Nigeria is at an vital inflection level in its electricity-sector reform journey.
For a long time, our nationwide dialog has rightly centered on a cussed problem: how do we offer dependable electricity to tens of millions of Nigerians, significantly these dwelling and dealing in communities the place typical grid enlargement is both too sluggish or economically tough?
Today, one thing vital is starting to alter.
Distributed renewable power has moved from the margins of Nigeria’s electricity sector in direction of its mainstream. Mini-grids have gotten commercially viable infrastructure. Private builders are investing.
Nigerian monetary establishments are getting into the market. States are assuming better duty for electricity. Renewable Energy Service Companies are rising. Local manufacturing is increasing. Digital platforms are reworking metering, monitoring and income assurance.
Against this backdrop, the proposed Electricity Act (Amendment) Bill, 2025 seeks to ascertain a National Authority for Renewable Energy (NARE), transferring renewable-energy tasks presently exercised by the Nigerian Electricity Regulatory Commission, the Rural Electrification Agency and the Rural Electrification Fund to the brand new establishment. Public experiences additionally point out a proposal to allocate 40 per cent of the annual Rural Electrification Fund to NARE.
I respect the National Assembly’s constitutional duty to repeatedly enhance our legal guidelines, and I perceive the intention behind creating a stronger institutional focus for renewable power. Nigeria actually must speed up renewable-energy deployment.
However, good intentions should in the end be examined towards market realities.Having spent years on the implementation finish of Nigeria’s energy-access problem, I consider the proposed structure requires basic reconsideration.
It risks making an attempt to resolve a coordination drawback by creating one other coordination drawback; making an attempt to eradicate institutional overlap by establishing overlapping jurisdiction; and making an attempt to speed up funding by introducing exactly the type of regulatory uncertainty that personal capital avoids.
The query is subsequently not whether or not renewable power deserves better consideration. It unquestionably does.
The query is whether or not creating one other regulatory establishment will produce one extra megawatt of electricity, one extra connection, one extra manufacturing plant or one extra naira of personal funding. That is the check we should always apply.
The first drawback is conceptual. Renewable electricity is not a discrete sector able to being neatly separated from the broader electricity market.
Consider a contemporary interconnected mini-grid. It could comprise photo voltaic technology, battery power storage, sensible meters, distribution infrastructure and digital fee programs whereas concurrently working at the side of a Distribution Company community. Which regulator ought to regulate such a system?
If NARE regulates the renewable technology element whereas NERC or a State Electricity Regulatory Commission regulates the distribution community into which that electricity is injected, who determines the tariff? Who approves interconnection? Who resolves technical disputes? Who protects the buyer? Who in the end carries regulatory duty?
These will not be tutorial questions. They go on to undertaking bankability. Capital dislikes ambiguity. Every extra regulatory interface introduces one other approval, one other interpretation, one other potential disagreement and one other threat that should finally be priced into the price of capital and, in the end, the value paid by electricity customers.
Nigeria ought to subsequently be simplifying the journey from capital to kilowatt, not making it extra sophisticated.
There is one other vital actuality the place we’re already managing a historic decentralisation. The Electricity Act 2023 essentially modified Nigeria’s electricity structure by enabling States to ascertain and regulate intrastate electricity markets.
By July 2026, NERC reported that electricity-market regulatory oversight had already been transferred to 16 States. The Federal Government itself subsequently convened federal and state establishments particularly to handle authorized, coverage and regulatory harmonisation, culminating within the creation of an inter-agency committee to handle rising implementation points. That tells us one thing vital.
Nigeria’s current problem will not be an absence of regulators. It is how one can make an more and more decentralised regulatory system work coherently.
At a time after we are fastidiously managing the connection between a federal regulator and rising State regulators, introducing one other federal regulator organised round a know-how creates a brand new axis of jurisdiction.
We might find yourself with NERC, State Electricity Regulatory Commissions, NARE, NEMSA and different establishments interacting with completely different points of the identical electricity undertaking.
That will not be simplification. It is fragmentation.
The timing is especially consequential as a result of Nigeria’s distributed-energy market is starting to exhibit what is feasible when public coverage intentionally crowds in personal enterprise.
The World Bank-supported Distributed Access via Renewable Energy Scale-up programme DARES is a US$750 million programme designed to supply new or improved electricity entry to greater than 17.5 million Nigerians, with a goal of 1,225 mini-grids and 465MW of renewable technology. Critically, its growth goal explicitly locations private-sector-led distributed renewable power technology on the centre of supply.
This builds on the Nigeria Electrification Project, via which greater than 7.8 million Nigerians had been impacted with clear power and greater than 1.1 million households acquired new or improved electricity companies.
We are subsequently not discussing renewable power theoretically.
We have spent years constructing an ecosystem of builders, financiers, know-how suppliers, communities, regulators, growth companions and authorities establishments round an more and more subtle market.
Today, greater than 1,000 mini-grids are underneath growth via the programmes being applied by REA. And one thing much more important is occurring.
Nigeria’s home monetary establishments are starting to recognise distributed renewable power as an investible asset class. REA has signed financing MoUs with FCMB for ₦100 billion, Lotus Bank for ₦100 billion, Alpha Morgan for ₦50 billion and Stanbic IBTC for ₦100 billion.
That is ₦350 billion in potential home financing commitments round an business that, not way back, depended overwhelmingly on authorities and worldwide growth finance.
This is precisely the transition Nigeria needs to be accelerating.
Private capital doesn’t principally ask whether or not a rustic has a devoted renewable-energy authority. Capital asks completely different questions. Who licenses my undertaking? Who determines my tariff? Which regulation applies? Can that regulation change midway via my funding? Which authority governs my interconnection settlement? If my undertaking operates inside a State electricity market, does the State regulator or federal renewable-energy regulator have jurisdiction? What occurs to current licences, grants, contracts and concessions? How are disputes resolved?
