The United Kingdom Nigeria Infrastructure Advisory Facility (UKNIAF), in collaboration with the Nigerian Governors’ Forum (NGF), has concluded a nationwide workshop series designed to accelerate State-led electricity market reforms across Nigeria.

The State Learning Workshop Series, held in Lagos, Calabar, Kano and Jos, brought together policymakers, regulators, and energy stakeholders from all 36 States and the Federal Capital Territory.

The sessions focused on Electricity Market Development, Integrated Resource Planning (IRP), and hands-on training with energy modelling software, equipping States with the capacity to design sustainable and investor-ready electricity markets in line with the Electricity Act 2023.

Speaking on the significance of the initiative, Mr. Chijioke Chuku, director-Legal/Head Power Desk at the NGF, said:

“Nigeria’s electricity future depends on the capacity of our States to lead with vision, clarity, and technical precision. Through the workshop series, we are equipping States not just with knowledge, but with the confidence to take charge of their electricity markets. The NGF is proud to partner with UKNIAF in ensuring that the promise of the Electricity Act 2023 becomes a lived reality across the country.”

The workshops covered:

• Legal and regulatory pathways for establishing State Electricity Markets;
• Commercial models to attract private sector investment;
• Integration of State electricity plans into the National IRP;
• Practical training on advanced software platforms for energy modelling.

The initiative builds on UKNIAF’s technical support to pioneering States such as Akwa Ibom, Enugu, and Oyo, which have taken early steps in setting up their own electricity markets.

It also draws from UKNIAF’s contribution to national reforms, including support to the Federal Ministry of Power in drafting Nigeria’s first National Integrated Electricity Policy and National Integrated Resource Plan, both recently approved.

With States now empowered by the Electricity Act 2023 to shape their own electricity markets, the workshop series represents a timely intervention to strengthen technical capacity, improve coordination, and ensure sustainability in Nigeria’s evolving decentralized energy landscape.

The report, which complies with the Electricity Act 2023, provides an evaluation of operational, commercial, and regulatory performance. 

Growth in Power Generation Capacity and Performance

The average available generation capacity of Nigeria’s 28 grid-connected power plants reached 5,100.90MW in Q3 2024, showing a 16.04% increase (+705.13MW) compared to Q2 2024. 

This growth was largely driven by increased capacities in 19 of the 28 plants. 

Improvements were observed at Afam, which recorded a 182% increase, Omotosho with 92%, and Olorunsogo at 84%. These developments contributed to an average hourly generation of 4,280.24MWh/h, a 6.51% improvement from Q2, translating to a total quarterly generation of 9,450.76GWh, up by 7.68%.

The generation mix also saw hydropower contributing 32.60% of the total energy generated, an increase from 26.98% in Q2. 

Seasonal river flows helped in boosting the performance of hydropower plants such as Shiroro (+50.02%), Kainji (+21.86%), and Jebba (+38.56%). Despite this, thermal plants faced challenges, with a 1.69% drop in their cumulative average hourly generation due to constraints like gas supply issues and mechanical faults. Plants like Egbin and Geregu recorded declines of -26.32% and -35.42%, respectively.

Advances in Metering and Revenue Collection

An achievement was recorded in metering, with 184,507 meters installed during Q3, representing a 256.01% increase from Q2’s 51,826 installations. 

This surge elevated the net end-user metering rate from 45.43% to 46.15%. The installations were primarily carried out under the Meter Asset Provider (MAP) framework, accounting for 96.86% of the total. 

NERC has mandated Distribution Companies (DisCos) to leverage all available frameworks to close metering gaps, ensuring consumer protection against overbilling through energy caps for unmetered customers.

Revenue collection also saw improvements. DisCos collected ₦466.69 billion out of the ₦626.02 billion billed, an 8.24% increase compared to Q2. 

However, the collection efficiency dropped slightly to 74.55%, down from 79.31% in Q2. Aggregate Technical, Commercial, and Collection (ATC&C) losses rose to 39.10%, representing a 4.40-percentage-point increase from Q2. 

This included technical and commercial losses at 18.32% and collection losses at 25.45%. No DisCo met its ATC&C target as stipulated in the Multi-Year Tariff Order (MYTO), with Kaduna DisCo recording the worst underperformance (actual ATC&C at 70.84% against a target of 25.00%).

Grid Stability and System Losses

Grid performance remained a mixed bag in Q3. The Transmission Loss Factor (TLF) increased to 9.04%, exceeding the MYTO target of 7.00%. 

This showed that for every 100MWh of energy sent out, 9.04MWh were lost in transmission, marking a decline from the 7.79% recorded in Q2. One incident of partial grid collapse was reported during the quarter, occurring on 6th July 2024. This highlights the need for improved system coordination and infrastructure to prevent disruptions.

Frequency stability showed improvement, with the average quarterly frequency range narrowing to 1.19Hz from 1.51Hz in Q2. The grid operated closer to the standard 50Hz benchmark, thanks to enhanced monitoring systems. However, the absence of a Supervisory Control and Data Acquisition (SCADA) system continues to hinder real-time grid management.

Consumer Affairs and Safety

Consumer engagement remained a priority, with NERC hosting two town hall meetings in Gombe and Calabar to address issues like service-based tariffs, metering, and customer redress mechanisms. 

