NERC’S TRANSFER OF AKWA IBOM’S ELECTRICITY OVERSIGHT: WHAT THIS MEANS FOR LICENSEES, INVESTORS AND CONSUMERS

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BY ADERONKE ALEX-ADEDIPE & EFE OKPARAVERO

 

Introduction

On 18 August 2026, the Nigerian Electricity Regulatory Commission (“NERC”) issued Order No. NERC/2026/087, transferring regulatory oversight of Akwa Ibom State’s (“the State”) intrastate electricity market to the Akwa Ibom State Electricity Regulatory Commission (“AKSERC”).

The Order was issued pursuant to Section 230(2) of the Electricity Act 2023 (“Electricity Act”), which provides, in essence, that a State may regulate intrastate electricity activities and upon the state’s request and satisfaction of the statutory conditions, NERC may transfer regulatory oversight of intrastate electricity activities to the state regulator.

In furtherance of the Electricity Act, in January 2025, the Akwa Ibom State Electricity Law was enacted, establishing the AKSERC, while AKSERC also formally engaged NERC on the development and transition of the State electricity market. Following these steps, NERC issued the Order, marking the commencement of the transition of regulatory oversight to AKSERC.

The Nature and Impact of the Transfer

The transfer moves regulatory oversight only in respect of intra-state electricity activities from NERC to AKSERC. This means that electricity operators whose activities fall exclusively within the State, will increasingly deal with the State regulator in respect of licensing, regulation, compliance and other matters falling within the State electricity market.

The transfer, however, is not yet operational, as the Order provides for a transition period ending on 17 February 2027, during which certain implementation steps must still be completed.

Given that the Port Harcourt Electricity Distribution Plc (“PHEDC”) currently oversees electricity distribution in the State, NERC has mandated PHEDC to incorporate a subsidiary, i.e  “PHEDC SubCo”, which will assume responsibility for electricity supply and distribution within the State.

Implications for Licensees and Operators

For existing licensees and operators, the focus is on the regulatory transition, which will require businesses to assess their existing licences, regulatory obligations, contracts, assets and operating arrangements against the emerging regulatory framework.

Existing licensees should therefore undertake a regulatory-gap assessment in respect of their regulatory and contractual obligations.

A New Regulatory Environment for Investors

For investors, the transfer presents both opportunities and potential regulatory risks. The establishment of a dedicated State regulator provides greater control over the development of its electricity market and creates an institutional framework through which the State can facilitate investment in generation, distribution and supply infrastructure.

AKSERC has itself indicated that it intends to adapt regulatory frameworks to the State’s specific electricity needs, while NERC has committed to providing technical assistance during the transition. This could make the State particularly attractive to investors interested in the State’s electricity ecosystem.

In the same vein, the transition introduces a new set of questions for investors which would need to be determined including: (i) whether its proposed activities are intrastate or interstate in character; (ii) whether the nature of activities requires a State or federal licence; (iii) which regulator has tariff and consumer-protection jurisdiction; (iv) whether access to the national grid is involved and (v) how existing federal licences and contractual rights will be treated during the transition.

For investors therefore, regulatory certainty will be as important as the availability of opportunities.

Implication for Consumers

For consumers, the most important point is that the transfer does not immediately give effect to a change in tariffs. PHEDC will continue to supply meters and bill consumers during the transition. These operational responsibilities are, however, expected to be transferred to PHEDC SubCo as part of the transition process. The longer-term significance is the creation of a regulator with a direct mandate over the State’s electricity market as upon completion of the transition by February 2027, regulatory responsibility for its intrastate electricity market will pass from NERC to AKSERC. If effectively implemented, State-level regulation could improve service quality, electricity access, consumer complaints and investment in underserved areas.

Next Steps for Operators

The transition period presents an opportunity for existing and prospective operators to prepare before the February 2027 completion deadline. Electricity operators in the State should consider:

  1. Reviewing regulatory status: Determine whether existing licences remain applicable and identify any new State licensing requirements.
  2. Mapping regulatory jurisdiction: Separate activities falling under AKSERC’s intrastate jurisdiction from those remaining under NERC.
  3. Reviewing contracts: Assess existing PPAs, supply agreements, distribution arrangements, financing documents and other contracts for provisions affected by the transition.
  4. Assessing compliance requirements: Monitor AKSERC’s emerging regulations, licensing procedures, tariff frameworks and consumer-protection requirements.
  5. Reviewing investment structures: Prospective investors should assess whether their proposed structures are appropriately aligned with the State and federal regulatory framework.

Conclusion

The Electricity Act provides the legal basis for States to establish and regulate intrastate electricity markets, while NERC continues to perform a central regulatory role over electricity activities that remain interstate, international in character or involves the national grid.

Consequently, businesses operating across multiple States may face a more complex regulatory landscape. This makes regulatory structuring and licensing analysis increasingly important for operators.

The transfer of regulatory oversight to AKSERC marks a further step in the decentralisation of Nigeria’s electricity market, with Akwa Ibom becoming the 17th State to assume regulatory oversight of its electricity market.

The transition by 2027 will therefore be particularly important, as the impact of decentralisation will not be determined solely by the transfer of regulatory authority, but by how effectively AKSERC exercises that authority, how clearly the respective roles of AKSERC and NERC are defined, and whether the transition ultimately delivers improved service and greater consumer satisfaction.

 

NIGERIA’S PROPOSED RULES ON DIGITAL AND VIRTUAL ASSETS: KEY PROVISIONS AND IMPLICATION FOR BUSINESSES

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BY SEUN TIMI-KOLEOLU & HILLARY OKOROTIE

Introduction 

On August 20, 2026, the Securities and Exchange Commission (“SEC”) published the Proposed Rules on Digital and Virtual Assets Operations, Custody and Markets (the “Proposed Rules”). The Proposed Rules seek to establish a comprehensive regulatory framework for digital and virtual asset activities in Nigeria, including the issuance, offering, trading, custody, transfer and settlement of digital and virtual assets. 

