Blackouts: FG Urges States to Establish Power Companies for Stable Electricity Supply

The federal government has called on state governments to take advantage of the new electricity framework by establishing their own power generation and distribution companies to address persistent blackouts across the country. The move, officials say, is part of efforts to decentralize electricity management, boost energy access, and accelerate national development through localized solutions.

Minister of Power, Chief Adebayo Adelabu, made the call during a stakeholders’ engagement on Nigeria’s power reform agenda in Abuja. He emphasized that the 2023 Electricity Act provides states with full legislative and operational powers to generate, transmit, and distribute electricity within their jurisdictions — an opportunity he urged governors to utilize in tackling the recurrent power crisis.

Adelabu said the federal government alone cannot resolve the country’s power deficit, noting that the participation of sub-national governments and the private sector is critical to achieving stable supply. “The solution to the energy challenge must be multi-level. States now have the constitutional authority to establish their own electricity markets. We encourage them to create power generation and distribution entities tailored to their unique needs,” he stated.

He added that decentralization will reduce pressure on the national grid, improve efficiency, and ensure that energy projects reflect local realities. “The blackout problems we face are not due to a lack of resources or ideas, but rather a centralized system that limits flexibility. By empowering states, we can drive competition, innovation, and accountability,” the minister said.

Adelabu also revealed that the federal government, through the Nigerian Electricity Regulatory Commission (NERC), has begun supporting state governments with technical guidance on how to set up independent regulatory commissions, frameworks for licensing, and power purchase agreements. He urged states to partner with investors and renewable energy firms to fast-track projects that can serve industrial clusters, rural communities, and urban centers.

According to him, several states, including Lagos, Edo, and Kaduna, have already initiated steps toward setting up electricity markets. Lagos, for instance, passed its electricity law earlier this year, paving the way for state-regulated power generation and distribution companies. Edo State has also signed agreements for modular power plants designed to serve key industrial zones.

Adelabu disclosed that discussions are ongoing with other states to replicate these models. “We are working with willing states to develop frameworks for power generation, distribution, and transmission. The ultimate goal is for Nigeria to have multiple, interconnected but semi-autonomous energy markets that strengthen national supply and resilience,” he explained.

He further noted that the federal government is focusing on completing critical transmission projects to stabilize power delivery nationwide. These include the expansion of the national grid, the construction of regional substations, and the rehabilitation of existing transmission lines. “The Transmission Company of Nigeria (TCN) is working to ensure that even as states develop their own systems, they can still connect efficiently to the national backbone,” he said.

Adelabu highlighted that renewable energy will play a significant role in the decentralization process, especially in states with strong solar and hydro potential. “We want every state to identify its energy advantage — whether solar in the North, hydro in the Middle Belt, or gas in the South. By leveraging these strengths, we can achieve reliable, clean, and affordable electricity for all Nigerians,” he said.

The minister also addressed concerns about the funding of new power projects, assuring that the federal government is engaging development partners, multilateral agencies, and local investors to finance state-led energy initiatives. He noted that the African Development Bank (AfDB), World Bank, and other institutions have expressed interest in supporting Nigeria’s power sector reforms through grants and low-interest loans.

Industry experts who attended the event commended the move, describing it as a significant step toward achieving energy security. The Managing Director of EnergyHub Nigeria, Dr. Emmanuel Ajayi, said, “Allowing states to run their own electricity systems is the only sustainable solution to blackouts. It will make power more reliable and improve accountability in service delivery.”

Similarly, the Chairman of the Nigerian Electricity Regulatory Commission (NERC), Engr. Sanusi Garba, confirmed that guidelines for state electricity markets have been released to support seamless implementation. He said that NERC would continue to collaborate with state governments to ensure technical and operational consistency across the sector.

Garba explained that decentralization will create new investment opportunities and jobs in the power sector, while also promoting competition that drives down tariffs in the long term. “When states begin to manage their own electricity networks, we will see improved service delivery, lower losses, and better metering coverage. This is the model used in many successful power markets around the world,” he noted.

Meanwhile, energy analysts have urged the federal government to ensure that proper coordination mechanisms are in place to prevent duplication of efforts and ensure interoperability between state and national grids. They also called for transparency in licensing processes to encourage private participation.

The push for state-based power companies comes as Nigerians continue to experience prolonged blackouts caused by grid collapses, generation shortfalls, and gas supply constraints. Data from the Nigerian Electricity System Operator (NESO) shows that the country generates less than 5,000 megawatts on most days, far below the national demand estimated at over 28,000 megawatts.

With the federal government’s latest appeal, industry observers believe that state-driven energy solutions could mark a turning point for Nigeria’s electricity sector — reducing dependence on the national grid and ensuring that more communities and businesses finally gain access to stable power supply.