On August 20, 2024, the Nigerian Electricity Regulatory Commission (NERC) issued an order, (No: NERC/2024/111) that transfers regulatory oversight of the electricity market in Edo State from NERC to the newly established Edo State Electricity Regulatory Commission (ESERC). This significant regulatory shift, rooted in the provisions of the Electricity Act 2023 and recent constitutional amendments, is poised to reshape the electricity landscape in Edo State and has profound implications for the ease of doing business in the state.
The regulatory framework in Nigeria’s electricity sector has traditionally been centralized, with NERC exercising broad oversight across the country. However, the amendment of Paragraph 14(b) Part II of the Second Schedule to the 1999 Constitution of the Federal Republic of Nigeria (CFRN) in March 2023 initiated a move towards decentralization. The amendment empowers state governments to legislate on the generation, transmission, and distribution of electricity within their jurisdictions. This legal change aligns with Section 2(2) of the Electricity Act (EA), which recognizes the legislative autonomy of states in the electricity sector.
With the new legal framework, states such as Edo are granted the authority to regulate their intrastate electricity markets. NERC, while retaining oversight on interstate and international electricity matters, must transfer regulatory responsibilities to state authorities upon compliance with the statutory conditions. In this context, the Edo State Government, having met the necessary legal prerequisites, has formally requested NERC to transfer oversight of its intrastate electricity market to ESERC.
This regulatory transition is crucial for Edo State’s business environment. By assuming control over its electricity market, the state can tailor regulations to its specific needs, thereby enhancing efficiency, reliability, and cost-effectiveness in power supply. Such improvements are expected to stimulate industrial growth, attract investments, and boost overall economic activity.
The NERC order directs the Benin Electricity Distribution Plc (BEDC) to incorporate a subsidiary company, BEDC SubCo, responsible for the intrastate supply and distribution of electricity in Edo State. BEDC SubCo will operate under the regulatory oversight of ESERC, marking a departure from the previous centralized regulatory model. This shift is intended to streamline operations, reduce bureaucratic delays, and ensure that electricity distribution is more responsive to the unique demands of Edo State’s economy.
The order also mandates BEDC to clearly define the geographic boundaries of Edo State’s electricity network, install boundary meters, and transfer relevant assets, liabilities, and employees to BEDC SubCo. This meticulous reorganization aims to create a standalone electricity network for Edo State, enhancing operational clarity and efficiency. The creation of an Asset Register and the identification of trading points within the state are expected to facilitate smoother transactions and improve service delivery.
The establishment of ESERC as the exclusive regulator for Edo State’s electricity market is a pivotal development. ESERC will have the authority to determine and adopt an end-user tariff methodology, independent of NERC’s influence. This localized tariff-setting power is anticipated to result in more competitive pricing, benefiting consumers and businesses alike. Additionally, all tariff policy support for end-users will be the responsibility of the Edo State Government, ensuring that policies are closely aligned with the state’s economic priorities.
Moreover, the order requires that all transfers and related processes be completed by February 20, 2025. This deadline underscores the urgency of the transition and the state’s commitment to swiftly enhancing its electricity market.
In summary, the transfer of regulatory oversight from NERC to ESERC represents a landmark change for Edo State. By gaining control over its electricity market, the state can implement policies that directly address local needs, thereby creating a more conducive environment for business. This development is expected to reduce electricity-related barriers to business operations, attract new investments, and ultimately improve the ease of doing business in Edo State.
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Osaze Ogbomo Ighoretin is the Team Lead, Ease of Doing Business Secretariat.
