The Federal Government could initiate a re-privatization process for Nigeria’s 11 electricity distribution companies (Discos) if the proposed 2025 Electricity Act (Amendment) Bill is passed into law by the National Assembly.
This legislative proposal, currently under deliberation, aims to introduce significant changes to the 2023 Electricity Act. Central to the amendment is a clause mandating that core investors in the Discos must inject fresh capital into their companies within 12 months of the bill’s enactment. Failure to comply could result in penalties such as share dilution, government receivership, or full-scale re-privatisation.
Sponsored by Senator Enyinnaya Abaribe (Abia South), the bill seeks to fix longstanding regulatory weaknesses and enforce performance-based accountability in the power sector. It has passed its second reading and is currently at the committee stage for further review and stakeholder engagement.
Under the proposed law, the Nigerian Electricity Regulatory Commission(NERC) would gain the authority to compel equity holders in all 11 Discos to recapitalise or face regulatory sanctions. These could include the dilution of existing shares, takeover through receivership, or transfer of ownership to new investors.
According to a draft of the amendment, these reforms are designed to strengthen investor confidence, boost capital inflow, and address the chronic financial instability plaguing the Nigerian Electricity Supply Industry (NESI).
However, the Forum of Commissioners of Power and Energy has voiced concerns, warning that the amendment could jeopardize gains made under the 2023 Electricity Act and threaten the recently decentralised electricity market.
The amendment also proposes broader powers for NERC to sanction underperforming Discos, especially those already under financial distress or receivership.
Nigeria’s 11 Discos serve various regions nationwide and include: Abuja Electricity Distribution Company, Benin Electricity Distribution Company, Eko Electricity Distribution Company, Enugu Electricity Distribution Company, Ibadan Electricity Distribution Company, Ikeja Electricity Distribution Company, Jos Electricity Distribution Company, Kaduna Electricity Distribution Company, Kano Electricity Distribution Company, Port Harcourt Electricity Distribution Company, and Yola Electricity Distribution Company.
A key feature of the amendment is the requirement for a comprehensive financial restructuring plan to be developed within 12 months of the bill’s enactment. This framework, to be led by the Minister of Power in collaboration with NERC, would aim to reduce the sector’s N4 trillion debt burden, attract long term local investment, and eliminate inefficient subsidy regimes.
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Sections 228J and 228K of the bill detail the expectations for this restructuring, including:
Creation of long-term local currency financing instruments for gas to power and decentralised energy projects;
A transparent, cost-reflective tariff system that supports efficient operators;
Completion of the recapitalisation process for Discos, overseen by NERC;
Clear delineation of federal and state government equity stakes in the Discos;
Fiscal and tax incentives to attract investment and stabilize the sector.
The amendment also empowers NERC to order core investors, including those under receivership, to recapitalise their holdings within a year of the bill’s enactment. Non-compliance could trigger sanctions ranging from forced dilution of equity to full divestment and transfer of ownership.
“The commission shall consult widely and take such measures as are necessary to ensure that the implementation of any order or directive on recapitalisation under subsection (3) of this section neither disrupts continuity of service nor undermines investor confidence in the NESI,” the bill reads.
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The move reflects government frustration over the poor performance of the Discos, which despite multiple interventions, including financial bailouts, debt relief, and tariff reforms, continue to provide unreliable service to consumers.
At a press conference in Abuja earlier this year, Minister of Power Adebayo Adelabu criticised the Discos for undermining reform efforts.
“We’ve invested trillions into this sector, yet many Nigerians remain without consistent power. The Discos have failed to meet expectations,” Adelabu stated. “If they can’t invest and perform, they must give way to those who can.”
A recent report from the Bureau of Public Enterprises revealed that over 70% of the Discos have not met key performance targets since their privatisation in 2013.
In response to the proposed changes, a senior official at one of the Discos, speaking anonymously, acknowledged that the amended law would be binding once passed.
“It’s not about whether the law affects Discos or not. Once the National Assembly passes it, it becomes law. Our duty is to comply and work with all stakeholders to implement it,” the official said.
He also welcomed the expanded role of NERC, noting that stronger regulation could lead to better outcomes for the sector.
Chinedu Amah, an electricity market expert, believes the real issue lies not in the absence of policy but in the lack of effective implementation.
“Nigeria doesn’t suffer from a shortage of energy policies,” Amah noted in an interview. “The challenge has always been poor execution. We have too many policies and not enough action.”
As the National Assembly continues its review, stakeholders in the power sector will be watching closely to see whether the amended bill can finally deliver long-promised reforms, or whether it will become yet another piece of legislation lost in Nigeria’s crowded energy policy landscape.
