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NIGERIA’S ANTI-COMPETITION REGIME: KEY COMPLIANCE CONSIDERATIONS FOR MIDSTREAM AND DOWNSTREAM PETROLEUM OPERATORS IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE & OLUWAYEMI IBIRINDE

Introduction 

On 6th August 2026, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (“NMDPRA”) launched a stakeholder consultation in relation to the proposed Midstream and Downstream Petroleum Prevention of Anti-Competitive Practices and Behavior Regulations, 2026 (the “Regulations”). Comprising 138 provisions across 23 parts, the Regulations seek to introduce the first dedicated, detailed competition-law framework governing anti-competitive conduct in Nigeria’s midstream and downstream petroleum sector. 

Historically, competition concerns in the sector including price-fixing, market allocation and abuse of dominant positions by vertically integrated operators were addressed only indirectly, through the general provisions of the Petroleum Industry Act and the oversight of the Federal Competition and Consumer Protection Commission (FCCPC”). The Regulations seek to close this gap by translating the PIA’s competition provisions into sector-specific rules, while establishing a coordination framework with the FCCPC through a recently signed Memorandum of Understanding. 

In this newsletter, we examine the key provisions of the Regulations and highlight some of the legal and commercial considerations for operators. 

Who Do the Regulations Apply To? 

The Regulations apply broadly to licensees and permit holders operating across the midstream and downstream petroleum value chain. Specifically, they apply to: 

  1. operators engaged in pricing, marketing and distribution of petroleum products (marketers and retailers); 
  2. owners and controllers of essential petroleum infrastructure, including pipelines, storage terminals, jetties, bulk-loading facilities and depots;
  3. vertically integrated operators and their affiliates, including entities engaged in intra-group transactions; and 
  4. operators participating in mergers, acquisitions, or joint ventures within the sector. 

The regulatory focus is therefore not on any single category of licensee, but on any conduct, agreement or arrangement capable of preventing, restricting or distorting competition in the sector. 

What are the Key Prohibitions? 

1. Prohibition on Anti-Competitive Conduct (Regulation 3) 

The foundation of the regime is Regulation 3, which prohibits any conduct, agreement, arrangement, understanding, decision or practice that has the object or effect of preventing, restricting or distorting competition regardless of whether it is formalised in writing or conducted informally. 

2. Price-Fixing, Market Allocation and Bid-Rigging 

Competing operators are prohibited from coordinating pump prices, ex-depot prices, margins, discounts, freight charges, supply or output levels, territories, customer allocation and tender submissions. 

3. Restrictive Commercial Arrangements 

Exclusive supply agreements, long-term contracts, take-or-pay arrangements, tying and bundling, loyalty rebates, minimum-volume commitments, resale price maintenance and franchise restrictions may be scrutinised where they substantially lessen competition with focus is not on whether they foreclose market access or distort competitive conditions. 

4. Abuse of Dominance 

The Regulations do not prohibit market dominance itself, only its abuse. Dedicated provisions address vertically integrated firms, affiliate transactions and cross-subsidisation. 

5. Infrastructure Access and Transparency 

Controllers of essential infrastructure are prohibited from unjustifiably refusing, delaying or obstructing access by qualified third parties. Access must be transparent, non-discriminatory, and based only on legitimate technical, safety and creditworthiness considerations. Operators must also publish tariffs, fees and service conditions; hidden surcharges, secret discounts and undisclosed preferential arrangements are prohibited. 

6. Mergers and Digital Markets 

The Regulations introduce a merger and acquisition review mechanism empowering the NMDPRA to assess transactions for effects on competition, market entry and consumer welfare, alongside emerging oversight of digital markets including shared platforms, data-sharing and algorithmic pricing risks. 

Compliance Considerations 

Pending finalisation of the Regulations, operators in the midstream and downstream sector should consider the following: 

  1. Operators should audit supply agreements, distribution contracts and pricing arrangements with competitors for provisions that could be characterised as price-fixing, market allocation, or bid-rigging. 
  2. Vertically integrated operators and infrastructure owners should evaluate whether their current market position could expose them to “abuse of dominance” scrutiny, particularly regarding third-party infrastructure access. 
  3. Owners of pipelines, depots, terminals and jetties should ensure access terms are documented, published, and based on objective technical and safety criteria. 
  4. Organisations should establish internal governance procedures including competition-law training and pricing-communication protocols to monitor ongoing compliance ahead of finalisation. 
  5. Given that NMDPRA has invited stakeholder input on the clarity, practicality and impact of specific provisions, operators should consider making submissions to flag ambiguous provisions before the Regulations are finalised. 

