By Adewale Sanyaolu and Chinwendu Obienyi
Nigeria’s power sector reforms risk stalling without urgent regulatory clarity and stronger coordination between federal and state governments, a new report by PricewaterhouseCoopers (PwC) has warned.
In its report, titled “Priority actions for the successful evolution of Nigeria’s multi-tier electricity market,” the firm warned that as the country deepens its transition toward a decentralised electricity system, blurred lines between federal and state authorities could undermine investor confidence and disrupt market stability.
PwC noted that while reforms are designed to expand the role of sub-national governments and regulators, the absence of clearly defined boundaries is creating uncertainty for operators, investors, and consumers.
“As states exercise authority over intra-state electricity activities, overlap with federal institutions is unavoidable,” the firm stated. “Where transition arrangements are unclear or inconsistent, uncertainty rises for utilities, investors and consumers.”
The report stressed that without clear regulatory frameworks and agreed transition rules, the evolving multi-tier market risks fragmentation, with conflicting directives and compliance obligations across jurisdictions.
According to PwC, regulatory clarity and alignment between federal and state actors are critical to ensuring a smooth reform process and sustaining investor confidence in the sector.
Beyond governance concerns, the firm highlighted persistent structural weaknesses in Nigeria’s electricity distribution segment, which continue to weigh on performance despite ongoing policy changes.
It identified liquidity constraints, legacy debt, inadequate metering, and ageing infrastructure as major challenges affecting the efficiency and financial viability of distribution companies.
“Data shared by utilities and reinforced by the Honourable Minister highlighted persistent liquidity stress, legacy debt, metering gaps and ageing infrastructure,” the report noted.
PwC added that unreliable consumption data continues to drive billing disputes, weaken revenue collection, and complicate regulatory decision-making across the sector.
The firm emphasized that decentralisation alone will not resolve these longstanding inefficiencies, warning that the success of reforms will depend heavily on governance quality, robust data systems, and well-structured investments.
It further observed that while policy momentum remains strong, the underlying financial and operational challenges in the distribution segment require urgent and coordinated intervention.
PwC concluded that stabilising Nigeria’s electricity market will depend on stronger collaboration across all tiers of government, clearer regulatory boundaries, and sustained efforts to address liquidity and infrastructure gaps.
President Bola Ahmed Tinubu, had in June 2023, assented to the Electricity Act 2023, a landmark legislation originally passed by the National Assembly in July 2022.
The new Act replaces the Electric Power Sector Reform Act 2005 and introduces a comprehensive framework to guide the post-privatisation phase of the Nigerian Electricity Supply Industry (NESI). It is also designed to attract increased private sector investment into the power sector.
A major feature of the law is the removal of electricity from the Exclusive Legislative List, effectively decentralising the sector.
This reform allows state governments, private companies, and individuals to generate, transmit, and distribute electricity independently, thereby breaking the long-standing monopoly at the national level.
The Act is expected to drive competition, improve service delivery, and expand access to electricity across the country by enabling subnational and private participation in power infrastructure development.
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