A new report by PricewaterhouseCoopers titled “Priority actions for the successful evolution of Nigeria’s multi-tier electricity market” makes that point clearly. The transition to a decentralised system is underway, but the structure holding it together is still unsettled.
At the centre of the issue is the overlap between federal and state authority. Since the Electricity Act 2023 opened the door for states to run their own electricity markets, the system has effectively split into layers. But those layers are not fully defined. What PwC is pointing to is not just legal overlap, but operational uncertainty. Who regulates what, who sets tariffs in contested areas, and how assets are transferred or shared are still grey zones. For investors, that is not a technical issue, it is a risk signal.
The bigger problem is that this uncertainty is colliding with an already weak system. Distribution companies are still dealing with liquidity stress, legacy debt, poor metering, and ageing infrastructure. These are not new problems, but decentralisation is exposing them more sharply. A fragmented system without strong data and billing accuracy makes it harder to enforce tariffs, recover costs, or attract financing. In simple terms, the structure is being expanded before the foundation is fixed.
What stands out in the report is that decentralisation on its own does not solve inefficiency. It only redistributes responsibility. If state regulators inherit weak data, unclear pricing models, and financially strained utilities, the problems simply move rather than disappear. That is why PwC is placing emphasis on governance and transition rules. Without a clear handover framework, reforms risk becoming uneven across states, with some markets progressing while others stall.
There is also a timing issue. The reform is happening at a point when the sector is under financial pressure. Refund obligations to customers, subsidy restructuring, and weak revenue collection are already tightening the system. Introducing multiple regulatory centres without alignment could stretch coordination even further.
What this means is that the success of the reform will not be decided by how many states join the market, but by how clearly the system is defined. Investors can price risk, but they struggle with uncertainty. Until the boundaries between federal and state roles are settled, capital will likely remain cautious.
The direction of reform is not in question. The gap is in execution. Nigeria is trying to move from a centralised electricity model to a multi-tier market, but the rules guiding that transition are still catching up.
