The Federal Government of Nigeria may sell the 11 power distribution companies (Discos) to new investors through a re-privatization process if the Electricity Act (Amendment) Bill 2025 becomes law. This bill aims to address regulatory gaps and compel Discos to inject fresh capital into their companies within 12 months of the bill’s enactment. If they fail to comply, they risk facing stiff regulatory actions, including share dilution, reducing the stake of existing shareholders, government takeover of the company’s operations, or even transfer of ownership to new investors.
The Nigerian Electricity Regulatory Commission (NERC) will have increased powers to sanction underperforming Discos, particularly those under financial distress or receivership. The bill also proposes a comprehensive financing framework to be developed within 12 months to resolve the sector’s debt crisis, estimated at over N4 trillion. This move is expected to attract investment, stabilize the sector, and improve the overall efficiency of the power distribution companies.
The bill has several key provisions,ncluding recapitalization requirements for Discos, a transparent tariff regime that guarantees cost recovery for efficient operators, and prioritizing long-term local currency financing for gas-to-power and distributed energy projects. Additionally, the bill proposes fiscal and tax incentives to attract investment and stabilize the sector. These provisions aim to promote a more efficient and sustainable power sector, which is essential for Nigeria’s economic growth and development.
However, the bill has sparked debates, with some experts calling for a 24-month deadline for recapitalization to allow for a more realistic transition. They argue that the 12-month deadline may be too short, and Discos may struggle to meet the requirements. The Forum of Commissioners of Power and Energy has also raised concerns that the bill poses a serious threat to the country’s newly decentralized electricity market and could reverse key reforms achieved under the landmark Electricity Act of 2023.
Despite these concerns, the Federal Government remains committed to improving the power sector and attracting investment. The government believes that the bill will promote transparency, efficiency, and sustainability in the sector, which is essential for Nigeria’s economic growth and development. If the bill becomes law, it is expected to have a significant impact on the power sector, and stakeholders are eagerly awaiting the outcome.
