Lagos State Establishes Independent Electricity Operator

By Johnson Emmanuel

The Lagos State Government has constituted the governing board and management of the Lagos State Independent System Operator (LAISO), established under the Lagos State Electricity Law 2024, to operate the state’s electricity grid, administer wholesale electricity markets and oversee system reliability. Announced recently in Lagos, the move operationalises the state’s electricity market following the enactment of the new law. Mr. Biodun Ogunleye chairs the governing board, with Professor Lanre Fagbohun as Vice Chairman, while Dr Oladimeji-Yisa Taiwo serves as Managing Director. The institution will coordinate system operations, market administration, grid settlements, regulatory compliance and stakeholder engagement through a statutory Member Sector Group Committee representing market participants.

DECISION HIGHLIGHT

Lagos State has moved from electricity policy formulation to institutional execution by establishing an independent market operator designed to separate system governance from commercial electricity activities, thereby creating the governance architecture required for a competitive sub-national electricity market.

DECISION MEMO

The establishment of LAISO marks a structural rather than administrative reform. Following the decentralisation enabled by the Electricity Act, Lagos is building the institutional infrastructure necessary for an autonomous electricity market capable of attracting private investment while maintaining operational neutrality.

Unlike conventional utilities that combine multiple market functions, an independent system operator provides neutral coordination of electricity dispatch, market settlements and grid reliability. This institutional separation reduces conflicts of interest, strengthens market confidence and creates clearer regulatory accountability.

The composition of the governing board also reflects an emphasis on multidisciplinary governance rather than purely technical administration. According to the government, the board will provide strategic oversight by drawing expertise in electricity systems, engineering, finance, law, regulation, risk management and executive leadership.

“The board will provide strategic direction, policy oversight, and corporate governance leadership, drawing on its collective expertise in electricity systems, engineering, finance, law, regulation, risk management, and executive leadership to guide the successful operation of LAISO.”

Equally significant is the creation of the Member Sector Group Committee mandated under the Lagos State Electricity Law 2024. By incorporating transmission-dependent generators, distribution companies, embedded generators, distributed energy resource operators, grid-connected customers and other licensed participants, Lagos is institutionalising stakeholder participation within market governance instead of relying solely on government regulation.

The management appointments reinforce the state’s implementation strategy. Taiwo contributes experience in financial regulation and public policy, including service at the Central Bank of Nigeria; Engineer Adetunji Adesanya, System Operator, brings over 35 years in transmission operations and grid management; while Barrister Bunmi Benson, Market Operator, contributes expertise in regulatory compliance and electricity market governance.

The broader implication is that Lagos is positioning electricity governance as an economic competitiveness issue. Rather than expanding public ownership of power assets, the state is prioritising market rules, operational transparency and institutional credibility as mechanisms for improving electricity reliability.

DATA BOX

• Institution established: Lagos State Independent System Operator (LAISO)
• Legal basis: Lagos State Electricity Law 2024
• Governing Board Chairman: Mr Biodun Ogunleye
• Vice Chairman: Professor Lanre Fagbohun
• Managing Director: Dr Oladimeji-Yisa Taiwo
• System Operator: Engineer Adetunji Adesanya
• Market Operator: Barrister Bunmi Benson
• Core responsibilities:
  • State grid operations
  • Wholesale electricity market administration
  • Grid coordination
  • Market settlements
  • System reliability
  • Technical and regulatory compliance
• Governance innovation:
  • Statutory Member Sector Group Committee representing licensed market participants
• Government objective:
  • Build a reliable, competitive, transparent and investor-friendly electricity market.

WHO WINS / WHO LOSES

Winners

• Independent power producers.
• Electricity distribution and embedded generation companies.
• Renewable energy developers.
• Large industrial and commercial electricity users.
• Infrastructure investors seeking predictable market governance.

Potential Losers

• Market participants dependent on opaque operational arrangements.
• Investors preferring vertically integrated electricity market structures.

POLICY SIGNALS

Lagos is demonstrating how Nigerian states can translate electricity decentralisation into functioning market institutions. The emphasis is shifting from electricity ownership towards governance quality, independent system operation and transparent market administration.

INVESTOR SIGNAL

The creation of LAISO lowers institutional risk by providing clearer operational governance for the Lagos electricity market. An independent system operator improves transparency in dispatch, settlements and market coordination, factors that are fundamental to attracting long-term private investment into generation, embedded power, distribution infrastructure and distributed energy resources.

RISK RADAR

Institutional establishment does not automatically guarantee market performance. LAISO’s effectiveness will depend on regulatory independence, efficient market settlement systems, coordination with national electricity infrastructure, timely licensing of participants and sustained political commitment to market-based governance. Delays in these areas could weaken investor confidence despite the strength of the institutional framework.