Hot Source– Says drafted bill riddled with landmines
Peter Uzoho
Foremost energy expert and Lead Consultant on Electricity to the Nigeria Governors Forum (NGF), Mr. Odion Omonfoman has called on the Nigerian Senate to thread with caution and avoid the risk of throwing the nation’s electricity market into catastrophe as the lawmakers are currently amending the Electricity Act 2023.
The Electricity Act 2023 was signed into law by President Bola Tinubu on June 8th, 2023 following the 5th Alteration of the Constitution of the Federal Republic of Nigeria, which expressly provided full constitutional rights to State Houses of Assembly to make laws for electricity generation, transmission and distribution within their state territories.
Omonfoman argued that while the National Assembly was well within its powers to either amend or repeal any of its Acts, and at such a time it deems necessary, the Electricity Act Amendment Bill 2005 as currently drafted, was riddled with constitutional, legal, regulatory and fiscal landmines that would be catastrophic to the Nigerian electricity sector if the bill was passed.
In his essay entitled, “The Electricity Act (Amendment) Bill 2025 – The Need for a Cautious Rethink”, Omonfoman argued that by virtue of the 5th alteration of the constitution, the regulation of all aspects of distribution and sale of electricity within a state is an exclusive (not residual) right of State Electricity Regulatory Commissions (SERCs).
Curiously, he noted that less than two years of its passage, a bill to amend the Electricity Act has passed second reading on the floor of the Senate, sponsored by the Chairman of the Senate Committee on Power, Sen. Enyinnaya Abaribe.
Based on the Electricity Act (Amendment) Bill, 2025, he said several areas of potential conflict and jurisdictional overlap exist between the Nigerian Electricity Regulatory Commission (NERC) and the newly empowered State Electricity Regulatory Commissions (SERCs).
According to him, the tension primarily arises from the division of regulatory power over a national grid that services state-level markets.
Omonfoman noted that the most significant potential for conflict lies in the concept of NERC’s “overriding regulatory oversight.”
He explained that Section 230C(1)(b) of the bill states that intra-state electricity operations that rely on the national grid system remain subject to the “overriding regulatory oversight of NERC”.
“This gives NERC direct regulatory jurisdiction over electricity distribution licensees, and any other state electricity licensee operating in SEMs where such licensee has a reliance on the national grid”, he said.
He faulted the drafted bill, saying it uses vague and ambiguous terminologies and language such as ‘reliance on the national grid system, operational codes, intra-state electricity operations, and intra-state electricity activity.
Omonfoman explained, “The term “overriding regulatory oversight” is not explicitly defined by the bill, leaving it open to broad interpretation by NERC.
“This could lead to jurisdictional disputes where a SERC believes NERC is overstepping its authority in the regulation of the state’s internal market. The ambiguous and vague terminologies are certainly not helpful to the Bill’s core objective of addressing conflict between Federal and State Regulatory Bodies.”
He observed that another area of conflict created by the bill was in tariff design and implementation for electricity distribution.
While states are empowered to establish their own electricity markets, the expert said the bill strangely allows NERC to retain significant control over tariffs for any state connected to the national grid system.
He stated that the amended Section 2 grants State Houses of Assembly the power to legislate on their own electricity markets and regulators.
“However, Section 230C (2) extends NERC’s overriding oversight to “tariffs designs and implementation” for any state market that is reliant on the national grid. This creates a direct conflict. A SERC could set a tariff for its local market, only for NERC to challenge or attempt to override it, citing its authority over the interconnected grid.
“The issue between Enugu State Electricity Regulatory Commission and MainPower DisCo is a good example of such potential regulatory overreach by NERC under the amendment bill.
“The point must be made that SERCs have no authority to design and implement tariffs for generation and transmission on the national grid (national wholesale electricity market).
“For clarity and contrary to (uninformed) public opinion, EERC did not adjust wholesale generation and transmission tariffs set by NERC for Enugu Electricity Distribution Company (the HoldCo for MainPower)”, he noted.
Furthermore, Omonfoman argued that the bill defines how electricity subsidies under the Power Consumer Assistance Fund (PCAF) would be implemented.
He, however, explained that PCAF as proposed by the bill, would distort state tariff methodologies and usurp the powers of SERCs to implement any electricity subsidies within SEMs.
He added that the amendment bill will create conflicts between federal and state regulators in implementing consumer protection within SEMs.
According to him, the amended Section 2 lists “consumer protection and anti-trust” as an area where state laws must not conflict with the federal Act, implying NERC’s standards are supreme.
Simultaneously, he argued that Section 230 C (2) explicitly includes consumer protection as part of NERC’s oversight for grid-connected state markets.
He described that as a clear constitutional overreach by the bill and will lead to implementation disputes.
For instance, he said a conflict could easily arise if a SERC attempts to implement a consumer protection regulation that NERC deems either insufficient or in conflict with national standards.
“In any case, it is pertinent to ask which consumer is being protected here? Are these customers served by electricity distribution licensees within a SEM? Without any equivocation, implementing consumer protection regulations within a state electricity market should fall under the jurisdiction of the SERC.
“NERC and the FCCPC may set baseline consumer protection standards, but no federal law should invalidate nor prevent State Houses of Assembly from making laws for consumer protection within their territories.
“The bill establishes a Forum of Electricity Regulators (FERs) to harmonize regulations between the NWEM and SEMs. However, the bill as drafted seeks to solidify NERC’s supremacy over SERCs under the FER structure. According to Section 228B(d), the forum serves as a platform for settling disputes…
“…I have only highlighted a few of the landmines that relate to the implementation of the SEMs. I urge the Senate and proponents of the bill to have a cautious rethink before passing the bill into law”, Omonfoman concluded.
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