Electricity Act Amendment 2025 Targets Non-Performing Discos with Re-Privatisation Clause and Financial Overhaul
The Federal Government is considering the sale of Nigeria’s 11 power distribution companies (Discos) through a re-privatisation process, as part of the proposed amendments to the Electricity Act, 2025. This development comes amid growing frustration over poor power supply, mounting debts, and a lack of fresh capital investment by existing core investors.
The Electricity Act (Amendment) Bill, currently under review by the National Assembly, proposes sweeping regulatory reforms that could change the ownership structure of the Discos.
The bill, sponsored by Senator Enyinnaya Abaribe, aims to plug regulatory gaps in the 2023 Electricity Act. A key provision in the amendment mandates that core investors inject fresh capital within 12 months of the bill’s enactment or risk losing their stakes through dilution, receivership, or full re-privatisation... Read complete content click link below
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Already passed for second reading, the bill empowers the Nigerian Electricity Regulatory Commission (NERC) to enforce compliance and penalise defaulting investors.
These measures include issuing directives to recapitalise or face sanctions that could significantly alter ownership structures of the Discos, especially those under receivership or facing financial stress.
The proposed reforms have, however, attracted concern. The Forum of Commissioners of Power and Energy warns that such actions may destabilise Nigeria’s newly decentralised electricity market and undo reforms under the 2023 Act. Yet, government officials insist that decisive steps are necessary to address chronic underperformance, as many Nigerians remain without reliable electricity despite heavy financial investments.
There are currently 11 electricity distribution companies in Nigeria, including Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt, and Yola Discos. These firms have long faced criticism over poor service delivery and operational inefficiencies.
The amendment bill includes the development of a new financing framework within 12 months, focused on de-risking investments, reducing unstructured subsidies, and attracting long-term local currency funding for gas-to-power and distributed energy projects. It further calls for fiscal and tax incentives, recapitalisation of the Discos, and clarification of federal and state government equity stakes.
Sections 228J and 228K of the proposed Act direct the Minister of Power, in consultation with NERC, to create and implement policies to address the sector’s over N4 trillion debt and ensure a financially viable Nigerian Electricity Supply Industry (NESI). These include:
Prioritising long-term, local currency financing for gas and distributed energy projects.
Establishing a transparent tariff regime that ensures cost recovery.
Recapitalisation of Discos under strict regulatory supervision.
Timely determination of federal and state equity contributions to Discos.
Failure to meet recapitalisation mandates could result in a forced dilution of core investor shares or complete re-privatisation of the company. Despite some backlash, the government believes strong enforcement will prevent further decline in the power sector and protect long-term investments.
Minister of Power, Adebayo Adelabu, has voiced his frustration over the Discos’ persistent underperformance. At a May 2025 media briefing, he criticised the lack of progress, saying: “We can no longer tolerate excuses. If you can’t invest, give way to those who can.”
Further highlighting the depth of the issue, a Bureau of Public Enterprises report revealed that over 70% of Discos have failed to meet their post-privatisation performance benchmarks since 2013.
In response, the Ministry of Power began a pilot restructuring programme in May 2025 targeting two underperforming Discos—one in the North and one in the South—under a reform roadmap presented by the Japanese International Cooperation Agency (JICA). The programme is expected to wrap up by August 2025, although updates on its progress remain limited.
The Electricity Act (Amendment) Bill, if passed, will mark a significant shift in Nigeria’s electricity regulation. It seeks to prioritise service delivery, attract serious investors, and resolve the power sector’s long-standing issues through a combination of recapitalisation, regulatory enforcement, and fiscal incentives.
Source: The PUNCH
