FG may Sell 11 DisCos to New Investors
The Federal Government may sell the 11 power distribution companies through a re-privatisation process if the Electricity Act (Amendment) Bill, 2025, currently before the National Assembly, becomes law.
The National Assembly has already initiated a legislative process to enforce sweeping reforms that could see core investors in electricity distribution companies lose their stakes if they fail to improve their investment.
The amendment bill, sponsored by Senator Enyinnaya Abaribe (Abia South), seeks to overhaul the 2023 Electricity Act by addressing regulatory gaps, as it warned that investors risk losing their stakes through share dilution, receivership, or outright re-privatisation if fresh capital is not injected into the sector within 12 months, following years of poor performance and a worsening debt crisis.
This clause comes into effect immediately after an assent is granted to the ongoing amendment of the Electricity Act 2023. The bill has passed its second reading and is currently undergoing further legislative action and discussions.
If passed into an Act, it will empower the Nigerian Electricity Regulatory Commission to compel core investors in the 11 successor Discos to inject fresh capital or face stiff regulatory action, including share dilution, receivership, or outright re-privatisation.
This was disclosed in the draft amendment to the Principal Act seen on Monday. The proposed Electricity Act (Amendment) Bill, 2025, has already attracted condemnation from the Forum of Commissioners of Power and Energy, warning that the bill poses a serious threat to the country’s newly decentralised electricity market and could reverse key reforms achieved under the landmark Electricity Act of 2023.
The bill also gives the commission powers to impose sanctions, including dilution of shares or re-privatisation, on defaulting Discos, particularly those under receivership or financial distress.
There are 11 Discos in Nigeria that service different regions across the country. They include Abuja Electricity Distribution Company, Benin Electricity Distribution Company, Eko Electricity Distribution Company, Enugu Electricity Distribution Company, and Ibadan Electricity Distribution Company.
Others are 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.
Under the new law, a comprehensive framework must be developed within 12 months to overhaul the financial structure of the Nigerian Electricity Supply Industry, with a strong focus on attracting long-term local currency investments and phasing out what the bill describes as “unstructured and regressive subsidies.”
According to Sections 228J and 228K of the amended Act, the Minister of Power, in consultation with NERC, is required to develop and implement a robust financing framework aimed at de-risking investments across the power value chain and resolving the sector’s chronic debt overhang, estimated at over N4tn.
However, power sector experts and consumer advocacy groups have argued that the proposed law, if passed, can only be effectively implemented if the long-standing subsidy debts crippling the sector are first cleared.
They also recommend extending the recapitalisation deadline to 24 months, similar to the approach adopted during the banking sector recapitalisation, to allow for a more realistic and structured transition.
A copy of the amended act read, “Financing of Projects in the NESI: The Federal Government shall, through the minister and in consultation with the Nigerian Electricity Regulatory Commission, establish a comprehensive framework for financing of projects in the NESI within 12 months from the commencement of this Bill.
“The framework referred to under subsection(1) of this section shall give regard to the extant National Electricity Policy and Strategic Implementation Plan and aim to attract and de-risk investments across the power value chain from generation, transmission, distribution, reduce diesel and petrol-based self-generation and address crippling financial crisis and debt overhang in the Nigerian power sector.”
The proposed Act stipulates that the new financing framework must prioritise long-term local currency financing for gas-to-power and distributed energy projects, a transparent and predictable tariff regime that guarantees cost recovery, the recapitalisation of Discos under NERC’s supervision, a clear determination of federal and state equity stakes in the Discos, and the provision of fiscal and tax incentives to attract investment and avert a sector collapse.
It noted, “The framework established under section 228I of this Bill shall include, but not limited to the following: long-term local currency capital financing for gas-to-power optimisation projects; distributed energy projects, etc, to mitigate foreign exchange risks for investors;
“Commitment to a transparent and predictable tariff regime that allows for cost recovery for efficient operators, progressively phasing out regressive and unstructured subsidies.
“Concession of certain power plants under the portfolio of the Niger Delta Power Holding, as well as commencement and completion of successor Discos’ recapitalisation to be implemented through the directive and supervision of the Nigerian Electricity Regulatory Commission.”
It further stated that the regulatory commission shall have the power to direct the core investors in the 11 successor distribution companies, including those under receivership, to recapitalise their respective equity holdings within such a time frame not exceeding 12 months from the commencement of this bill, and in deserving circumstances impose appropriate sanctions for non-compliance with its directive under this subsection, including an order for dilution of such shares held by core investors or re-privatisation.
It added, “A determination of Federal Government equity stakes in the 11 successor distribution companies with a clear timeframe of not later than 12 months from the commencement of this bill, for both the federal and state governments to make their respective contributions reflective of their equity holdings in the 11 successor distribution companies; and
“Such other mechanisms, such as fiscal and tax incentives to prevent the collapse of the NESI. Without prejudice to the provisions of subsection (2)(c) of this Section, the commission shall have the power to direct the core investors in the 11 successor distribution companies, including those under receivership, to recapitalise their respective equity holdings within such a time frame not exceeding 12 months from the commencement of this bill, and in deserving circumstances impose appropriate sanctions for non-compliance with its directive under this subsection, including an order for dilution of such shares held by core investors or re-privatisation.
“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 sub-section (3) of this section neither disrupts continuity of service nor undermines investor confidence in the NESI.”
The government’s tough stance follows years of poor performance by the Discos, which continue to deliver erratic power supply despite multiple interventions, including debt forgiveness, financial bailouts, and tariff adjustments.
In May, the Federal Government openly expressed disappointment in the Discos, accusing them of frustrating ongoing reforms. At a media briefing in Abuja, the Minister of Power, Adebayo Adelabu, lamented that despite trillions of naira sunk into the sector, many Nigerians remain in darkness.
“The performance of the Discos has been grossly underwhelming,” Adelabu declared. “We can no longer tolerate excuses. If you can’t invest, give way to those who can.”
“We need to get tough with the Discos, as they can easily frustrate all the gains we have made. They have disappointed us in performance expectations. Whatever we do in generation does not mean anything to consumers if it is frustrated at the distribution points”.
A May 2025 report by the Bureau of Public Enterprises showed that more than 70 per cent of Discos have failed to meet key performance benchmarks set at the time of privatisation in 2013.
Reacting to the proposed timeline and pending directive, an official of power distribution companies dismissed concerns over the impact of the recently amended Electricity Act on Discos, saying the law is binding when assented to, and must be implemented by all stakeholders.
SOURCE: The PUNCH