FG unveils scheme to revive 2 underperforming electricity distribution companies

The Federal Government has initiated a pilot reform targeting two struggling electricity distribution companies as part of a broader strategy to revamp Nigeria’s power distribution system.

In a statement released on Monday, Mr. Bolaji Tunji, Special Adviser on Strategic Communications and Media Relations to the Minister of Power, revealed that the project would begin with two DisCos identified as underperforming.

Tunji cited Minister of Power, Mr. Adebayo Adelabu, who shared details of the planned reform after engaging with the Japan International Cooperation Agency (JICA), which presented a comprehensive roadmap titled “Revamping of the Distribution Sector in Nigeria.”

The plan, according to Adelabu, follows his recent visit to Japan’s power sector and emphasizes a “holistic approach” to transformation, focusing on collaboration with JICA and the achievement of clear benchmarks.

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Adelabu explained that the pilot phase, scheduled to commence between May and August, will focus on one distribution company in the North and another in the South.

He stated, “The Federal Government has begun moves to initiate sweeping reforms to revitalise Nigeria’s electricity distribution sector, starting with a pilot overhaul of two underperforming Distribution Companies (DisCos).”

He added, “The move follows a comprehensive assessment of systemic challenges plaguing the DisCos, including governance gaps, infrastructure deficits, and commercial inefficiencies.”

The minister noted that the initiative is designed to offer a replicable framework for turning around operations within the sector by merging internal reorganisation, external technical assistance, and federal supervision to drive swift progress.

According to him, JICA’s plan proposes reforming the utilities “from within.”
“By integrating outside experts, strengthening leadership, and aligning government support with short-term results in pilot zones to lay the groundwork for long-term sector-wide transformation.”

Highlighting the need for urgency, Adelabu said the government could not continue to ignore the underperformance of DisCos that consistently fail to meet expectations.

“This pilot is not optional, we will use regulatory authority to restructure underperforming DisCos and compel compliance if necessary,” he said.

While acknowledging previous reform efforts were met with resistance, Adelabu pledged to confront nationwide and regional challenges such as vandalism and local operational obstacles.

He added, “The key initiative is resolving the DisCos’ inability to invest in infrastructure upgrades. Their lack of investment is not solely due to unwillingness but also a lack of incentives. Returns on infrastructure spending are not commensurate, so we must attract investors and franchise viable and the not so viable areas to capable operators, so we can have a mix.”

Adelabu also instructed the Nigerian Electricity Regulatory Commission (NERC) to champion the franchising model and ensure DisCo cooperation.

“NERC must secure their buy-in. Past efforts failed due to resistance, but this time, we will be intentional and decisive,” he said.
He further emphasized the importance of raising public awareness about the distinct roles of the generation, transmission, and distribution arms of the electricity sector, stressing that a more informed public would foster greater acceptance of the reforms.

The ministry and NERC are expected to finalize the pilot plan in the coming months, focusing on distribution companies with the most critical operational deficiencies.

Adelabu described the initiative as the most determined push yet to address the country’s longstanding power distribution issues, with the goal of restoring investor confidence and delivering more reliable electricity nationwide.

Also speaking during the meeting, Mr. Takeshi Kikukawa, JICA’s Power Sector Policy Advisor to Nigeria, said the project aims to achieve short-term improvements in designated areas while setting the stage for long-lasting reform across the country.