FG Moves to Re-Privatise Discos Under New Electricity Act Amendment
The Federal Government is contemplating a comprehensive overhaul of Nigeria’s power sector through the proposed Electricity Act (Amendment) Bill, 2025. If passed, the bill could lead to the re-privatisation of the country’s 11 electricity distribution companies (Discos) within a year if they fail to recapitalise and improve service delivery. The measure, currently before the National Assembly, is part of wider reforms aimed at revitalising the struggling power sector.
National Assembly Sets Stage for Radical Power Sector Shake-Up
The amendment bill, sponsored by Senator Enyinnaya Abaribe (Abia South), is a direct response to the persistent failures in the power distribution chain. It proposes major changes to the 2023 Electricity Act, empowering the Nigerian Electricity Regulatory Commission (NERC) to enforce share dilution, takeovers, or outright re-privatisation of Discos that remain non-compliant.
The bill has already passed its second reading and is undergoing legislative review. It mandates that within 12 months of enactment, Discos must inject fresh capital or face stringent regulatory action. This aggressive timeline is designed to force compliance and push for operational and financial reforms in a sector burdened by inefficiency and debt.
Discos on the Brink: A Sector in Crisis
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 are responsible for supplying electricity to consumers across different regions of the country. Despite their critical role, the Discos have consistently failed to meet performance benchmarks since their privatisation in 2013.
YEPS gathered that a May 2025 report from the Bureau of Public Enterprises revealed that over 70% of Discos have defaulted on key performance indicators, including service delivery, infrastructure development, and revenue generation. The sector’s N4 trillion debt burden further underscores its financial instability.
NERC to Take the Lead on Enforcement
Sections 228J and 228K of the proposed Act place the responsibility for enforcement squarely on the shoulders of NERC. The commission will be empowered to direct core investors in the Discos—especially those under receivership or financial distress—to recapitalise within 12 months. Non-compliance could result in sanctions, including share dilution and the re-privatisation of the affected companies.
According to the bill, “The Federal Government shall, through the Minister and in consultation with NERC, establish a comprehensive framework for financing projects in the Nigerian Electricity Supply Industry (NESI) within 12 months from the commencement of this bill.”
Financing Framework: The Path to Stability
The amendment lays out the need for a robust financing framework to attract long-term local currency investments and reduce reliance on diesel and petrol-based power generation. The framework will be designed to eliminate regressive subsidies and promote a transparent, cost-reflective tariff regime.
Key provisions include:
- Long-term financing for gas-to-power and distributed energy projects
- Tariff reform that allows efficient operators to recover costs
- Supervised recapitalisation of Discos
- Clear federal and state equity stake determinations
- Tax incentives to encourage private investments
These measures are expected to reduce foreign exchange risks and create a more attractive environment for investors.
Mixed Reactions from Industry Stakeholders
While the government’s intentions are clear, the proposed bill has sparked criticism. The Forum of Commissioners of Power and Energy warned that the amendment could undermine the decentralised structure established by the 2023 Electricity Act. They argue that the sweeping powers granted to NERC may be excessive.
Energy analyst Chinedu Amah added that Nigeria’s problem isn’t policy creation but implementation. “We’re overloaded with policies. What we need is proper execution. Maybe it’s time we removed subsidies entirely, flattened the tariff structure, and let market forces determine growth,” he said.
A senior Disco official, speaking to YEPS on condition of anonymity, emphasised compliance over resistance. “The law, once passed, binds all stakeholders. It’s not a matter of debate. We must work collectively to implement it.”
Calls for Extended Recapitalisation Timeline
Some experts have questioned the feasibility of the 12-month deadline, urging the government to consider a more realistic timeframe. Power sector analyst Habu Sadiek welcomed the intent of the bill but recommended a 24-month recapitalisation window, akin to the Central Bank of Nigeria’s banking sector reforms.
“Before recapitalisation, the government must settle all subsidy debts and allow for cost-reflective tariffs,” Sadiek stated. “Otherwise, these reforms could collapse under their own weight.”
Federal and State Roles Clarified
The bill also outlines a clear timeline for the federal and state governments to contribute financially to reflect their equity stakes in the Discos. This determination must be made within 12 months of the Act’s commencement, helping to eliminate ambiguity in ownership and governance.
