Electricity Act (Amendment) Bill: FG Considers Selling 11 Discos To New Investors

The Federal Government may repossess and re-privatise the 11 electricity distribution companies (DisCos) if they fail to inject fresh capital into the sector, according to provisions in the Electricity Act (Amendment) Bill, 2025 currently before the National Assembly.
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‎The bill, sponsored by Senator Enyinnaya Abaribe, aims to amend the 2023 Electricity Act and introduce sweeping regulatory reforms. It seeks to address years of poor performance, mounting debts, and stalled investments in the power distribution segment.
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‎If passed into law, the Nigerian Electricity Regulatory Commission (NERC) will be empowered to compel core investors in the DisCos to recapitalise within 12 months. Failure to comply could lead to punitive actions, including share dilution, takeover, or outright re-privatisation—particularly for DisCos already under receivership or experiencing financial distress.
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‎The draft legislation, proposes a comprehensive financing framework to be developed within a year. This framework would prioritise long-term local currency investments, reduce reliance on diesel and petrol-powered generators, eliminate unstructured subsidies, and stabilise the Nigerian Electricity Supply Industry (NESI), which is currently weighed down by a debt overhang of over N4 trillion.
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‎The affected DisCos are Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt, and Yola. The bill also calls for a reassessment of equity contributions by both federal and state governments in the DisCos, aligned with their ownership stakes.
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‎Under Sections 228J and 228K of the amendment, the Minister of Power and NERC are tasked with implementing a robust financing strategy to de-risk investments across the power value chain—from generation to distribution. It also recommends phasing out regressive subsidies and enforcing a transparent tariff system that ensures cost recovery for efficient operators.
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‎While the bill has been welcomed by some stakeholders, others, including the Forum of Commissioners of Power and Energy, have criticised it, warning that it could disrupt the decentralised electricity market established under the 2023 Act.
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‎Power sector experts and consumer advocacy groups have also raised concerns. Many argue that the proposed 12-month window for recapitalisation is too short, recommending a 24-month timeline similar to previous banking reforms. Others stress that recapitalisation will remain ineffective unless the government settles all outstanding subsidy debts and allows cost-reflective tariffs.
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‎Minister of Power Adebayo Adelabu has repeatedly expressed frustration with the DisCos, accusing them of stalling reforms and underperforming despite multiple government bailouts and tariff reviews. In May, he publicly stated that those unwilling to invest should exit the sector.
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‎A report by the Bureau of Public Enterprises in May 2025 revealed that over 70% of the DisCos have failed to meet performance targets set during the 2013 privatisation.
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‎Meanwhile, the Ministry of Power is piloting a reform programme involving two underperforming DisCos—one each from the North and South. The initiative, launched in collaboration with the Japanese International Cooperation Agency, is part of a broader plan to restructure the distribution segment.
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‎When contacted for comments, a representative of the DisCos, speaking anonymously, said that once passed into law, the amended Electricity Act will be binding and must be implemented by all stakeholders. He noted that DisCos are prepared to cooperate with NERC and support reforms that improve the sector.
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‎Electricity market expert Chinedu Amah said the issue isn’t a lack of policy but poor implementation. He called for the removal of inefficient subsidies and suggested that investment should be driven by market forces rather than obligation alone.
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‎Another analyst, Habu Sadiek, echoed support for the bill but stressed the need for the government to first clear subsidy arrears and revise tariff structures. He also argued that the 12-month deadline for recapitalisation is unrealistic given the current economic climate.
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‎The Ministry of Power has assured the public that the reform process is ongoing, with updates to be provided in due course, according to the Minister’s Special Adviser on Strategic Communications, Bolaji Tunji.
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