The Nigerian Electricity Regulatory Commission (NERC) has called for a review of how the $2 billion currently available to the Rural Electrification Agency (REA) is utilised.
This comes as the World Bank, Nigerian government officials, and energy sector leaders have collectively emphasised the urgent need for stronger regulation, better governance, and coordinated reforms to fix Nigeria’s struggling power sector.
Speaking at the event to commemorate 20 years of electricity sector regulation in Nigeria, NERC’s vice chairman, Dr Musiliu Oseni, asserted that prudent regulation had yielded substantial subsidy savings for the government, reinforcing the country’s fiscal health.
“There is a need for a policy rethink on utilising the $2bn currently available to the Rural Electrification Agency (REA).
“A substantial portion of the fund should be dedicated to providing an end-to-end solution to our industrial hubs’ power supply challenges. You can power access through mini-grids, but you can’t power your economy to prosperity,” he said.
Oseni noted that 20 years ago, the Electric Power Sector Reform Act established the Commission with a clear mandate to provide regulatory oversight of the Nigerian Power Sector.
He noted that despite the regulatory challenges, the Commission has recorded significant achievements in its two decades.
“The Commission oversaw the privatisation and unbundling of the hitherto state-owned vertically integrated monopoly.
“We have developed standard regulatory instruments to strengthen the electricity market, improve supply reliability, and enhance consumer protection.
“Relative to 20 years ago, not less than 30 per cent of the electricity consumers have experienced significant improvement in their electricity services.
“Through effective regulation, the Commission has saved the federal government several trillion of naira in subsidies, thereby contributing to the improved fiscal position of the FGN,” he said.
Dr Oseni said the Electricity Act of 2023 provides for regulatory oversight at the subnational level, and today, 15 states have received their transfer Order from the Commission.
“Eleven of them have crossed the six-month transitional period, but only eight of the eleven are currently operational. There is a vacuum in Edo, Ogun and Oyo states. I congratulate all the states that have operationalised their regulatory commission,” he said.
The VC advised the State Electricity Regulatory Commission to note that regulation is not populism, activism, or politics; rather, it requires being objective, analytical, attentive to details, independent, and able to see beyond the surface.
“You must constantly remember that there must be a utility before you can be called a regulator! While isolating yourself from the government (policymakers or legislature) is impossible, always remind yourself of your role as an unbiased umpire.
“I also urge you to avoid compromising with your licensees, no matter the situation. This is necessary to avoid regulatory capture,” he noted.
Oseni thanked the Commission’s past and present staff for their invaluable contributions to the Commission and the growth of the nation’s power sector.
In his goodwill message, the World Bank country director for Nigeria, Mr Mathew Verghis, called for stronger regulations and effective sector governance to be required to drive Nigeria’s electricity market to achieve efficiency, financial sustainability, and universal access.
He noted that Nigeria currently has the largest electricity access deficit in absolute terms globally, stressing that inefficiencies, high losses, and limited investments have continued to hamper progress since the privatisation of the power sector in 2013.
However, he expressed optimism about Nigeria’s energy future, describing the country as one with significant energy resources, huge growth potential, and an untapped demographic dividend.
“Stronger regulations and proper sector governance are central to achieving an expanded and diversified power generation mix and investment in transmission and distribution infrastructure at competitive costs,” he said.
According to him, financially viable utilities that deliver reliable services will help increase private sector participation and expand distributed renewable energy solutions for affordable last-mile access.
Verghis commended NERC’s role in shaping Nigeria’s electricity landscape through forward-looking policies that have enabled over 7.8 million Nigerians to access electricity in the past five years through distributed renewable energy initiatives.
He also lauded the Commission for its advisory roles in supporting decentralising electricity markets to states and building institutional capacity at the subnational level.
“The regulator’s role in providing transparent and balanced service to consumers and utilities is central to any power sector reform,” he added.
