The Digest:
The Nigerian government may sell 11 power distribution companies (Discos) to new investors if the Electricity Act (Amendment) Bill, 2025, becomes law. The bill, aimed at overhauling the electricity sector, has passed its second reading in the National Assembly and could result in re-privatization for underperforming Discos.
Key Points:
- The bill seeks reforms to address regulatory gaps and compel Discos to inject fresh capital.
- Discos failing to meet performance expectations risk losing stakes through share dilution or receivership.
- The Nigerian Electricity Regulatory Commission (NERC) will have increased powers under the new law.
- A comprehensive financing framework is to be developed within 12 months to resolve the sector’s debt crisis.
- The bill has sparked debates, with some experts calling for a 24-month deadline for recapitalization.
- The power sector is currently burdened by over N4 trillion in debt.
- Despite years of interventions, Discos have failed to deliver consistent power, prompting the government’s tough stance.
The Electricity Act (Amendment) Bill aims to bring about necessary reforms in Nigeria's electricity sector by forcing underperforming Discos to invest or face penalties. If passed, it could reshape the power distribution landscape, but challenges remain regarding debt and financing.
