Clear regulations, cost-reflective tariffs, critical to building state electricity markets – Stakeholders

Electricity stakeholders have revealed that Nigerian states’ electricity markets require clear regulations and cost-reflective tariffs to drive bankable investment for growth.

During a panel session at the BusinessDay Energy Conference 2026, with the theme ‘Beyond the Grid: How States Can Rewrite Nigeria’s Power Story’ on Tuesday, energy players from the government, legal, regulatory, and advisory sectors provided insights into capacity gaps, investor concerns, market structure, and pathways to unlocking sub-national electricity markets.

Bola Adigun, a financial expert at Deloitte, said that for states to decentralise successfully, they must identify and anchor credible offtakers, fast-track the licensing of mini-grid projects, and engage in regional coordination. For her, this will improve collaboration within closer states.

“The decentralisation of power does not provide a coordination mechanism across states. However, to improve effectiveness and efficiency, states can identify one or two neighbouring states, and they coordinate regionally,” she said.

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Currently, over 20 states have passed electricity laws, and many have received transition orders. However, implementation remains uneven, with several states yet to fully assume control of their electricity markets.

The speakers highlighted the role of investment in funding states’ decentralisation ambitions. While more than 50 percent of states are operating under decentralised electricity operations, many are yet to fully implement their operations owing to a funding gap.

Chinonye Ajayi, managing counsel at Olaniwun Ajayi LP, said that “capacity is needed to attract funding, but funding is required to build capacity,” noting that limited technical capacity and funding constraints are some of the challenges at the state level.

But Abudu Muhammad, managing director of Nigerian Independent System Operator (NISO), clarified that decentralisation does not translate to disintegration. He also said that some states lack technical expertise and institutional capacity for decentralisation.

“Decentralisation should not lead to fragmentation,” Muhammed said, stressing that states need common baseline standards, clear licensing frameworks, and coordinated regulatory approaches.

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According to him, states can develop their markets but must remain aligned with the national grid system.

The stakeholders all reiterated that the success of Nigeria’s state electricity markets will depend less on new laws and more on execution, regulatory clarity, and investor confidence.

Decentralised power refers to generating electricity at or near the point of consumption rather than relying on a centralised, distant power plant.