While congratulating NERC on its 20th anniversary, the World Bank chief reaffirmed the Bank’s commitment to supporting Nigeria’s efforts towards achieving sustainable, inclusive, and affordable power for all.
The Minister of Power, Adebayo Adelabu, gave the commendation on Thursday at the “Technical Session themed: Strengthening Power Sector Governance for a Sustainable Future” in Abuja.
He said, “As NERC marks two decades of service, we celebrate an institution that has embodied professionalism, resilience, and vision. Let this anniversary inspire a renewed commitment to collaboration between the federal and state governments, regulators and operators, public institutions, and private investors.”
The anniversary reflects the commission’s remarkable journey from the early challenges of its establishment, through the regulation of the unbundled power sector, the privatisation of key assets in the value chain, and the oversight of the Nigerian Electricity Market from the post-privatisation and Interim Market stages to the Transition Electricity Market, among other milestones.
Speaking further at the event, the minister said the federal government is implementing reforms to strengthen the entire value chain, especially the financial and operational capacity of the Distribution Companies (DisCos).
Adelabu said that their impact on the Nigerian people would measure the success of these reforms.
“This means transparent tariff-setting, enhanced metering through initiatives like the Presidential Metering Initiative, and holding all operators accountable for service delivery.
“States are now empowered to challenge DisCos and the Transmission Company of Nigeria (TCN) to serve their people better,” he explained.
According to him, the government is developing a National Electricity Policy Coordination Framework to align Federal and State actions, support States in establishing new regulators, and strengthen investor confidence through policy consistency and regulatory clarity.
“The federal government has provided the legal and policy framework. The states now have the autonomy to act. The private sector has the capital and innovation to invest. Let us not fall into the trap of constant, hasty amendments before the current Act has been fully tested. Let us have the resilience and patience to allow this new model to mature,” he said.
The minister, who was represented at the event by the Director, Distribution, Ministry of Power, Mustapha Baba Shehuri, said the administration is also advancing the Presidential Power Initiative (the Siemens Project) and has sustained generation capacity at an average of 5,300MW in 2024, up from 4,200MW in 2023.
While affirming that a decentralised system cannot thrive in an insolvent national market, Adelabu said that the government is strategically addressing the sector’s liquidity crisis.
“The government is acutely aware of the debilitating liquidity crisis, with debts to Generation Companies (GenCos) posing a severe threat to sector stability.
“I am pleased to inform you that Mr President has recently approved a N4 trillion bond to clear verified GenCos and gas supply debts. Alongside this is the commercialisation effort at developing a targeted subsidy framework to protect vulnerable households and ensure a sustainable path towards full commercialisation,” he noted.
Also speaking, the former President of the African Development Bank (AfDB), Dr Akinwumi Adesina, said the people who would solve the Nigerian electricity problem are Nigerians. Therefore, those in leadership positions should protect and defend the local investors, stating that Charity must begin at home.
“The people who built America are Americans. The people who built Korea are Koreans. If we treat our own with levity and dignify the foreigners, we are only destroying ourselves and our future,” he added.
Adesina, represented by the group managing director/CEO of Sahara Power Group, Kola Adesina, noted that if the DisCos are interested in collecting electricity tariff for Band A, they must be ready to give Band A service.
On tariffs, he disclosed that the majority of the people who engage in energy theft and meter bypass are those who are metered, especially the rich, stating that such an act is retarding the progress being made in the sector.
“We have seen in our own system that people who are metered, especially the rich, are the ones bypassing meters. They are the ones stealing electricity.
“The reality of the case, which needs to be interrogated intelligently, is that the incentive for bypass is not so significant for insignificant consumers; it is substantial for those who know that they are paying a lot of money and can bribe our staff to bypass.
“So, if those that are metered are bypassing the meters, what incentive is there to do universal metering, and then you will not have universal theft? Suppose we cannot account for the energy we are receiving from the generation company, and do not account for a true payment commensurate with the generated electricity. In that case, we are in a mess,” he said.
