Nigeria’s electricity reform is facing a potentially consequential contradiction: while the country’s new electricity law is shifting power-market responsibilities towards states and opening greater space for private investment, the federal government continues to design interventions that could keep decision-making, coordination and significant investment risks concentrated at the centre.
The tension is emerging in two areas that are increasingly important to Nigeria’s electricity future — off-grid power and renewable-energy infrastructure.
In one intervention, the Ministry of Power is planning an Off-Grid Sector Coordination Secretariat to address fragmentation and coordination challenges in a rapidly expanding off-grid market.
In another, the Rural Electrification Agency (REA) has launched the Renewable Asset Management Company (RAMCO) to professionally manage, maintain and optimise publicly funded renewable-energy infrastructure.
Both initiatives are responses to genuine problems. But Masah Emmanuel Ikus, a power and energy infrastructure strategist and principal consulting partner at EMI Resources Limited, argues in two separate opinion pieces published by Business a.m. that the government risks creating new federal structures to manage problems that a decentralised and commercially driven electricity market should resolve differently.
Ikus, a University of Lagos-trained electrical engineer with an Executive MBA from Lagos Business School and more than 27 years of infrastructure experience spanning ICT, oil and gas and power, specialises in decentralised power systems and solar integration. He advises investors, project sponsors and public institutions on structuring bankable energy opportunities in Nigeria.
His two analyses point to the same underlying concern, although from different directions.
The first is about who should make decisions in the emerging off-grid market.
The second is about who should own assets and carry the financial and operational risks of renewable-energy investment.
Taken together, they raise a fundamental question about the direction of Nigeria’s power reform: is Abuja genuinely transferring responsibility to states and the private sector, or is it retaining control through new institutions even as the legal architecture of the electricity market changes?
The decentralisation dilemma
The Electricity Act 2023 marked a fundamental shift in Nigeria’s electricity architecture.
The law allows states to establish and regulate electricity markets within their territories, while federal authorities retain responsibility for interstate electricity, the national grid, transmission, system operation and other federally regulated activities.
The transition is already taking place. The Nigerian Electricity Regulatory Commission (NERC) has reported that a growing number of states have completed the transition to regulating their own electricity markets, with state regulators taking responsibility for local market development, investment and consumer protection.
That makes the proposed Off-Grid Sector Coordination Secretariat more than an administrative development.
It raises a question about the practical direction of the decentralisation programme.
Ikus argues that Nigeria’s off-grid sector certainly needs better coordination. Government programmes, donor-funded interventions and private-sector projects have produced a fragmented landscape, with slow project deployment and overlapping institutional responsibilities.
But his argument is that adding another federal coordinating layer risks reproducing the very bureaucracy it is intended to overcome.
Off-grid electricity is inherently local. The load profile of a rural community is different from that of an industrial cluster; the economics of a mini-grid in an agricultural community differ from those of a system serving a university or commercial centre.
For that reason, Ikus argues that states are better positioned to map electricity demand, identify viable communities, design local electricity markets and structure projects for private investors.
The federal government, in this model, should not disappear.
Its role would instead shift towards setting standards, providing technical support, managing national funding mechanisms and using guarantees or viability-gap funding to make difficult projects commercially investable.
That is materially different from creating another federal administrative funnel through which off-grid investments must pass.
The question of state capacity
There is, however, a complication.
Decentralisation transfers responsibility to states, but not every state currently has the technical and commercial capacity to design sophisticated electricity markets.
Ikus acknowledges this institutional-capacity deficit and proposes that states bridge it through specialist consultants, technical advisers and recruitment of experienced professionals from the private power industry.
That creates a transition problem for the federal government.
If Abuja retains too much control, it risks frustrating the decentralisation envisaged by the Electricity Act. If it withdraws too quickly, states without adequate expertise could struggle to attract credible investors or protect consumers.
The answer may therefore lie less in centralising coordination than in building decentralised capacity.
The federal government still has a legitimate role in establishing common standards, strengthening state institutions, providing technical support and helping states structure projects that can attract investment.
The challenge is to ensure that federal coordination supports state ownership of electricity markets rather than substitutes for it.
