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In a move that may trigger a major shake-up in Nigeria’s electricity sector, the Federal Government is considering the sale of all 11 electricity distribution companies (DisCos) to new investors under a proposed amendment to the Electricity Act 2023. The Electricity Act (Amendment) Bill 2025, sponsored by Senator Enyinnaya Abaribe (Abia South), has passed second reading in the National Assembly and aims to impose stricter conditions on underperforming operators in the power sector.
If enacted, the bill would give the Nigerian Electricity Regulatory Commission (NERC) sweeping powers to demand recapitalisation of all DisCos within 12 months, failing which NERC could initiate share dilution, receivership, or complete re-privatisation of the companies.
The move is being justified as part of an effort to resolve the sector’s crippling financial issues, estimated to exceed N4 trillion in debt. According to the bill, DisCos that fail to raise new capital within the specified timeline would risk losing their equity stakes, especially those already under receivership or facing severe liquidity constraints.
A copy of the bill obtained by The Punch outlines an ambitious financing and reform framework aimed at attracting long-term local investments, eliminating unstructured subsidies, and establishing a transparent tariff regime. Among its mandates is a requirement for the Minister of Power, in collaboration with NERC, to roll out a National Electricity Financing Framework within 12 months.
The Act stipulates:
De-risked, long-term local currency financing for gas-to-power and distributed energy projects
Federal and state equity contributions in the DisCos
Recapitalisation of all DisCos under strict NERC oversight
Concessioning of select power plants under the Niger Delta Power Holding Company (NDPHC)
The bill also empowers the regulatory body to impose stiff penalties on non-compliant DisCos. “NERC shall have the power to impose share dilution or order the sale of equity holdings where recapitalisation is not met,” the document states.
The development comes after years of complaints about poor performance by electricity distribution companies, which have repeatedly failed to meet targets despite interventions such as tariff hikes, government bailouts, and debt restructuring. A 2025 report by the Bureau of Public Enterprises (BPE) revealed that more than 70% of DisCos have missed critical post-privatisation benchmarks set in 2013.
Minister of Power Adebayo Adelabu expressed strong dissatisfaction with the DisCos’ performance, saying in May, “If you can’t invest, give way to those who can.” Adelabu also confirmed that the government would deploy restructuring teams to underperforming DisCos in line with the proposed legislation.
However, the Forum of Commissioners of Power and Energy and other stakeholders have criticised the bill, warning that its current form may threaten the country’s decentralised electricity market and destabilise recent gains under the 2023 Act. Concerns have also been raised about the 12-month recapitalisation window, with analysts urging a 24-month extension, similar to Nigeria’s previous banking sector reforms.
Speaking anonymously, a senior official of a leading Disco said the law would be binding once passed and that all operators must comply. “We support the law and the authority of NERC. What is needed now is implementation and cooperation among stakeholders,” the official told our correspondent.
Electricity market expert Chinedu Amah argued that Nigeria’s challenge isn’t policy formulation but implementation. He called for the phasing out of subsidies and a realistic tariff regime to attract credible investors.
Meanwhile, Habu Sadiek, another energy analyst, welcomed the initiative but stressed that the Federal Government must first clear subsidy arrears and allow market-driven pricing. “Otherwise, recapitalisation efforts will fail,” he warned.
As of press time, efforts to obtain an official statement from NERC were unsuccessful. However, the Ministry of Power confirmed that its pilot restructuring of two DisCos—one in the North and another in the South—was ongoing, with full details expected by August 2025.
With this amendment bill gaining momentum, Nigeria’s power sector may be on the brink of another round of privatisation, this time with stricter compliance rules, clearer investment expectations, and no tolerance for failure.