The Federal Government is considering the sale of Nigeria’s 11 electricity distribution companies (DisCos) to new investors through a re-privatisation process if the proposed Electricity Act (Amendment) Bill 2025 becomes law, following years of underwhelming performance in the power sector.
The amendment bill, currently before the National Assembly and sponsored by Senator Enyinnaya Abaribe (Abia South), has passed its second reading and is undergoing further legislative review. The bill seeks to overhaul the 2023 Electricity Act by addressing regulatory gaps, warning 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.
The proposed legislation empowers the Nigerian Electricity Regulatory Commission (NERC) to compel core investors in all 11 successor DisCos to inject fresh capital or face severe regulatory sanctions. 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.
The 11 affected distribution companies include Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt, and Yola Electricity Distribution Companies, which collectively serve different regions across Nigeria.
The government’s tough stance follows mounting frustration with the DisCos’ performance since privatisation in 2013. In May 2024, Power Minister Adebayo Adelabu expressed disappointment, stating: “The performance of the Discos has been grossly underwhelming. We can no longer tolerate excuses. If you can’t invest, give way to those who can”.
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.
The amendment establishes strict financial restructuring requirements, including the resolution of the sector’s chronic debt overhang, estimated at over ₦4 trillion. The proposed framework mandates:
- Long-term local currency financing for gas-to-power and distributed energy projects
- A transparent and predictable tariff regime guaranteeing cost recovery
- Recapitalisation of DisCos under NERC supervision
- Clear determination of federal and state equity stakes in the DisCos
- Provision of fiscal and tax incentives to attract investment
The Forum of Commissioners of Power and Energy in Nigeria (FOCPEN) has expressed strong opposition to the proposed bill, warning that it poses a serious threat to the country’s newly decentralized electricity market and could reverse key reforms achieved under the landmark Electricity Act of 2023.
Power sector experts have raised concerns about the implementation timeline. Industry analyst Habu Sadiek welcomed the recapitalisation plan but criticised the 12-month deadline as unrealistic, suggesting a 24-month window similar to the banking sector recapitalisation would be more appropriate.
Electricity market expert Chinedu Amah argued that the sector’s challenges stem from implementation failures rather than policy gaps. “We have policies on everything in Nigeria. So I don’t think it is a policy problem,” he stated, advocating for the removal of subsidies and allowing market forces to drive investments.
The Power Ministry is already implementing pilot reform programmes targeting underperforming DisCos. A restructuring initiative involving one DisCo each from Northern and Southern Nigeria was scheduled to commence between May and August 2025, developed in collaboration with the Japanese International Cooperation Agency.
As the bill continues its legislative journey, stakeholders await the National Assembly’s final decision on what could represent the most significant restructuring of Nigeria’s power distribution sector since the original privatisation programme. The outcome will determine whether current DisCo owners can meet the capital injection requirements or face potential loss of their investments to new investors willing to revitalise the struggling power sector.
The success of any recapitalisation programme, experts note, will largely depend on the government’s commitment to addressing outstanding subsidy payments and implementing cost-reflective tariffs that enable sustainable operations in the electricity distribution segment.