NISO warns states against fragmented electricity investments

By Onu Okorie

Nigeria’s growing decentralisation of the electricity sector could undermine its potential to attract investment and improve power supply if state governments and industry stakeholders fail to coordinate infrastructure development, the Nigerian Independent System Operator (NISO) has warned.
Managing Director/Chief Executive Officer of NISO, Engr. Abdu Bello Mohammed, said the emergence of multiple state electricity markets must be matched with stronger collaboration in infrastructure planning, system operations and data management to prevent fragmented investments and poorly coordinated networks.
Mohammed spoke at the ongoing Africa Energy Leadership Summit 2026, holding at the Landmark Centre, Lagos, from October 27 to 29.
He noted that the implementation of the Electricity Act 2023 was reshaping Nigeria’s electricity landscape, with more states establishing their own electricity markets and regulatory institutions, alongside the emergence of decentralised generation, independent transmission infrastructure providers and new distribution networks.
According to him, while these developments offer opportunities for increased investment and innovation, they also present coordination challenges that could affect the efficiency and sustainability of the electricity supply industry.
He stressed that decentralisation should not translate into isolated infrastructure projects or incompatible electricity networks, particularly where state-level systems depend on the national transmission grid or exchange electricity across state boundaries.
“Effective coordination has become increasingly important as state electricity networks connect to the national transmission grid, exchange electricity across state boundaries or depend on shared transmission infrastructure,” he said.
Mohammed warned that investments undertaken without adequate coordination could undermine the benefits of decentralisation, potentially resulting in infrastructure duplication, inefficient resource allocation and systems that fail to complement one another.
To address these concerns, he said NISO was strengthening its position as a neutral technical integrator, system coordinator and market facilitator to support the effective interaction of different institutions and participants across the electricity ecosystem.
He explained that the operator was expanding its functions beyond conventional grid operations to provide the technical, operational and market coordination interfaces required to support the country’s evolving electricity market.
However, Mohammed clarified that NISO’s expanded coordination role did not confer regulatory authority over state electricity markets or diminish the statutory responsibilities of the Nigerian Electricity Regulatory Commission (NERC) and state electricity regulatory authorities.
He said effective collaboration among the various institutions would be critical to ensuring that decentralised electricity markets operated efficiently while remaining compatible with the wider national electricity system.
The NISO chief executive also identified Integrated Resource Planning as a key instrument for aligning investments in generation, transmission and distribution.
According to him, the approach would help ensure that infrastructure projects were technically compatible, economically justified and consistent with the long-term development needs of the electricity industry.
He said coordinated planning would become increasingly necessary as more investors and state governments pursued independent electricity projects, adding that the success of such investments would depend partly on how well they integrated with existing and planned infrastructure.
Mohammed further highlighted digitalisation and access to reliable industry data as essential to improving transparency, coordination and investor confidence.
He disclosed that NISO was pursuing the development of a centralised data infrastructure for the Nigerian Electricity Supply Industry (NESI) to consolidate, validate, manage and share critical sector information.
The proposed initiative is expected to support more informed planning and decision-making by providing stakeholders with better access to reliable electricity industry data.
He maintained that improved data management would help reduce information gaps, strengthen coordination among market participants and create a more predictable environment for private investment.
“Our vision is a Nigerian electricity industry that is decentralised in its development opportunities, integrated in its infrastructure planning, coordinated in its operations, transparent in its market administration and attractive to sustainable private investment,” Mohammed said.
He called on state governments, regulators, investors, development partners and technology providers to deepen their collaboration with NISO to ensure that the opportunities created by the Electricity Act 2023 translated into tangible improvements in electricity access, reliability and affordability.
He added that the ultimate test of electricity sector reform would be its ability to stimulate sustainable investment, strengthen infrastructure and deliver measurable economic benefits to Nigerians.
As more states assume greater responsibility for electricity market development, the challenge, he suggested, is no longer simply to expand the number of market participants but to ensure that their investments and operations work together to build a more reliable and efficient national electricity ecosystem.