Decentralised power market key to unlocking Nigeria’s energy future – NGF DG

Nigeria’s decentralised electricity market, enabled by the Electricity Act 2023, is critical to delivering reliable and affordable power, the Director-General of the Nigeria Governors’ Forum (NGF) has said, warning that effective implementation will determine the success of ongoing reforms.

Delivering a keynote address themed “From Central Control to State Power: Implementing Nigeria’s Decentralised Electricity Market,” at the BusinessDay Energy Conference in Lagos, Abdulateef Shittu, the NGF boss, described the Electricity Act 2023 as a “decisive shift” from decades of centralised control that has failed to meet the country’s energy demands.

Represented by Chijioke Chuku General Counsel & Head, Energy, he noted that the Act provides, for the first time, constitutional and legal backing for states to establish and regulate their own electricity markets, license operators across the value chain, and design energy systems tailored to their local economic realities.

“Nigeria is too diverse for a one-size-fits-all electricity model,” he said, stressing that decentralisation is not merely a policy preference but a practical necessity. “What works in Lagos may not work in Nasarawa, and what is required in Bayelsa differs from Kano.”

Early gains, uneven progress

According to him, the reform process is already gaining traction, with a number of states emerging as early movers. These states have begun setting up electricity regulatory commissions, developing legal and policy frameworks, licensing embedded generation and mini-grid projects, and engaging investors.

However, progress remains uneven across the federation. Many states are still in the early stages of building institutional capacity and grappling with the technical and financial complexities of managing electricity markets.

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To address this gap, the NGF is playing a central coordinating role by facilitating peer learning, supporting capacity development, aligning policies, and engaging federal authorities and development partners.

“Our objective is clear, no state should be left behind in this transition,” he said.

Renewables at the core of decentralisation

The DG emphasised that decentralisation must go hand in hand with energy transition, positioning renewable energy as a critical pillar of Nigeria’s future electricity market.

He said the new framework enables states to accelerate deployment of solar and hybrid systems in underserved communities, scale mini-grids and off-grid solutions, and support embedded generation for industrial clusters.

Beyond environmental considerations, he described renewable energy as an economic imperative, citing its lower long-term costs, faster deployment timelines, and ability to expand access in rural and peri-urban areas.

“Decentralisation gives us a unique opportunity to modernise, not just reform,” he added, while calling for the right mix of policies, incentives, and financing structures to unlock investment.

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Coordination Risks Loom

Despite the opportunities, the DG warned that decentralisation introduces a new layer of complexity that must be carefully managed.

Key challenges include coordination between federal and state authorities, integration with the national grid, regulatory consistency, and persistent gaps in metering, data, and revenue assurance.

He cautioned that without deliberate alignment, the sector risks fragmentation, which could undermine investor confidence and system stability.

“This is why coordination must be at the heart of implementation,” he said, calling for clear frameworks for federal-state collaboration, stronger links between state markets and national infrastructure, and transparent regulatory environments.

Private Capital as the Game Changer

The address highlighted the critical role of private sector investment in achieving the scale required to transform the power sector.

The DG stated unequivocally that the government alone cannot finance the transition, urging policymakers to focus on creating bankable and predictable frameworks, de-risking investments, ensuring contract enforceability, and providing regulatory clarity.

“When these conditions are met, capital will flow,” he said.