The Nigerian Electricity Supply Industry is undergoing significant structural and regulatory reforms aimed at improving efficiency and market competitiveness. The enactment of the Electricity Act 2023 represents a major milestone, replacing the EPSRA 2005 and introducing a more robust legal framework to strengthen regulatory oversight and promote private sector participation. A key feature of the Act is the decentralisation of the grid structure, allowing states to establish and regulate their own electricity markets, which is expected to drive localised investments and improve service delivery.
In addition, plans to unbundle the Transmission Company of Nigeria (TCN) into separate transmission and system operations entities are underway, with the goal of improving grid management, reducing bottlenecks, and enhancing operational efficiency. These reforms, combined with tariff adjustments for Band A customers and the introduction of bilateral contracting, are expected to improve liquidity, encourage cost-reflective pricing, and foster greater market discipline. Despite these positive developments, the Industry continues to face significant challenges, including liquidity constraints, weak enforcement of market rules, and inadequate infrastructure. Affordability concerns, macroeconomic pressures and political risks, particularly around tariff reforms, also pose threats to the sustainability of these changes.
Looking ahead, we expect the effective implementation of the Electricity Act 2023, successful decentralisation of the market, and progress on ongoing tariff realignments and bilateral contracting to underpin developments in the Industry. If these reforms are sustained, the Industry should experience improved liquidity, operational efficiency and supply reliability. However, risks related to financial viability, infrastructure gaps and regulatory enforcement will remain key concerns.
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