The Proposed Rules set out: the categories of activities to which they apply; the prescribed requirements for conducting business in relation to digital and virtual assets; and regulatory requirements relating to the issuance and trading of digital assets. 

In this newsletter, we provide an overview of the key provisions of the Proposed Rules and their potential implication for businesses operating within Nigeria’s digital and virtual asset ecosystem. 

Key Provisions and Implication of the Proposed Rules 

Where the proposed rules are implemented the following are key provisions that players in the digital and  virtual assets space should take note of when operating in the Nigerian market. 

1. Application of the Proposed Rules 

The Proposed Rules will apply to persons and businesses operating in Nigeria, as well as persons providing services to Nigerian residents or the Nigerian market through digital channels in relation with the issuance, trading, custody and management of digital and virtual assets. 

The Proposed Rules will also apply to persons and entities facilitating any aspect of digital and virtual asset services, including Virtual Asset Service Providers (“VASPs”) and Digital Asset Custodians(“DAO”). 

2. Obligations of Regulated Entities 

Regulated entities are required to comply with various obligations in the conduct of their business and in the issuance, offering, and trading of digital assets in Nigeria. These obligations include, amongst others, the following: 

  1. Advertisement and Promotion: In connection with the issuance and offering of digital assets in Nigeria, entities must ensure that no publication, advertisement, or promotional material is made in respect of a digital asset unless the asset has been duly registered with SEC. Where an entity advertises or promotes a registered digital asset, such advertisement or promotional content must be accurate, fair, and not misleading.
  2. Changes to the Structure of the Entity: Where there are material changes to the structure or operations of a regulated entity, including changes to its ownership, governance structure, technology architecture, or business model, the entity must obtain SEC’s prior approval before implementing such changes. In addition, any cybersecurity incident, data loss, or loss of assets must be reported to SEC within twenty-four hours of such occurrence.
  3. Dispute and Conflict of Interest Management: Entities engaged in the trading of digital assets must maintain a comprehensive framework for receiving, handling, and resolving customer complaints. They are also required to establish and maintain appropriate procedures for identifying, managing, and mitigating conflicts of interest arising in connection with their digital asset trading activities.
  4. System Access and Transaction Monitoring: SEC may require regulated entities to provide API-based access to their financial, operational, and transaction data for regulatory monitoring and supervisory purposes. The Proposed Rules further require entities to implement systems capable of monitoring and reporting transactions involving Nigerian residents. In respect of cross-border transactions, entities must implement systems that maintain designated transaction wallets for domestic and cross-border asset flows. Such systems must also ensure that all inflows into and outflows from Nigeria are traceable to identifiable users.

3. Disclosure Requirements for the Issuance of Digital Assets 

The Proposed Rules require the disclosure of all material information relating to a digital asset prior to its issuance. An issuing entity is required to prepare a white paper containing the issuers information, characteristics, offer structure of the digital asset, and other material information to enable prospective investors make informed investment decisions. The whitepaper must be filed with SEC, and the issuing entity must obtain a no-objection or approval from SEC before offering the digital asset to the public. 

The issuing entity and its officers will be responsible for any misrepresentation or omission of material information contained in the whitepaper. Where there is a material change to the information relating to the digital asset following SEC’s no-objection or approval, the issuing entity will be required to file a supplementary or amended whitepaper with SEC and suspend further issuance of the digital asset pending compliance with the applicable requirements. 

4. Issuance of the Digital Assets 

The Proposed Rules provide that, for an asset to be eligible for issuance, the rights and obligations attached to the asset must be clear, the structure of the asset must be transparent, and the risks must be adequately disclosed. 

Digital assets shall be categorized either as Asset-Referenced Tokens, Asset-Backed Tokens, or other digital assets, including cryptocurrencies and utility tokens. Assets that are anonymous, exhibit a fraudulent token structure, or constitute an unbacked stablecoin will be prohibited from issuance. The asset must also be offered through a Digital Asset Offering Platform approved by SEC. 

5. Registration Under the Proposed Rules 

An entity intending to register under the Proposed Rules must apply to first participate in SEC’s Accelerated Regulatory Incubation Programme (“ARIP”). Following an application under the ARIP, SEC may grant the applicant an Approval-in-Principle to commence operations subject to the conditions prescribed by SEC. The Approval-in-Principle will be valid for a period of two years, after which SEC may require the entity to apply for full registration. 

SEC may, in certain circumstances, permit an applicant to bypass the ARIP process. This may apply where the applicant is a registered capital market operator, a registered (“VASP”), or a subsidiary of a licensed financial institution. 

To qualify for registration under the Proposed Rules, an entity must, amongst  other requirements, be incorporated in Nigeria in accordance with the Companies and Allied Matters Act, 2020. Its Chief Executive Officer and other principal officers must be resident in Nigeria, and the entity must maintain a registered office address in Nigeria. The applicant must also satisfy other registration and regulatory requirements prescribed by SEC. 

Conclusion 

SEC’s objective under the Proposed Rules is to establish a comprehensive regulatory framework for the digital assets market in Nigeria. Notably, the framework extends beyond the regulation of intermediaries engaged in the trading of digital assets to also encompass digital asset issuers and other relevant participants in the digital asset’s ecosystem. 

If implemented, the Proposed Rules will have significant implications for foreign entities seeking to issue digital assets in the Nigerian market. Such entities may be required to comply with requirements relating to the incorporation of a domestic entity where the parent company is incorporated outside Nigeria, as well as requirements concerning the residency of principal officers in Nigeria.