In addition, the Act allows for concessions of specific power plants under the Niger Delta Power Holding Company, as part of broader efforts to enhance power generation and distribution.
Minister of Power Vows Action
Minister of Power, Adebayo Adelabu, has remained vocal in his criticism of the electricity distribution companies, blaming their inefficiency for frustrating much-needed reforms in the power sector. In a media briefing held in May 2025, Adelabu didn’t mince words. “We have invested trillions, yet many Nigerians still live in darkness. It’s time to get tough. If the Discos can’t invest, they should step aside and let capable investors take over,” he declared.
To address these inefficiencies, the minister announced that the government would deploy specialised intervention teams to the most underperforming Discos. These teams, he explained, will conduct diagnostic assessments, recommend turnaround strategies, and supervise implementation to ensure measurable improvements in service delivery.
This initiative forms part of a broader restructuring effort, including a pilot reform programme already underway in collaboration with the Japanese International Cooperation Agency (JICA). According to Adelabu, this pilot will offer a model for wider sector transformation. By focusing on targeted performance improvements and accountability, the ministry aims to ensure that Nigerians begin to experience reliable and equitable electricity supply.
The move underscores the ministry’s determination to shift the conversation from policy promises to practical outcomes—delivering power, not excuses.
Pilot Programme to Revamp Two Discos
As part of a broader plan to reform the electricity distribution sector, the Ministry of Power is launching a pilot programme aimed at restructuring two of the country’s most underperforming Discos—one from the Northern region and one from the Southern region. The initiative will serve as a testing ground for future interventions and is expected to set a precedent for large-scale restructuring across the sector.
The roadmap guiding this effort is being developed in collaboration with the Japanese International Cooperation Agency (JICA). Titled “Revamping of the Distribution Sector in Nigeria,” the roadmap outlines technical and strategic steps for reviving poorly performing Discos, attracting private investment, and enhancing operational efficiency across the board.
According to Bolaji Tunji, Special Adviser on Strategic Communications and Media Relations to Minister Adebayo Adelabu, the programme is still in its implementation phase. “It is an ongoing process,” Tunji said. “We will provide more details and brief the public as things progress.”
A Sector at a Crossroads
As the Electricity Act (Amendment) Bill, 2025, inches closer to becoming law, Nigeria’s power sector finds itself at a historic turning point. For over a decade, the sector has grappled with inefficiencies, erratic supply, ballooning debts, and investor mistrust. With the new bill, the government has drawn a bold line in the sand—signaling the urgent need for renewal or removal.
At stake are billions of naira in public and private investment, the faith of international partners, and the trust of millions of Nigerian households and businesses that continue to suffer under unreliable power supply. If this reform is handled with political courage and technical precision, it could open a new chapter for Nigeria’s power industry—one driven by accountability, innovation, and results.
The proposed legislation is as much a lifeline as it is a last chance. For the current investors, it represents a wake-up call: they must meet performance expectations or risk losing their controlling stakes. For the government, it offers a fresh opportunity to correct past privatisation missteps and strengthen its credibility. And for ordinary Nigerians, it might just be the long-awaited turning point toward stable, reliable, and equitable access to electricity—one of the most basic yet elusive public goods in the country.
In Conclusion; Reform or Relapse?
The Electricity Act (Amendment) Bill, 2025, represents a defining moment for Nigeria’s troubled power sector. After years of dysfunction, underinvestment, and consumer frustration, this legislation may be the country’s most significant opportunity to reset and rebuild the electricity supply industry.
Its success, however, hinges on more than the fine print. Implementation, stakeholder buy-in, and unwavering political will are essential to transforming intention into impact. The urgency is clear: Nigerians deserve consistent, affordable, and equitable electricity, not continued promises or failed reforms.
On the other hand, failure to act decisively will only reinforce public distrust and stall the nation’s developmental ambitions.
Ultimately, the power sector is too critical to Nigeria’s progress to be left to inertia. The coming months will reveal whether the country chooses reform—or slides back into relapse. Either way, the choices made now will shape the future of electricity in Nigeria for decades to come.