On December 3, 2024, the Governor of Lagos State officially assented to the Lagos State Electricity Law, 2024 (LSEL). This landmark law lets Lagos manage the generation, transmission and distribution of electricity within the State on its own. As a result, it should sharply reduce reliance on the national grid and pave the way for energy sufficiency.
In this Newsletter, we explore the key provisions of the Lagos State Electricity Law. We also examine likely implementation challenges and outline the expected benefits for citizens and businesses in Lagos State for both citizens and businesses in Lagos State.
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Overview of the Lagos State Electricity Law, 2024 (LSEL)
The Fifth Alteration Act No. 33 of 2023 amended the Constitution of the Federal Republic of Nigeria, 1999. Under it, States can now make laws on electricity generation, transmission and distribution in their territories. Building on that power and the Electricity Act, 2023, the Governor of Lagos State signed the Lagos State Electricity Bill on 03.12.2024. It then became the Lagos State Electricity Law, 2024 (LSEL).
The LSEL sets up the Lagos Electricity Market (the Market) and introduces innovative measures. Over time, these should cut the State’s heavy reliance on the national grid and deliver energy sufficiency.
Key provisions of the Lagos State Electricity Law
This newsletter delves into the key provisions of the LSEL, potential implementation challenges, and the expected impacts on citizens and businesses in Lagos State under five groupings:
(i) Lagos State Market and Regulatory Oversight;
(ii) licensing requirements and tariff methodology;
(iii) enforcement of standards and customers’ and host communities’ interests;
(iv) off-grid electrification, emission control, and renewable energy; and
(v) general provisions.
Regulatory framework and consumer protections: what it means for you
In particular, our Newsletter covers the issues that prospective market players and consumers will find most useful:
- Establishment of the market and statutory bodies such as the Lagos State Electricity Regulatory Commission (the Commission) and the Lagos State Electrification Agency and their functions in regulating the market,
- The licensing regime for market participants. This covers licence types and requirements, the transition of existing licensees and the method for setting consumer tariffs;
- Market standards for market participants and specific sanctions for non-compliance;
- Special consumer protections and a framework for resolving consumer complaints. It also covers contributions by generating companies to develop their host communities; and
- General provisions such as dispute resolution, the procedure for legal action against the Commission, and liability protection.
How the Lagos State Electricity Law advances energy sufficiency
The LSEL is a giant stride towards energy sufficiency, economic success and environmental sustainability for Lagos. If the State puts its provisions into effect well, a viable electricity market should emerge. That market would give consumers enough power and give market participants a profit.
Next, we expect the Commission to start making regulations, guidelines, rules and directives. That way, the law can take effect. It should also notify the Nigerian Electricity Regulatory Commission so that regulatory authority transfers to Lagos. Our Power Wrap-Up 2024 and Outlook 2025 and our note on the NERC Delineation Order explain how that transition works.
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