The Nigeria Governors’ Forum (NGF) is developing a uniform electricity tariff methodology to guide pricing across state electricity markets and address inconsistencies emerging from the decentralisation of electricity regulation in the country.
The proposed framework is expected to establish common minimum standards for tariff determination as more states assume regulatory responsibilities over electricity markets within their jurisdictions.
A representative of the NGF, Chijioke Chukwu, disclosed this during the ongoing Lagos Energy Summit, explaining that the initiative was designed to help states navigate the technical and regulatory challenges associated with setting electricity tariffs.
Chukwu said the forum began working on the methodology following difficulties encountered by some states in developing and publishing tariffs under the decentralised regulatory structure.
He indicated that the framework would provide a common reference for states while helping them establish more consistent pricing arrangements.
The methodology is expected to be completed by the first quarter of 2027.
Nigeria’s electricity sector has undergone significant regulatory changes, with the decentralisation of electricity regulation allowing states to establish and oversee electricity markets within their territories, subject to the provisions of the relevant legal and regulatory framework.
The transition has created new responsibilities for state governments, including the development of market rules, licensing arrangements and tariff structures that reflect local operating conditions.
However, differences in regulatory capacity, market structures, investment requirements and electricity supply costs have raised concerns about inconsistencies in tariff determination across jurisdictions.
A common methodology could help address some of these challenges by providing states with a standard approach to assessing the cost of electricity generation, transmission, distribution and other relevant market components.
It could also improve transparency and predictability for investors and electricity consumers, although individual state markets may still need to account for their specific operating conditions.
The initiative comes as state governments seek to attract investment into electricity generation and distribution, improve supply reliability and develop regulatory systems capable of supporting more competitive electricity markets.
The success of the proposed framework will depend on its ability to balance consistency with the flexibility required by states to respond to differences in infrastructure, demand, investment and local market conditions.
