FG Finally Takes Action, Set to Restructure Underperforming DisCos in Nigeria

• Nigeria's Minister of Power, Adebayo Adelabu, announced a trial reform programme aimed at improving the performance of two underperforming DisCos
• The initiative will focus on creating a sustainable turnaround model through federal control, technical assistance, and internal restructuring.
• Adelabu emphasised the need for decisive action and public awareness, alongside a strategy to attract investment and restructure struggling areas through the NERC

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

To improve Nigeria's struggling power industry, the Minister of Power, Adebayo Adelabu, said the federal government intends to start a trial reform programme that will focus on two underperforming energy distribution firms (DisCos).

Adelabu's remarks came following a meeting with representatives of the Japan International Cooperation Agency (JICA), according to a statement released on Monday by Bolaji Tunji, special adviser.

Tunji stated that a roadmap titled "Revamping the Distribution Sector in Nigeria" was presented during the conference.

Adelabu stated during the conference that the pilot programme, which is set between May and August 2025, will concentrate on one DisCo in the north and another in the south.

The objective, he continued, is to create a reproducible turnaround model through a combination of enhanced federal control, external technical assistance, and internal restructuring.

“We can no longer fold our hands and watch the inadequacies of DisCos whose performances fall short of expectations,” Adelabu said.

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

Adelabu claims that JICA's strategy is centred on "reforming DisCos from within," bringing outside specialists into management, bolstering leadership, and coordinating federal incentives with immediate service enhancements.

Although there had been strong opposition to previous reform initiatives, he stressed that the present approach will be "intentional and decisive."

FG trying to address issues

Adelabu noted challenges, including vandalism and regional operating hurdles, but he also stated that the government was trying to address more serious structural issues like inadequate investment incentives.

“Their lack of investment is not solely due to unwillingness but also a lack of returns,” he said.

“We must attract investors and franchise viable and struggling areas to capable operators.”

He gave the Nigerian Electricity Regulatory Commission (NERC) instructions to spearhead the franchising initiative and secure DisCo collaboration.

“NERC must secure their buy-in. Past efforts failed due to resistance. That won’t be the case this time,” he said.

Adelabu also underlined the necessity for improved public awareness of the power sector’s operation.

“Many Nigerians still see the sector as a single entity. We must educate consumers on generation, transmission, and distribution roles if we want their trust and support.”

FG announces new partnership with Chinese company

Legit.ng reported that under Phase 1 of the Presidential Power Initiative (PPI), the Federal Government has contracted with China Machinery Engineering Corporation (CMEC), a Chinese company, for $328.8 million to upgrade and extend Nigeria's electrical transmission system.

The deal addresses Engineering, Procurement, Construction, and Financing (EPC+F) for the nationwide construction of 330kV and 132kV transmission lines with the goal of lowering stranded generation capacity and enhancing grid dependability.

A special purpose company created by the federal government to supervise the PPI's implementation, FGN Power Company, will coordinate the initiative.

Source: Legit.ng