FG moves to enforce capital test for electricity distribution firms

A new rule is being planned to make electricity Distribution Companies (DisCos) meet a minimum capital requirement before their licences can be renewed.

The aim is to make the companies financially stronger and improve their operations.

The Minister of Power, Chief Adebayo Adelabu, announced this on Tuesday at the opening of the Nigeria Energy Week 2025 in Lagos. The event, organised by Informa Markets, has the theme

“Powering Nigeria through Investment, Innovation, and Partnership.”
Adelabu explained that many DisCos are struggling financially and owe huge debts.

The new policy, he said, will ensure only financially sound companies continue to operate.

He also revealed that before President Bola Tinubu’s administration came into power, Nigerians spent about ₦15 trillion yearly on diesel and fuel to power generators due to poor electricity supply. He claimed that the situation has improved under the current administration.

According to data from the National Bureau of Statistics, petrol import costs increased by 105.3%  from ₦7.51 trillion in 2023 to ₦15.42 trillion in 2024.

The minister called on private investors to commit more funds to the power sector, saying the federal government alone cannot finance all the necessary projects.

Adelabu provided updates on key power projects, confirming that contracts for Phase One of the Presidential Power Initiative (PPI) have been signed.

This phase aims to add 7,000 megawatts (MW) to the national grid. He noted that average power generation rose from 4,200MW in 2023 to about 5,300MW in 2024.

He said ongoing projects include the rehabilitation of National Integrated Power Projects (NIPP) plants to restore 345MW and the successful integration of the 700MW Zungeru Hydropower Plant into the grid.

Adelabu also mentioned that the Presidential Metering Initiative has begun, with ₦700 billion secured to install 1.1 million meters by the end of 2025.

He explained that the Transmission Company of Nigeria (TCN) has been split into two entities:

The Nigerian Independent System Operator (NISO), which manages grid operations and the electricity market.
The Transmission Service Provider (TSP), which owns and maintains transmission infrastructure.

Adelabu urged investors to take advantage of opportunities in Nigeria’s power sector, stressing that the environment is now more business-friendly.

He said Nigeria currently has over 10,000MW of stranded generation capacity  electricity that is produced but not distributed due to transmission constraints.

He compared Nigeria’s plans to South Africa’s $25 billion project to expand its transmission network, noting that Nigeria’s Presidential Power Initiative is valued at $2.3 billion.

The minister also highlighted the Electricity Act 2023 as a major milestone, granting 15 states regulatory autonomy to run their own power markets.

He added that the Integrated National Electricity Policy  the first comprehensive policy in nearly 20 years  has been approved to make the sector more investment-friendly.

Adelabu said the government is working with states to align their power markets with the national grid and that state governments have a key role, especially in off-grid power projects.

On financial reforms, he noted that cost-reflective tariffs for certain customers have improved supply reliability and increased industry revenue by 70%, from ₦1 trillion in 2023 to ₦1.7 trillion in 2024. Revenue for 2025 is projected to exceed ₦2 trillion.

He announced that President Tinubu has approved a ₦4 trillion bond to clear verified debts owed to power generation companies and gas suppliers.

In addition, a targeted subsidy will be introduced to protect low-income households as the market becomes fully commercialised.

Adelabu concluded by reaffirming the government’s commitment to reforms that will make Nigeria’s power sector sustainable, efficient, and attractive to investors.