Adebayo Adelabu, the Minister of Power, announced the federal government's decision to suspend the transfer of regulatory authority over electricity to state governments. This was revealed during the 8th Africa Energy Market Place (AEMP) conference held in Abuja on Friday.
Earlier in April, the Nigerian Electricity Regulatory Commission (NERC) had transferred oversight of the electricity markets in Ondo, Ekiti, and Enugu to the states' electricity regulatory bureaus (OSERB). However, Adelabu stated that the suspension was necessary to ensure state governments and power sector stakeholders fully understand the requirements for operating an electricity market.
Adelabu emphasized that a thorough understanding of regulatory oversight transfer is crucial for the power sector's sustainability. "We must proceed with caution and not rush this process. Our market is not mature enough. Centralizing regulation under one body has presented numerous challenges. Now, creating a regulatory framework across 36 states must be done methodically and strategically," he said.
He proposed using a few states as pilot programs, which led to halting further regulatory autonomy grants. The transfer will be tested in selected states across Nigeria's geopolitical zones. "By running the pilot for three to six months, or up to a year, we can identify and address potential issues before extending regulatory autonomy further," Adelabu explained.
Adelabu clarified that granting regulatory autonomy to a state encompasses the entire electricity value chain—generation, transmission, and distribution within the state's territory, including tariff setting. He stressed the importance of understanding the financial responsibilities involved, particularly concerning tariffs and subsidies.
"We need comprehensive discussions to ensure everyone understands the implications of regulatory autonomy. This will determine whether we are ready for full autonomy or need to implement it gradually until our electricity market matures," he said.
The minister also highlighted the underestimated capacity required for regulatory authorities in 36 states and the FCT. Each state must establish a framework to protect assets, address vandalism, ensure consumer protection, and secure sufficient capital for continuous investment and infrastructure maintenance.
