The Federal Government could revoke the licences of Nigeria’s 11 electricity distribution companies (Discos) and re-privatise them if they fail to inject new capital within a 12-month period, following proposed amendments to the 2023 Electricity Act currently before the National Assembly.
The proposed legislation, sponsored by Senator Enyinnaya Abaribe, seeks to overhaul Nigeria’s power sector by compelling underperforming Discos to recapitalise or face sanctions such as share dilution, receivership, or outright sale. The bill has passed its second reading and awaits further deliberation.
The amendment would give the Nigerian Electricity Regulatory Commission (NERC) broad powers to enforce investment compliance, especially on Discos facing financial distress. The proposed changes have stirred concerns among stakeholders who fear it could disrupt the progress made under the Electricity Act 2023.
A draft of the Electricity Act (Amendment) Bill, 2025, empowers NERC to direct recapitalisation of equity holdings by core investors in all 11 Discos. Failure to do so within a year of the bill’s commencement could trigger regulatory penalties, including a re-privatisation process.
Nigeria’s power distribution network comprises Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt, and Yola Discos. Most have failed to meet performance benchmarks since their privatisation in 2013, according to the Bureau of Public Enterprises.
The bill mandates the development of a financing framework within 12 months to overhaul the power sector’s structure, targeting long-term local currency investments and the phasing out of unsustainable subsidies. Power Minister Adebayo Adelabu stressed that the reforms are necessary to address a debt burden estimated at over N4 trillion.
“The performance of the Discos has been grossly underwhelming,” Adelabu said during a media briefing. “If you can’t invest, give way to those who can.”
Sections 228J and 228K of the proposed law would require both federal and state governments to determine and reflect their equity stakes in the Discos within a year, providing fiscal and tax incentives to stabilise the sector. The framework also proposes attracting capital for distributed energy and gas-to-power projects.
Critics, however, argue that without settling existing subsidy arrears and allowing cost-reflective tariffs, the recapitalisation plan may fall short. Some stakeholders are calling for a 24-month window for recapitalisation, citing economic realities and precedents from the banking sector.
Power market expert Chinedu Amah said the sector’s issues stem from weak implementation, not a lack of policies. “Nigeria is saturated with policies. What we lack is execution,” he said, advocating for the removal of regressive subsidies to enable market-driven investment.
A power distribution company official, who preferred anonymity, insisted that the Discos are ready to work within the law, adding, “When the National Assembly makes laws, it is binding on all of us. We must comply and collaborate.”
Habu Sadiek, another energy analyst, welcomed the recapitalisation move but warned that “without clearing existing debts and adjusting tariffs, the initiative may struggle.” He also criticised the 12-month deadline, calling it too ambitious.
Meanwhile, the Power Ministry has begun deploying reform teams to underperforming Discos as part of a pilot programme scheduled between May and August 2025. This reform, supported by the Japanese International Cooperation Agency, aims to overhaul the sector starting with two Discos from the North and South.
Providing an update on the pilot, Bolaji Tunji, spokesperson for the Power Minister, said the restructuring initiative was still ongoing. “It is an ongoing thing and we will brief you at the appropriate time,” he said on Monday.
Despite multiple interventions, Nigeria’s electricity supply remains erratic. Billions have been spent on the sector through bailouts and subsidies, yet consumers continue to suffer. The government hopes that a stricter regulatory framework will finally bring the needed turnaround.
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