signals a massive opportunity for states to craft energy strategies that reflect their local economic needs, resource availability, and population demands. No longer bound by the inefficiencies of the national grid, each state can now design, regulate, and operate power systems to meet the needs of its people and industries.
The economic implications are enormous. Nigeria loses an estimated $29 billion annually to power shortages. By liberalising the sector, the Tinubu administration is laying the groundwork for industrial expansion, job creation, and poverty reduction — all anchored on reliable electricity.
Manufacturing hubs, agricultural clusters, and digital enterprises can now thrive without the crippling cost of self-generated power. Businesses that once spent over 40% of operational costs on diesel generators may now access cleaner, cheaper, and more reliable electricity.
The legislation is expected to spark a surge in investment across the power value chain. Independent power producers, technology firms, renewable energy companies, and international investors now see Nigeria as a viable, decentralised energy market with diverse entry points.
The potential for renewable energy development is especially promising. With more autonomy, states can harness solar, wind, hydro, and biomass resources without depending on federal coordination. This not only boosts energy security but also aligns with global climate goals and Nigeria’s net-zero targets.
State governments are now being challenged to rise to the occasion. With control comes responsibility. Beyond political statements, they must build institutional capacity to license, regulate, and oversee energy projects. Weak regulation at the state level could easily lead to price gouging, poor service delivery, and infrastructure duplication.
States must also develop comprehensive electricity masterplans, conduct energy audits, and provide incentives for investors. Collaboration with technical experts and development partners will be critical in building these frameworks from the ground up.
Corporate organisations must also recognise the opportunities presented by this reform. Industrial zones, manufacturing conglomerates, and estate developers can now partner with state governments to build embedded generation systems or operate private mini-grids for clusters of users.
Rather than rely on unstable central supply, companies can build their own independent energy systems, potentially exporting excess power to neighbouring communities or business partners. This is not only cost-effective but enhances productivity and competitiveness.
However, the federal government cannot simply walk away after this privatisation. There remains a need for strong oversight, coordination, and standardisation — particularly to ensure interoperability of grids, safety compliance, and protection of consumers across states.
The Nigerian Electricity Regulatory Commission (NERC) must now take on a new role — not just as a national regulator, but as a supervisor and capacity-builder for state-level regulatory bodies. Where no state authority exists, NERC must continue to regulate and ensure consumers are not left behind.
There is also the need for a unified policy framework that protects against arbitrary tariffs, guarantees consumer rights, and ensures energy equity for rural and underserved populations. Energy liberalisation must not widen the gap between rich urban states and poorer rural ones.
To prevent market fragmentation, the federal government must work with states to establish a national power interoperability standard — a blueprint for ensuring that state-level grids and networks can eventually link up for load-sharing and emergency support.
This is especially important in a federal system like Nigeria’s, where energy needs and resource distribution vary widely. A collaborative, rather than competitive, approach will maximise gains and avoid duplication or isolation of power markets.
Tinubu’s reform also offers an opportunity for Nigeria to finally digitise its power sector. States can now pioneer digital metering, smart grids, real-time billing, and mobile payment systems, leapfrogging the decades of inefficiency that plagued the national grid.
Additionally, the new law could serve as a template for reform in other critical sectors like water supply, rail transport, and broadband infrastructure. It sends a clear message: the federal government must no longer be the bottleneck to development in a nation of 200 million.
Critics of power sector reform often point to the failures of past privatisations. Yet, this latest step could succeed where others faltered, provided there is transparency, accountability, and inclusivity. Local ownership, community involvement, and fair competition must be pillars of the new system.
As Nigeria stands on the brink of a decentralised energy revolution, the path forward requires bold leadership at every level — from state governors and corporate executives to local councils and community leaders.
Consumers must also be vigilant. With increased choice and decentralised markets comes the need for active civic engagement, public feedback, and demand for quality service. Electricity is not a privilege; it is a right that powers livelihoods and dreams.
President Tinubu has not just signed a bill — he has signed a new chapter in Nigeria’s development story. The challenge now lies in implementation. If done right, this reform could light up Nigeria — literally and economically — like never before.
This unprecedented privatisation of power transmission completes a long journey started over two decades ago. Nigeria now has a chance to redefine its energy future with decentralisation, innovation, and partnership as its guiding principles. The time to act is now — state by state, community by community, project by project. _Ibim is Editor of The Tide Newspapers, political analyst and public affairs commentator
