Nigeria’s power sector has entered a new phase with the signing of the Electricity Act (Amendment) Bill 2025 into law. President Bola Ahmed Tinubu gave his assent on 2 February 2026, introducing changes that refine the Electricity Act 2023 and further reshape how electricity is governed across the country.
A central feature of the amendment is the clearer transfer of authority to state governments. States now have express powers to regulate electricity generation, transmission, system operations, distribution, and retail supply within their borders. This move strengthens decentralisation and allows states to develop electricity solutions tailored to their unique needs. However, the law also draws clear boundaries. State electricity laws must align with national rules on grid operations, the wholesale electricity market, technical standards, consumer protection, competition, and Nigeria’s climate commitments. The goal is to encourage innovation at the state level without disrupting the national power system.
The amendment also tightens the framework for licensing and electricity trading. In particular, it introduces clearer rules for cross-border electricity transactions, requiring proper authorisation for power traded across state or national boundaries. This is intended to improve regulatory oversight and reduce uncertainty for investors operating in an increasingly interconnected electricity market.
For consumers, the law introduces a more structured support system through the establishment of the Power Consumer Assistance Fund (PCAF). The Fund is designed to provide targeted subsidies to underserved consumers and social institutions. By clearly outlining funding sources and accountability measures, the amendment seeks to move away from informal and unpredictable subsidy arrangements toward a more transparent system.
Addressing long-standing challenges of losses in the sector, the amendment imposes tougher penalties for electricity-related offences. Vandalism of power infrastructure is now a specific criminal offence that may attract imprisonment. Electricity theft is also met with stiffer sanctions, including fines tied to the value of power stolen, at least three times the benefit for first-time offenders, and up to six times or possible jail terms for repeat offenders. These provisions are aimed at protecting infrastructure and improving the financial health of the sector.
To manage the growing complexity of regulation following decentralisation, the law establishes a Forum of Electricity Regulators. This platform brings together federal and state regulators to coordinate policies, harmonise standards, and resolve disputes. The forum is expected to reduce regulatory overlaps and promote smoother cooperation across jurisdictions.
The amendment further designates electricity as an essential service. This classification limits industrial actions that could disrupt power supply and requires minimum service levels to be maintained, reflecting the critical role electricity plays in economic activity and everyday life.
On financing and investment, the law strengthens the framework for funding power projects and recapitalising Distribution Companies (DisCos). It enhances the authority of the Nigerian Electricity Regulatory Commission (NERC), empowering it to compel core investors to recapitalise failing DisCos or face sanctions. This measure targets chronic underinvestment and aims to improve service delivery across the sector.
In practical terms, the amendment pushes decentralisation further while maintaining national coordination. States are now better positioned to drive local electricity markets, attract private investment, and improve supply. At the same time, stronger enforcement mechanisms are expected to curb theft and vandalism, while structured consumer support could bring greater predictability to subsidies. Improved coordination among regulators may also reduce disputes and policy confusion.
Despite these objectives, the amendment has generated debate. Some state officials and stakeholders had earlier expressed concern that it could weaken state autonomy or roll back some decentralisation gains under the 2023 Act. Others warned that subsidy-related mechanisms might eventually raise costs for consumers. Whether these concerns will play out in practice remains to be seen.
Ultimately, the Electricity Act (Amendment) 2025 represents another major step in Nigeria’s ongoing power sector reforms. By combining expanded state participation with national oversight, tougher enforcement, and clearer consumer protections, the law aims to lay the foundation for a more stable and investable electricity sector. As with past reforms, its real impact will depend on how effectively it is implemented.
Adebayo Adekola is a counsel/executive assistant at Wole Olanipekun & Co. He can be contacted on LinkedIn at https://www.linkedin.com/in/bsadekola/
