Transition to State Electricity Markets in Nigeria - A Number of Noteworthy Issues

On March 17, 2023, the erstwhile President of the Federal Republic of Nigeria assented to a Bill of the National Assembly, referred to as the Fifth Alteration to the Nigerian Constitution, which allowed States to enact laws across the electricity value chain in their States (the “Fifth Alteration”). Subsequently, on June 9, 2023, President Bola Ahmed Tinubu assented to the Electricity Act, 2023 (the “Electricity Act"), which effectively repealed the Electric Power Sector Reform Act (“EPSRA”) of 2005.

The Fifth Alteration is an improvement on the previous legal regime, enabling States to make laws on electricity operations within such a State, even where there is a national grid system throughout such State. When considered together, the Fifth Alteration and the Electricity Act jointly provide considerable opportunities for private investments in electricity operations at the State level of the Federation.