Last week, President Bola Tinubu signed the Electricity Act (Amendment) Bill 2025 into law. The new Act forms part of the Federal Government’s efforts to decentralise the electricity sector and empower state governments to generate, transmit, and distribute electricity within their territories.
Experts believe this step could open the door for privatisation and overhaul the Nigerian electricity regime.
For years, Nigeria has grappled with epileptic power supply, suffering dire consequences for the country’s economic development. The Electric Power Sector Reform Act (EPSRA) 2005 previously regulated electricity with the federal government as the sole regulator. The law produced a centralised, subsidy-dependent system that could neither sustain investment nor deliver reliable electricity throughout the country.
A 5th alteration to the 1999 Constitution in 2023 marked the turning point. This amendment removed electricity from the Exclusive List and placed it on the Concurrent Legislative List. The change allows states to make their own electricity laws for generation, transmission, and distribution.
The 2025 Bill, now signed into law, significantly overhauled the country’s power sector, decentralising the control the federal government previously held. State governments can now establish state electricity markets and regulators, and they can license private investors to operate power plants and mini-grids without federal approval.
With over 88 million Nigerians still living without electricity, the country currently tops the list of the 20 countries with the world’s largest electricity access deficits, according to the Alliance for Rural Electrification. The National Bureau of Statistics (NBS) notes deep inequalities in electricity access between urban and rural households in the country. The NBS adds that while electrification rates are higher in urban areas, only 53.6 percent of households nationwide have access to electricity.
The new restructuring, especially the potential opening of doors for private investment, would drive competition and accelerate electricity supply, particularly in rural and underserved urban communities that have long suffered unreliable electrification.
Nigeria’s telecommunication sector serves as a living example. In the 1980s, the Nigerian Telecommunications Limited, a state-owned company, had only 30,000 subscribers. However, after decentralisation and privatisation in the early 2000s, competition significantly increased. Today, Nigeria has over 169 million active phone users, a reflection of how free enterprise can democratise opportunity and drive innovation.
Kenya’s telecom liberalisation offers another example of how opening markets and adopting pro-competition policies unlock private investment. Kenya drew private investment that transformed its digital economy. These instances show that privatisation and the elimination of monopolies fuel real progress.
With the new Electricity Act, “The timing is perfect for public-private partnerships to facilitate a sustainable energy sector,” says Omono Okonkwo, an energy analyst and energy communicator at Energy Newsletter.
A centralised mode of operation caused part of the problems in the Nigerian power sector. Over the years, state monopolies and centralised control failed to deliver basic services. Last year’s Madagascar “Gen Z” protests lent credence to this assertion.
In late September, protests broke out across Madagascar after weeks of crippling water and power outages in the capital city, Antananarivo. Jiro sy Rano Malagasy (JIRAMA), the government-run electricity and water company, sits at the centre of the unrest as its constant failures drove the anger that spilled into Madagascar’s streets. The country’s centralised economic model has demonstrated flawed governance, as constant blackouts and water cuts became popular, just as Nigerians grapple with epileptic power supply.
While assenting to the bill, President Bola Tinubu remarked that the law marks a new era in Nigeria’s energy sector. “States now have the constitutional authority to provide stable and efficient electricity to their residents, fostering industrialisation and job creation,” he says.
