The Nigerian Electricity Regulatory Commission (NERC) has issued a 45-day deadline to all privately-owned substations connected to the national grid, mandating them to obtain the necessary operating permits or face immediate disconnection and stringent penalties.
The directive, contained in an order signed by the Vice Chairman, Musiliu Oseni and Commissioner, Legal, Licensing and Compliance, Dafe Akpeneye, on Tuesday, March 10, is part of sweeping regulatory measures aimed at enforcing compliance, ensuring technical standards, and bridging a significant revenue leakages in the nation’s power sector.
The order, which took effect on Monday, March 9, 2026, targets a growing, yet largely unregulated, class of operators: large commercial and industrial customers who have built their own substations to step down high-voltage electricity from the Transmission Company of Nigeria (TCN) for their private use.
While these embedded private networks have proliferated as a way for businesses to bypass an unreliable distribution network and secure dedicated power supply, NERC argues that many are operating illegally without valid licenses or permits, thereby avoiding regulatory oversight and associated fees.
“There are a sizable number of bulk electricity customers, receiving electricity supply from the grid directly at the 132kv level. These customers
own and operate dedicated transmission substations on their premises to service productive activities. Their activities impact the grid performance through interconnections at the point of common coupling,” NERC stated.
“The impact of the grid-connected private transmission substations needs to be monitored to ensure compliance with the provisions of the Grid Code for
the Nigerian Electricity Transmission System (‘Grid Code’) and technical
standards with respect to construction, protection, metering, control,
communication, operation & maintenance.”
NERC said the objective of the Order is to create a framework for the registration and authorisation of entities
to own and operate a grid-connected private transmission substation in the Nigeria Electricity Supply Industry (NESI), strengthen regulatory oversight and compliance with technical standards, improve stability, and integrity of the grid power, and “promote transparency and accountability in the financial settlement for all energy transported through the national grid.”
The Commission therefore ordered the registration of existing and new grid-connected Private Transmission Substation Owners (PTSOs).
It directed the Nigerian Independent System Operator (NISO) to communicate the provisions of the Order to the PTSOs within five days from the effective date of the Order adding that NISO must send a list of the existing grid-connected PTSOs operating in NESI to the Commission.
According to the national electricity regulator, the list of PTSOs shall contain the physical address of the asset, GPS coordinates, as well as contact details of the point person, including name, email address, and telephone number.
“Within 45 days from the issuance of this Order, all existing PTSOs shall
apply to the Commission for an Independent Electricity Transmission
Network Operator (IETNO) permit to own and operate a grid-connected transmission substation in NESI,” it added.
For the registration of new grid-connected PTSOs, NERC said they must obtain an IETNO permit from the Commission before inter-connecting to the grid, adding that there shall be stringent sanctions for non compliance as prescribed in sections 63 (4) and (5) of the Electricity Act 2023.
It warned that failure to comply within the stipulated timeframe would trigger automatic enforcement actions. These include the issuance of a stop-order directing the immediate disconnection of the offending substation from the national grid, as well as the imposition of significant financial penalties for each day the substation remains non-compliant beyond the deadline.
The Commission highlighted documents that prospective applicants shall file alongside a completed application. These include a certificate of incorporation, valid tax clearance certificate, VAT registration certificate, approved substation impact assessment study by NISO for new PTSO, and payment of a registration fee of ₦100,000, among others.
Industry analysts suggest the move is a two-pronged strategy. Primarily, it is a bid to capture lost revenue. Private substations that are not properly licensed often bypass official distribution companies (DisCos), leading to disputes over service boundaries and unpaid service charges, energy theft, and inaccurate data on power consumption. By forcing them to obtain permits, NERC can better track power flows, enforce tariff structures, and ensure that all entities using the grid contribute to its maintenance.
The directive also addresses critical safety and technical concerns. Unregulated substations may not adhere to the rigorous technical codes and safety standards required by the Commission and TCN, posing a potential risk to the stability and safety of the entire national grid.
Mandating permits will, according to NERC, allow the regulator to conduct inspections and ensure compliance with grid codes, thereby mitigating the risk of system failures caused by substandard equipment or operating procedures.
“We are committed to sanitising the electricity market,” the notice added. “Compliance with regulatory instruments is not optional; it is fundamental to the stability, safety, and financial viability of the Nigerian Electricity Supply Industry (NESI).”
The 45-day deadline has sent ripples through the business community, particularly in industrial hubs where many factories and large enterprises have invested heavily in private infrastructure to guarantee power supply.
There are concerns that some industry groups may call for an extension, citing the complexity of the licensing process and the need for more time to gather required documentation. However, NERC has signalled it will be firm, warning that no further extension of time will be granted and that enforcement will commence immediately after the expiration of the deadline.
All private substation owners have been directed to contact the Commission’s Licensing Department immediately to commence the application process.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in mass communication.
