Investors are pulling back from Nigeria’s devolved state electricity markets, stalling the billions required to overhaul the power sector. The Electricity Act 2023 granted legal autonomy to 16 states, but only seven have taken full regulatory control, leaving major commercial centres in transition and undermining market confidence.
BusinessDay’s reporting identifies Enugu, Ekiti, Ondo, Imo, Oyo, Edo, and Kogi as the seven states that have fully assumed regulatory authority. The other states that secured autonomy include Lagos, Ogun, Niger, Plateau, Abia, Nasarawa, Anambra, Bayelsa, and Gombe, but they remain in various stages of transition.
Ayodele Oni, energy analyst and partner at Bloomfield LP, says the problem is bankability, not investor appetite. Most state markets lack creditworthy off-takers, secure payment mechanisms, predictable tariffs, and the scale lenders require. He pointed to the absence of escrow arrangements, standby letters of credit, or backstops for state power purchase agreements, and noted that newly formed subsidiaries often have no audited history or balance sheet to reassure lenders. "So, devolution has not removed regulatory risk, it has multiplied it," Oni said, arguing that regional pooling and harmonised licensing are needed to reach investable scale.
Adetayo Adegbemle, executive director of PowerUp Nigeria, offered a counterpoint on readiness, urging states to craft regulations that attract capital. He cited Lagos State’s approach as likely to draw faster investment and noted neighbouring states could align with Lagos to benefit from surplus capacity. Adegbemle also highlighted emerging regional models, including collaboration between Jigawa, Katsina, and Kano, and said the decentralisation experiment will produce varied outcomes as states learn from early movers.
The immediate consequence is clear: without clearer payment assurance, demonstrable financial capacity, and published readiness and funding statements, lenders will remain cautious. Policymakers who want private capital must settle federal-state competence boundaries, create standardised credit support for state PPAs, and consider regional aggregation to achieve the scale that will finally unlock investment.