Penalties for non-compliance 

The draft Regulations introduce significant sanctions for non-compliance. Operators found guilty of serious offences, including price-fixing, bid-rigging, market allocation and abuse of market dominance, may be fined between 3–5% of annual turnover. Persistent offenders may face licence suspension or revocation while the NMDPRA may impose daily penalties on operators that fail to comply or continue prohibited conduct. 

Conclusion 

The NMDPRA indicates it is actively reviewing submissions ahead of finalization. Therefore, stakeholders should prioritise reviewing their commercial arrangements, infrastructure access policies, and internal compliance frameworks.  

Operators who engage proactively with the consultation process, and who position themselves for compliance ahead of finalisation, will be better placed to navigate this significant shift in Nigeria’s petroleum regulatory landscape.

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.

 

WHEN THE REGULATOR TAKES THE BOARD: THE LEGAL LIMITS OF NERC’S INTERVENTION

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BY ADERONKE ALEX-ADEDIPE & EFE OKPARAVERO

Introduction

On 10 August 2026, the Nigerian Electricity Regulatory Commission (“NERC”) issued Order No. NERC/2026/086 in respect of Kaduna Electricity Distribution Plc (“KAEDC”), dissolving its existing board and appointing an interim board of “Special Directors” to oversee the company. NERC has also appointed an Administrator and commenced a 12-month process aimed at identifying a new core investor for KAEDC.

The intervention follows what NERC describes as a “grave situation”, including prolonged regulatory and market defaults, inadequate investment, operational weaknesses and significant outstanding market obligations.

The Order raises an important question for Nigeria’s electricity sector, which is how far can NERC go in taking control of a privately owned electricity distribution company without crossing the line between regulatory intervention and corporate ownership?

Taking control is not taking ownership

Section 75 of the Electricity Act, 2023 (“Electricity Act”) permits NERC, following an inquiry into the conduct or affairs of a licensee, to intervene where it determines that the licensee is in a “grave situation”.

The statutory triggers include;

  • an inability to discharge obligations under the Act or licence terms,
  • prolonged default in complying with statutory or regulatory obligations,
  • a protracted management crisis detrimental to shareholders, consumers or the operation of the undertaking, or
  • insufficient assets to meet liabilities with an imminent risk of receivership.

Where these circumstances exist, NERC is empowered to issue an interim order dissolving and removing the board and appointing Special Directors and an Administrator to manage the undertaking, notwithstanding anything contained in any written law and the memorandum and articles of association of the undertaking/licensee.

Accordingly, while the usual rights of shareholders to appoint or remove directors are displaced for as long as the intervention remains in force, the intervention does not transfer the shareholders’ ownership of KAEDC to NERC. The shareholders retain their shares and their underlying proprietary interests. What changes is the control over the affairs of the licensed undertaking.

Implications of an unsuccessful intervention

By the provisions of the Electricity Act, where the state of affairs of the licensee does not improve after NERC has taken the appropriate measures, NERC shall revoke the licence.

The Act therefore contemplates progression from regulatory intervention to licence revocation where the intervention fails, and ultimately to the sale and transfer of the undertaking. It provides  for the sale and transfer of the undertaking and addresses the treatment of liabilities and security interests.

Accordingly, if the intervention fails and a core investor has been identified, NERC may in line with the Electricity Act, proceed to revoke KAEDC’s licence and invoke the statutory process for the sale of the undertaking. This must however follow the statutory process:

  1. Regulatory intervention: This is the stage KAEDC is currently at and is critical to the preservation of its existing shareholding. At this stage, the focus is on addressing the circumstances that gave rise to the intervention and restoring the undertaking to a viable position.
  2. Licence revocation: If the regulatory intervention fails and the underlying issues are not resolved, NERC may revoke KAEDC’s licence in accordance with the Electricity Act. Revocation would trigger the statutory process for dealing with the undertaking.
  3. Compulsory sale: Following the licence revocation, NERC shall invoke the statutory sale mechanism under Section 77 of the Electricity Act and direct the sale of the undertaking.

Implications of the Intervention for KAEDC’s Creditors

The intervention has immediate implications for KAEDC’s creditors. While NERC has not revoked KAEDC’s licence or commenced the statutory process for the sale of the undertaking, the Order places KAEDC under regulatory control and introduces measures governing the company’s affairs during the intervention period.

