INTRODUCTION
On 3rd December 2024, the Governor of Lagos State, Babajide Sanwo-Olu signed the Lagos State Electricity Bill into law, thereby enacting the Lagos State Electricity Law, 2024 (the "Law"). This landmark legislation aligns with the Fifth Alteration Act No. 33 of the 2023 Constitution of the Federal Republic of Nigeria, (the "Constitution") and the Electricity Act, 2023 (as amended) (the "EA"), which empower states to legislate on the generation, transmission and distribution of electricity within their territories.
The Law repeals the Lagos Electric Power Sector Reform Law, 2018 and introduces a comprehensive framework for creating and regulating the Lagos Electricity Market (the "Market"). It aims to ensure reliable and uninterrupted power supply, prioritise sustainable energy solutions, and attract investment to the Market.
WHY LAGOS STATE NEEDED ITS OWN ELECTRICITY LAW
As Nigeria's commercial hub, Lagos State contributes approximately 30% of the national Gross Domestic Product ("GDP") and 50% of the non-oil GDP1. The state's economic activity is largely powered by less than 1,000 Megawatts (MW) of electricity supplied from the national grid to the two electricity distribution companies (Discos) operating in the State. In practice, however, Lagos is almost entirely reliant on a fleet of over 15,000 MW of backup generator capacity, fuelled by expensive and highly polluting distillates such as fuel oil, petrol, and diesel.
This dependence on unreliable and costly power sources impedes economic growth and undermines the state's ambition of becoming a globally competitive metropolis.
With an estimated population of approximately 16.5 million people2 , Lagos State's demographics position it as the most populous city in Nigeria and one of the largest urban centers in sub-Saharan Africa.
Consistent power supply is, therefore, critical to Lagos State's burgeoning population and the city's economic success for several reasons, including infrastructure development, economic growth, competitiveness, job creation, environmental sustainability, social development, and urban planning and expansion. As Lagos State continues to urbanise, reliable electricity serves as a cornerstone for supporting infrastructure development and stands as a linchpin for the State's economic resilience, environmental sustainability, and overall progress.
Recognising that no progressive and modern economy in the world has flourished in the face of a combination of electricity inadequacy and supply imbalance, Lagos State enacted the Lagos State Electricity Law, 2024. The Law aims to, amongst other things:
- create a commercially and technically sound Market that is well-funded and financially viable;
- facilitate the delivery of affordable, reliable, sustainable and modern public electricity access to consumers in the State;
- facilitate investment and innovation within the Market;
- incentivise the behaviour of licensees, electricity consumers, investors and other market participants, ensuring the delivery of constant, reliable and cost-efficient electricity supply to consumers in the State; and
- promote the provision of off-grid solutions for households, and micro, small and medium scale enterprises in the State3.
The Lagos State Electricity Law, 2024, aims to electrify underserved areas, support sustainable development, and ensure reliable interconnection between the Lagos and National Electricity Markets. It encourages adopting diverse and sustainable energy sources, promoting energy efficiency, and integrating modern, clean technologies for electricity access. Additionally, the law seeks to foster competition within the Market to enhance innovation and service delivery.
The newly enacted Lagos State Electricity Law is anticipated to establish a robust and commercially viable electricity market, ensuring the provision of reliable, affordable, and sustainable electricity to all consumers across the State.
THE PATH TO STATE-LEVEL ENERGY AUTONOMY
An amendment to Nigeria's constitution in 2023 granted Nigerian states the authority to generate, transmit, and distribute electricity within their respective states. This legal development enabled Lagos State to take direct control of its energy future by creating its own electricity market framework.
The provisions of the Constitution and the EA both set the stage for state-level electric power supply autonomy in Nigeria. Since the decentralisation of the electricity market, some states4 have enacted their own electricity laws to establish legal and regulatory frameworks for their respective markets. These states will undergo a transitional process during which the regulatory authority for intra-state electricity activities will shift from the Nigerian Electricity Regulatory Commission (NERC) to state-level regulators.
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Footnotes
1. Lagos_Electricity_Policy.pdf.
2. https://worldpopulationreview.com/cities/nigeria/lagos
3. Section 2 of the Lagos State Electricity Law 2024.
4. Lagos State, Kaduna State, Edo State and Enugu State.
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