State governors have deemed the Independent Electricity Distribution Network (IEDN) and distribution franchisee models developed by the Nigerian Electricity Regulatory Commission (NERC) as ineffective.
In a document submitted to the Federal Ministry of Power, the governors recommended that State Electricity Regulatory Commissions (SERCs) create new retail and supply licenses, business, and commercial models to open the retail electricity space to competition.
The governors, through their umbrella body, the Nigeria Governors’ Forum, described the IEDN and distribution franchisee models as outdated. They advocated for the evolution of new models that would allow companies to compete and address the poor power supply situation in their states.
The governors also recommended the establishment of electricity cooperatives to improve electricity access and supply reliability, particularly in underserved communities.
Under the Electricity Act 2023, state governments have been empowered to operate and regulate their own electricity markets outside of NERC’s control. The governors suggested disaggregating existing successor distribution licenses into ‘wires only’ and ‘supply’ licenses where feasible.
This move aims to improve revenue assurance in the state electricity market and the Nigeria Electricity Supply Industry (NESI) as a whole.