A total of 328,696 complaints were received across DisCo Customer Complaint Units (CCUs), a 14.35% increase from Q2. Common issues included metering, billing, and service interruptions. Forum Offices resolved 58.90% of active appeals, an improvement from the 54.90% resolution rate in Q2.

Safety remains an issue, with 56 accidents reported in Q3, resulting in 29 fatalities and 28 injuries. While fatalities decreased compared to Q2, injuries saw an increase. Investigations into these incidents are ongoing, and NERC is collaborating with stakeholders to enhance health and safety protocols.

Regulatory Achievements in Power Generation

In Q3, NERC issued 50 new orders and 50 licences, permits, and certifications. These include six off-grid generation licences with a combined capacity of 30.06MW, one on-grid licence renewal, and seven certifications for Meter Service Providers. 

The Commission also conducted five hearings to address stakeholder disputes and issued compliance directives to defaulting operators.

The Q3 2024 report stresses the duality of progress and challenges in Nigeria’s electricity sector. While advancements in generation capacity, metering, and revenue collection signify progress, issues like high ATC&C losses, grid instability, and safety reveal areas needing urgent attention. 

It added that, the Electricity Act, will empowers states to establish state-owned utilities, ‘successor companies,’ capable of attracting long-term investment through innovative structures.

This was contained in a report highlighting the outcomes from the 14th edition of PwC’s Annual Power and Utilities Roundtable.

Focusing on the theme, ‘The Electricity Act 2023: Powering Nigeria’, the PwC noted, “Having vastly different electricity laws across states will be detrimental, creating market distortions and unfair competition.”

However, the Multinational Professional Services, (Pwc), alighted that having different electricity laws in different states, would also breed unhealthy rivalry among players in the industry and allows states to have independent electricity laws would be detrimental to the growth.

Recall that the new electricity act signed by President Bola Tinubu in June 2023, allows states to have their electricity laws and regulatory bodies that would separate them from the control of the Nigerian Electricity Regulatory Commission.

So far, Enugu, Ekiti, and Ondo have been permitted by NERC to set up independent regulatory bodies, having satisfied the requirements of the Act.

PwC argued the regulation of electricity must be consistent across the country. “There is a need to ensure that regulation of electricity across the federation is fairly consistent and avoid regulatory capture,” the financial consultancy noted.

“The evolution of the policy landscape in the power sector shows that significant progress has been made, but challenges remain. The Electricity Act of 2023 attempts to address some of these challenges and unlock new potential.”

It added that dedicated distribution and supply companies within states could act as special-purpose vehicles, drawing capital from state resources or private investors through primary or secondary markets.

PwC stated that with the Power Consumer Assistance Fund serving as a joint federal-state mechanism for targeted subsidies, the act facilitated collaborative fundraising efforts.

Emphasizing that: “Adopting the Electricity Act 2023 involves substantial financial investments. Engaging legal and commercial expertise, developing and establishing state-level regulatory bodies come at a significant cost, competing for limited state resources. Thorough due diligence and feasibility studies are crucial to ensuring efficient resource allocation and project viability.”

However, PwC argued the regulation of electricity must be consistent across the country. “There is a need to ensure that regulation of electricity across the federation is fairly consistent and avoid regulatory capture,” the financial consultancy noted.

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The Act aims to address the longstanding issues in the Nigerian power sector, which have hindered economic growth and development.

The Manufacturers Association of Nigeria (MAN) recognizes the potential of the Electricity Act 2023 to be a game-changer for the manufacturing sector.

The Director General of MAN, Mr Segun Ajayi-Kadir, highlights the challenges faced by the power sector in the past, including poor policy enforcement, over-regulation, instability of gas supply, and transmission network bottlenecks.

These problems have resulted in erratic electricity supply, frequent power outages, and collapses of the national grid, all of which have hindered the growth of the economy.

The inadequate electricity supply in Nigeria has been a major obstacle for manufacturers, leading to significant economic losses.

Manufacturers have been compelled to spend a substantial amount on alternative energy sources, which has negatively impacted their profitability.

However, the newly signed Electricity Act 2023 is expected to address these constraints and reduce the cost of alternative energy.

The Act introduces cost-reflective electricity tariffs, which will promote healthy price competition between states and private investors. By addressing the challenges in the power sector, the Act is expected to encourage the inflow of manufacturing Foreign Direct Investment (FDI) and increase the sector’s contribution to the economy.

It is anticipated that the Act will boost Internally Generated Revenue (IGR), stimulate investment in renewable energy, improve infrastructure, ensure more stable power supply, and alleviate the tax burden on manufacturers.

Furthermore, empowering private manufacturing companies to generate their own electricity will encourage investment in backward integration activities, enhancing energy security within the sector.

To maximize the benefits of the Electricity Act 2023, the MAN DG suggests that the government consider their recommendations.

These recommendations include strengthening the security infrastructure to create a conducive environment for investors, providing legal, financial, and technical support to state governments in establishing electricity market laws, and promoting partnerships between state governments and existing agencies and operators in the power sector.

The effective implementation of the Act is also emphasized, calling for the appointment of a committed and experienced Minister of Power.