Report warns poor federal-state coordination could derail transition to decentralised power market…..
Nigeria’s ambitious electricity sector reforms may falter without clearer rules and stronger coordination between different levels of government, according to a new report by PricewaterhouseCoopers.
In its report titled “Priority actions for the successful evolution of Nigeria’s multi-tier electricity market,” PwC raised concerns about rising policy tensions as the country pushes toward a decentralised power system that gives greater authority to state governments and sub-national regulators.
The firm noted that while the reform agenda is gaining momentum, uncertainty around regulatory responsibilities remains a critical risk. Overlapping mandates between federal and state institutions, it warned, could create confusion for investors, operators, and consumers alike.
“Where transition arrangements are unclear or inconsistent, uncertainty rises,” the report stated, emphasising that clearly defined roles and agreed rules are essential for building trust and stability in the evolving market.
Beyond governance concerns, PwC highlighted deep-rooted structural challenges that continue to weigh on the sector. These include persistent liquidity constraints, legacy debt burdens, inadequate metering, and ageing infrastructure issues that have long undermined efficiency and service delivery.
According to the report, unreliable consumption data remains a major obstacle. Weak data systems, it said, often lead to billing disputes, reduced revenue collection, and difficulty in enforcing regulatory decisions.
The firm stressed that decentralisation alone will not fix these long-standing problems. Instead, it called for coordinated reforms that address both policy clarity and operational weaknesses, particularly within the electricity distribution segment.
Despite ongoing changes, distribution companies continue to face financial strain, with unresolved debts and metering gaps limiting progress. PwC added that investment outcomes in the sector will depend heavily on governance quality and how projects are structured under the new framework.
The report comes against the backdrop of sweeping reforms introduced under the Electricity Act 2023, signed into law by Bola Ahmed Tinubu. The legislation marked a turning point by removing electricity from the Exclusive Legislative List, effectively opening the door for states, private firms, and individuals to participate across the power value chain.
Designed to replace the Electric Power Sector Reform Act of 2005, the new law aims to boost investment, improve service delivery, and expand access to electricity nationwide through increased competition and decentralisation.
However, recent developments suggest the transition may not be seamless. The Nigerian Electricity Regulatory Commission has directed distribution companies to refund over N20.33 billion to customers under the Meter Asset Provider scheme, adding further financial pressure to already strained operators.
In addition, the Federal Government has signalled plans to begin sharing the burden of electricity subsidies with state and local governments from 2026, a move that could reshape the financial dynamics of the sector.
As Nigeria navigates this complex transition, PwC’s message is clear: without regulatory clarity, strong coordination, and structural fixes, the promise of a more efficient and competitive electricity market may remain out of reach.