Those questions decide bankability. An investor considering a 15- or 20-year infrastructure funding should have confidence that the institutional framework governing that funding will stay comprehensible and predictable.
Every ambiguity turns into a threat. Every extra threat will increase the required return. Every enhance in the price of capital finally seems someplace — in tariffs, subsidies or initiatives that merely by no means attain monetary shut.
Therefore, if our goal is to mobilise billions of {dollars} into renewable power, our institutional structure should develop into less complicated, clearer and extra predictable, no more layered.
There can also be a basic institutional-design query. A regulator ought to regulate. A market-development establishment ought to develop markets. These are completely different capabilities requiring completely different incentives and institutional cultures.
NERC regulates electricity markets. REA develops markets the place business electricity provision has traditionally been tough. It aggregates alternatives, helps undertaking preparation, buildings interventions, mobilises concessional assets and personal capital, and helps builders enter underserved markets.
Combining renewable-energy promotion, undertaking growth, licensing, tariff regulation, technical oversight and dispute decision inside a single establishment risks blurring the vital distinction between market participant, market facilitator and market referee. Rather than creating institutional readability, such focus might create new conflicts and uncertainties.
The proposal in regards to the Rural Electrification Fund deserves significantly cautious consideration. The REF exists essentially to handle an entry and market-failure drawback.
There are communities throughout Nigeria the place electricity can remodel agriculture, healthcare, training and native enterprise however the place buyer density, buying energy or preliminary demand could not instantly produce commercially enticing returns. Public intervention helps bridge that viability hole.
Renewable know-how is often probably the most environment friendly answer, however the goal of the Fund is in the end electricity entry, not the promotion of a selected know-how. Diverting a considerable portion of the Fund to finance the operations or mandate of one other establishment risks complicated the instrument with the target.
Every naira allotted from an electricity-access fund needs to be evaluated towards an easy query: How many extra Nigerians will this connect with dependable electricity?
Perhaps probably the most encouraging growth is what is occurring past authorities programmes. Nigeria is witnessing the emergence of Renewable Energy Service Companies – RESCOs – able to financing, developing and working distributed-energy infrastructure.
Fintech corporations are creating specialised options for mini-grid monitoring, collections, income assurance and asset administration. Developers that gained expertise in Nigeria are more and more able to working elsewhere in Africa. And Nigeria now has an rising renewable-energy manufacturing pipeline estimated at roughly 3.7GW.
This is how industries are created. The authorities creates an enabling surroundings; personal enterprise responds; capital enters; abilities develop; provide chains emerge; know-how improves; competitors will increase; and prices decline. At this stage, institutional stability turns into an financial asset. We needs to be extraordinarily cautious about resetting the principles simply because the market is starting to answer them.
None of which means that Nigeria’s renewable-energy institutional framework is ideal. It will not be. There are real coordination issues. Project approvals could be improved. Federal-State interfaces require additional clarification. Data must be higher built-in. Standards should proceed to enhance. Domestic financing should deepen. Local manufacturing requires stronger assist. And undertaking growth timelines should develop into shorter.
The answer to coordination failure is healthier coordination not essentially one other regulator. Indeed, the Federal Government and National Assembly have themselves just lately emphasised complementary regulatory roles in Nigeria’s rising multi-tier electricity market.
If there’s a compelling case for a devoted nationwide renewable-energy establishment, then we should always contemplate designing it round capabilities which might be presently underserved: renewable-energy funding promotion, green-finance mobilisation, analysis and innovation, useful resource mapping, manufacturing and supply-chain growth, carbon-market growth, abilities growth and inter-governmental coordination.
Those capabilities can strengthen the ecosystem with out creating a parallel electricity regulator. Nigeria wants an establishment that helps renewable-energy corporations navigate the market, not one other establishment they have to navigate.
The Electricity Act 2023 is barely three years outdated. The promote it created remains to be taking form. States are constructing regulatory capability. Investors are adjusting. Federal establishments are studying how one can function inside a decentralised framework. Private capital is getting into. Development companions have structured long-term programmes across the current institutional structure.
This is the second to consolidate, make clear and speed up not fragments. The National Assembly has an vital alternative because it considers this modification. Legislative scrutiny ought to study not merely the desirability of renewable power on which there’s broad settlement however the second-order penalties of the proposed institutional structure.
We ought to conduct detailed regulatory-impact evaluation. We ought to hearken to the States. We ought to hearken to traders and lenders. We ought to hearken to builders who truly finance and construct mini-grids. We ought to study the implications for current World Bank, African Development Bank and different development-finance commitments.
And above all, we should always ask whether or not the proposed association reduces or will increase the variety of institutional interfaces required to maneuver a renewable-energy undertaking from conception to operation.
Nigeria doesn’t undergo from a scarcity of establishments. Our problem is making establishments work collectively round a transparent market structure. The future we’re constructing is one by which the Federal Government, States, regulators, financiers, builders, producers, know-how corporations and communities take part in a dynamic electricity market able to mobilising capital at unprecedented scale.
We ought to defend that momentum. We ought to strengthen what works, right what doesn’t, eradicate real duplication and create better certainty for traders.
However, we should always resist the temptation to equate the creation of a brand new establishment with the answer to a market drawback.
The measure of reform will not be what number of businesses we create. It is what number of properties we join, what number of companies we energy, what number of megawatts we deploy, how a lot personal capital we mobilise and the way way more dependable electricity turns into for Nigerians.
That is the reform Nigeria wants.
And that needs to be the usual towards which each proposed modification to the Electricity Act is judged.
Dr. Abba Aliyu is the Managing Director/Chief Executive Officer of Rural Electrification Agency (REA).
