Reps to DisCos: Invest N500bn or Leave the Power Sector

The House of Representatives has issued a bold ultimatum to Nigeria’s 11 electricity Distribution Companies DisCos, calling for a minimum recapitalization of N500 billion if they intend to continue operating in the country’s power distribution sector.

This directive comes amid growing concerns about the DisCos’ financial capacity to invest in the necessary infrastructure to deliver efficient power services. Stakeholders, including power generation companies (GenCos), have long criticized the DisCos for their inability to expand networks and uptake generated power, hindering progress in the power sector.

Background and Current Concerns
Since the privatization of Nigeria’s power sector in 2013, the federal government has intervened with over N1.6 trillion in bailout funds, more than triple the amount initially earned from selling the assets. Yet, the sector continues to struggle, with inadequate infrastructure and mounting consumer dissatisfaction.

The Nigerian Electricity Regulatory Commission (NERC) recently imposed penalties on DisCos for failing to distribute at least 95% of the energy allocated to them. Despite regulatory efforts, the DisCos’ low capacity and operational inefficiencies persist, fueling calls for significant financial reform.

Call for Accountability
Rep. Ibrahim Ayokunle Isiaka, who moved the motion, decried the DisCos’ practices, accusing them of exploiting consumers by demanding additional payments for replacing meters that consumers had already paid for. He described these actions as undermining consumer trust and exacerbating financial burdens on households and businesses.

“DisCos continue to sabotage economic development by using essential services as leverage against citizens, stifling growth and welfare,” Isiaka said.

The House has now mandated its Committee on Power to:

Investigate the DisCos’ activities and hold them accountable.
Review the implementation of operational regulations to ensure transparency.

Launch public awareness campaigns to educate consumers on their rights and how to address grievances.
The committee is expected to submit its findings within four weeks.

Industry Experts Weigh In
Energy experts have echoed the need for recapitalization. Edu Okeke, Managing Director of Azura Power West Africa, recently stated that DisCos must significantly raise their capital base to remain viable.

“No DisCo should operate without at least $250 million in shareholder funds. To achieve meaningful progress, they must invest in transformers, cables, and equipment to reliably serve customers,” Okeke remarked.

He suggested a two-pronged approach: removing debts from DisCos’ books and mandating a $500 million capital injection to attract serious investors capable of driving infrastructure development.

Consumer Advocacy Group Skeptical
However, Princewill Okorie, Executive Director of the Electricity Consumer Protection Advocacy Centre (ECPAC), criticized the House’s call for recapitalization, arguing that the focus should instead be on how DisCos have managed the vast funds already allocated to them.

“Rather than recapitalizing, the National Assembly should demand accountability. How did the DisCos utilize the funds from the World Bank and previous government interventions?” Okorie questioned.

He also noted the DisCos’ history of ignoring regulatory directives, casting doubt on their compliance with the current mandate.

While the House of Representatives has laid out its vision for reforming the power distribution sector, its success hinges on enforcement and ensuring the DisCos adhere to the new requirements. With billions already invested and limited results, many Nigerians are waiting to see if this push will finally bring stability and efficiency to the power sector.