RAMCO and the ownership question
In his second intervention, Ikus identifies a different expression of the same centralising instinct.
This time, the issue is not where electricity decisions are made but who carries the cost and risk of renewable-energy infrastructure.
REA launched RAMCO as a specialised platform for the professional management, optimisation and long-term sustainability of renewable-energy assets.
The rationale is straightforward.
Nigeria has invested heavily in solar and other renewable infrastructure, but commissioning an asset does not guarantee that it will remain productive for 10, 15 or 20 years. Batteries, inverters and other components require maintenance and eventual replacement, while beneficiary institutions must be able to pay for electricity and associated services.
RAMCO is intended to address that post-commissioning problem.
But Ikus argues that the need for RAMCO itself exposes a weakness in the way some public renewable projects have been procured.
According to his analysis, the federal government, through REA and with multilateral support, has invested approximately ₦263 billion in 82MW of solar-hybrid capacity across 22 federal universities and three teaching hospitals.
At about ₦3.2 billion per megawatt, he argues, the investment raises questions about capital efficiency.
But the more important issue, in his view, is not simply the price of the capacity. It is who bears the risk after the project is built.
Under the traditional Engineering, Procurement and Construction model, the government finances construction and takes ownership of the asset. Once the contractor has completed its obligations, much of the long-term performance risk moves back to the public sector.
If batteries need replacing, equipment fails or the beneficiary institution cannot generate enough revenue to fund maintenance, the government remains exposed.
RAMCO therefore becomes necessary to protect an asset that the government already owns.
Ikus’s criticism is not that RAMCO should not exist. Rather, he argues that it should be treated as a transitional mechanism, not the permanent answer to the sustainability of government-owned renewable infrastructure.
The common thread: who carries the risk?
This is where the two arguments converge.
In the off-grid market, the concern is that the government is retaining too much decision-making and coordination at the federal level.
In publicly funded renewable infrastructure, the concern is that the government is retaining too much ownership and financial risk.
The proposed alternative is to change both.
States should become the principal architects of local electricity markets, while private investors should increasingly finance, build and operate commercial power assets.
For existing renewable projects, Ikus proposes preparing the assets for competitive concessioning to qualified Energy Service Companies.
For future projects, he advocates moving away from government-funded EPC procurement towards Build-Own-Operate (BOO) and Build-Own-Operate-Transfer (BOOT) structures.
The logic is straightforward: when private developers provide the capital and remain responsible for operating an asset over a long period, their returns depend on the project actually working.
Cost overruns, poor equipment selection and inadequate maintenance become commercial risks for the investor rather than problems automatically returned to the taxpayer.
This would also change the role of REA.
Instead of principally procuring and owning power infrastructure, the agency could increasingly use public resources to de-risk private investment through viability-gap funding, guarantees, concessional finance, standardised contracts and demand aggregation.
A test of the reform
The two analyses ultimately point to the same test for Nigeria’s electricity reforms.
The country can continue creating federal mechanisms to coordinate off-grid investments and manage publicly owned renewable assets. Those mechanisms may solve immediate problems.
But if they become permanent, Nigeria could find itself with a growing institutional architecture around a fundamentally unchanged model: government identifies projects, government funds them, government owns the assets and government eventually creates mechanisms to manage their deterioration.
That would sit uneasily alongside the direction of the Electricity Act.
The alternative is a clearer division of responsibilities.
The federal government sets policy, standards and market-enabling frameworks. States build and regulate local electricity markets. Private capital finances and operates commercially viable infrastructure and carries the associated construction and performance risks.
RAMCO, in that model, becomes a bridge for existing assets rather than a permanent extension of government ownership.
The proposed off-grid secretariat becomes useful only if it helps states and investors coordinate more efficiently rather than creating another layer between them.
The central question for Nigeria’s power reform is therefore no longer simply how to generate more megawatts.
It is whether the government is prepared to relinquish enough control and risk to allow the decentralised and private-sector-led electricity market envisaged by its own reforms to actually emerge.
The answer may determine whether the next phase of Nigeria’s electricity transition produces a genuinely different market — or simply a larger version of the old one.
