FG May Re-Privatise Underperforming Discos As Electricity Bill Advances in NASS

The Federal Government may be preparing to strip core investors of their stakes in Nigeria’s 11 electricity distribution companies, should they fail to recapitalise within 12 months—if a proposed amendment to the Electricity Act 2023 becomes law.

The Electricity Act (Amendment) Bill, 2025, currently undergoing legislative scrutiny in the National Assembly, seeks to overhaul the sector’s regulatory structure and inject new financing into Nigeria’s struggling electricity market. Sponsored by Senator Enyinnaya Abaribe (Abia South), the bill has passed its second reading and contains provisions that could lead to share dilution, receivership, or outright re-privatisation of defaulting distribution companies.

A key clause in the amendment mandates core investors to inject fresh capital into the sector within one year of the law coming into effect. Failure to comply could see them forfeit control of their companies.

“If you can’t invest, give way to those who can,” Minister of Power, Adebayo Adelabu, warned during a press briefing in May, where he expressed disappointment in the performance of the Discos despite several government bailouts and reforms.

According to a draft of the amendment, the Nigerian Electricity Regulatory Commission (NERC) will be empowered to impose sanctions—including share dilution and re-privatisation—on power distribution companies, especially those already under financial distress or receivership.

There are 11 Discos across the country: Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt, and Yola. These firms have faced criticism for their poor service delivery, failure to meet key performance benchmarks, and inability to attract long-term investments since the power sector privatisation exercise in 2013.

The proposed legislation further compels the Minister of Power and NERC to develop a robust financial framework within 12 months of the bill’s passage. This framework is expected to attract local currency financing, address the sector’s N4 trillion debt overhang, and phase out “unstructured and regressive subsidies.”

“The Federal Government shall… establish a comprehensive framework for financing of projects in the NESI within 12 months from the commencement of this Bill,” a section of the amendment reads.

The new regime will also prioritise cost-reflective tariffs, recapitalisation of Discos under NERC’s supervision, clarification of federal and state equity stakes, and the provision of fiscal and tax incentives to encourage private sector investment.

However, not all stakeholders are on board with the proposal. The Forum of Commissioners of Power and Energy has warned that the bill could reverse key decentralisation reforms introduced under the 2023 Act.

Power sector experts are also raising red flags. Chinedu Amah, a power market consultant, said the country’s problem lies not in policy deficiency but in implementation failure. “We have policies on everything in Nigeria… We should remove all subsidies, flatten the tariff regime, and allow the market to drive investments,” he said.

Another expert, Habu Sadiek, called for the recapitalisation deadline to be extended to 24 months, similar to the Central Bank’s previous bank recapitalisation exercise. “Giving the current Disco owners 24 months, rather than 12, would have been better,” Sadiek said. He also emphasised the need to clear all outstanding subsidy debts before enforcing recapitalisation.

Meanwhile, the Discos appear to be bracing for impact. A senior executive who spoke anonymously said the amendment is binding and the sector must comply. “When the National Assembly makes laws, it is binding on all of us,” the official said. “We believe in the wisdom of the National Assembly and are ready to work with all stakeholders.”

Efforts to obtain comments from NERC were unsuccessful as the Director of Public Affairs, Usman Arabi, was unreachable.

In a related development, the Ministry of Power has confirmed that a pilot reform programme targeting two underperforming Discos is still ongoing. The initiative, which involves deploying special teams to selected firms in the north and south, is expected to conclude by August.

Special Adviser to the Minister, Bolaji Tunji, said on Monday that the restructuring effort is “an ongoing thing” and more details will be shared in due course.