For example, the Order directs the Corporate Affairs Commission not to register any change in KAEDC’s shareholding or directorship during the intervention period without NERC’s prior written approval. NERC has also directed the Administrator, Bureau of Public Enterprises, Nigerian Bulk Electricity Trading Plc, Nigerian Independent System Operator and other material creditors to reconcile KAEDC’s liabilities and file a liability-management plan with the Commission within 90 days from the commencement of the Order. This means that creditors should endeavour to file their interests with the Commission. The Order further provides that the liability-management plan may allow for interim warehousing of the liabilities. Under this arrangement, such warehoused liability would not be immediately enforceable but temporarily preserved for later settlement as part of the sale transaction. The warehoused liabilities would need to be disclosed in the transaction documents in relation to the sale, and prospective investors would be required to set out in their bids how they propose to settle those liabilities.

The above becomes even more significant if NERC proceeds to a statutory sale as the Electricity Act provides that the new purchaser of the undertaking gets it free of KAEDC’s existing debts and other encumbrances. Therefore, the creditors are precluded from filing any claims against the undertaking or its assets after the sale. Instead, they must recover what they are owed from the funds paid for the purchase of the undertaking, according to their order of priority.

In the interim, however, the key point is that KAEDC is in a regulatory intervention, not yet a statutory sale.  Hence, Creditors should seek to have their interests expressly captured in the liability-management plan, where they can be warehoused and settlement provided for in the event of a sale.  If they fail to do so, their principal avenue for recovery may be limited to the purchase price paid by the purchaser, distributed in accordance with the applicable order of priority, which may ultimately be insufficient to satisfy their outstanding debts.

The legal limits of NERC’s power

NERC’s intervention powers are broad, but they are not unfettered. Their exercise remains subject to the statutory framework established by the Electricity Act. In particular:

  1. Statutory threshold: There must be a proper basis for concluding that the licensee is in a “grave situation” within the meaning of section 75 of the Electricity Act with at least one of the four statutory triggers identified above being present.
  2. Statutory purpose: The intervention must be directed towards the statutory objectives underlying section 75 of the Electricity Act, including maintaining the continuity of electricity supply and resolving the particular statutory trigger that warranted the regulatory intervention.
  3. Legal constraints: NERC’s exercise of its powers remains subject to applicable legal principles. Accordingly, issues of compliance with statutory preconditions, procedural requirements, and the rationality of the decision may arise in any litigation challenging the intervention.

These limitations do not, however, mean that NERC requires shareholder approval before exercising its power to remove or replace a licensee’s board.

Recommendations

  1. For KAEDC and its shareholders: KAEDC and its shareholders should closely monitor the intervention and ensure strict compliance with the requirements of the Order. In particular, they should obtain legal advice on the extent to which the intervention affects existing shareholder rights, board powers, contractual arrangements and proposed changes to the company’s shareholding or directorship.
  2. For creditors: Creditors should undertake an immediate review of their existing exposures to KAEDC, including the nature and enforceability of any security interests. They should also assess the effect of the Order on enforcement rights and engage with the liability-management process within 90 days as directed by NERC, to ensure that their claims are properly recognised and protected.
  3. For NERC: NERC should ensure that the intervention remains closely tied to the statutory conditions and objectives under section 75 of the Electricity Act. Any further measures taken during the intervention should have a clear statutory basis and be implemented in a manner that provides sufficient certainty to KAEDC, its shareholders, creditors and prospective investors.
  4. For prospective investors: Potential investors should conduct enhanced legal and regulatory due diligence before committing to KAEDC. This should extend beyond KAEDC’s financial position to include its regulatory obligations, outstanding liabilities, existing security interests, shareholder structure and the statutory implications of any subsequent licence revocation or sale.
  5. For other DisCos and their stakeholders: Other electricity distribution companies should treat the KAEDC intervention as a regulatory warning. DisCos should strengthen compliance, investment, governance and financial-management frameworks to address regulatory and market defaults before they develop into circumstances capable of triggering intervention under section 75 of the Electricity Act.
  6. For policymakers and regulators: The KAEDC intervention also highlights the need for greater clarity around the relationship between regulatory intervention, shareholder ownership, creditor rights and the proposed replacement of a core investor. Clearer guidance on how a replacement investor is to acquire an interest during an intervention would provide greater certainty for existing shareholders, creditors and prospective investors.

Conclusion

The KAEDC intervention is more than a decision to remove a board. It is a test of the boundary between regulatory control and corporate ownership. The Electricity Act gives NERC significant powers to intervene in the management of a distressed electricity licensee. However, removing the board does not, by itself, make NERC the owner of KAEDC or extinguish the proprietary interests of its shareholders and creditors.

If the intervention succeeds and KAEDC is returned to a viable position, NERC’s role may remain one of temporary regulatory control. If it does not succeed, section 75(4) of the Electricity Act creates a potential route towards licence revocation and the statutory sale of the undertaking. This is where the balance between regulatory intervention, shareholder ownership and creditor rights becomes most significant.