The Federal Government is set to strip the owners of Nigeria’s 11 power distribution companies of their shares — if they fail to inject new capital into the ailing electricity sector.
This follows a sweeping amendment to the 2023 Electricity Act, currently before the National Assembly.
The proposed law gives teeth to the Nigerian Electricity Regulatory Commission (NERC), allowing it to order a full re-privatisation of any electricity distribution company (Disco) that fails to meet the recapitalisation deadline.
Sponsored by Senator Enyinnaya Abaribe (Abia South), the bill warns that any core investor who fails to bring in fresh capital within 12 months of the law’s commencement may lose their stake — either through share dilution, receivership, or outright repossession.
It also demands the Minister of Power, in consultation with NERC, to create a robust framework for long-term, local-currency financing across the power sector, covering generation, transmission, and distribution.
The aim is to remove so-called “unstructured and regressive subsidies”, and attract real investment to a sector weighed down by over ₦4 trillion in debt.
Will Recapitalisation Fix Power?
The Discos are in trouble. Since privatisation in 2013, most have failed to meet agreed performance targets. According to a May 2025 report by the Bureau of Public Enterprises, over 70% of the firms underperformed.
The law now mandates them to recapitalise or quit the stage.
“We can no longer tolerate excuses,” Power Minister Adebayo Adelabu said in May.
“If you can’t invest, give way to those who can. Whatever we do in generation means nothing to consumers if it’s frustrated at the distribution point.”
To that end, the bill empowers NERC to not only monitor recapitalisation but also impose penalties on erring companies.
If passed, the law will affect all 11 Discos: Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt, and Yola.
The proposal also demands that the federal and state governments contribute funds to match their equity shareholding in the Discos. It seeks clarity on ownership, accountability, and future roles in sector financing.
Mixed Reactions Trail the 12-Month Ultimatum
Some experts welcomed the bill. Others raised red flags over the tight 12-month deadline and the unresolved financial mess still plaguing the power sector.
Power sector analyst Habu Sadiek said the idea was good — but came with a caveat.
“The government must first settle outstanding subsidy debts and allow cost-reflective tariffs before recapitalisation can work,” he said.
He warned that 12 months was “too short and unrealistic”, suggesting a 24-month window similar to what the Central Bank used in its banking recapitalisation reforms.
Chinedu Amah, another expert, agreed the sector didn’t lack policy — just proper action.
“We have policies on everything. What we don’t have is implementation,” he said.
He called on the government to tackle the grid’s infrastructure gap instead of only expecting private firms to invest.
“You can’t force them to grow their business,” he added. “But if infrastructure is the issue, it must be solved — by government, private firms, or through partnerships.”
A senior Disco official, who spoke anonymously, dismissed claims that the law unfairly targets the companies.
“It is totally irrelevant to say the law affects Discos. The law is binding on everyone. What we should do is implement it together,” he said.
He noted that the Discos were ready to work with the strengthened NERC and comply with any directive issued under the law.
But not everyone is convinced.
The Forum of Commissioners of Power and Energy has warned that the bill could reverse the gains of the 2023 Electricity Act, which opened up the electricity market and gave more power to states.
What Happens Next?
As the deadline inches closer, the Power Ministry is working behind the scenes.
Adelabu confirmed plans to deploy technical teams to some underperforming Discos as part of a pilot reform programme.
The programme, set to end in August, began after a May 2025 meeting with the Japanese International Cooperation Agency, which presented a plan titled “Revamping of the Distribution Sector in Nigeria.”
Special Adviser to the Minister, Bolaji Tunji, gave a brief update.
“It is an ongoing thing and we will brief you at the appropriate time,” he said.
Meanwhile, the National Assembly continues its legislative work. When the final version of the law emerges, it could change the face of Nigeria’s power sector for good.
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