The Federal Government has introduced a new policy requiring electricity Distribution Companies (DisCos) to meet a minimum capital adequacy requirement as part of the conditions for renewing their operating licences. The Minister of Power, Chief Adebayo Adelabu, announced the policy on Tuesday while delivering the keynote address at the Nigeria Energy Forum held at the Landmark Centre, Lagos, with the theme: “Powering Nigeria through Investment, Innovation, and Partnership.”

Adelabu said the directive was part of a broader reform agenda to address the persistent issues of under-capitalization and debt burden that have continued to undermine the performance of the power distribution segment. He explained that as the tenure of their operational licences approaches renewal, the government intends to introduce a minimum capital adequacy requirement to strengthen the financial health and liquidity position of the utilities.

The minister outlined a multi-pronged reform strategy launched since he assumed office in 2023, focused on legislation, policy reforms, infrastructure development, energy access, and local content enhancement. He highlighted the Electricity Act 2023 as a landmark achievement, granting regulatory autonomy to 15 states, while noting that the Integrated National Electricity Policy—the first comprehensive policy in nearly two decades—had been approved. According to him, this represents a clear shift toward a liberalized and investment-friendly electricity market, adding that the ministry is working closely with the states to ensure alignment between the wholesale and retail electricity markets, especially as subnational markets emerge.

Adelabu disclosed that the government is deepening power sector commercialization to strengthen liquidity and investor confidence. He said that tariff reforms enabling cost-reflective rates for specific customer categories have improved supply reliability, reduced industrial energy costs, and boosted revenue collection by 70 percent to N1.7 trillion in 2024, with expectations to surpass N2 trillion in 2025. To stabilize the market, he announced that President Bola Tinubu had approved a N4 trillion bond to settle verified debts owed to generation companies (GenCos) and gas suppliers, alongside a targeted subsidy framework being developed to protect vulnerable households while ensuring the sector’s sustainability.

The Minister confirmed that contracts for Phase One of the Presidential Power Initiative (PPI) have been signed, aiming to add 7,000MW of operational capacity to the national grid. He noted that generation capacity has risen to 5,300MW in 2024, up from 4,200MW in 2023, driven by the rehabilitation of NIPP plants, which unlocked about 345MW, and the integration of the 700MW Zungeru Hydropower Plant. He also revealed that the Presidential Metering Initiative has been operationalized, with N700 billion secured to deploy 1.1 million meters by the end of 2025.

Adelabu announced the unbundling of the Transmission Company of Nigeria (TCN) into two entities—the Nigerian Independent System Operator (NISO), responsible for grid operation and market coordination, and the Transmission Service Provider (TSP), which will manage and expand transmission infrastructure.

He made a strong appeal to investors, emphasizing that Nigeria’s power sector is now more open and investment-ready than ever. According to him, Nigeria currently has over 10GW of stranded generation capacity, which presents a huge opportunity for private investment. “In Nigeria today, we have over 10 GW of stranded generation capacity. Energy that could power industries, create jobs, and even support electricity exports to our neighbouring countries through the regional power pool. We are therefore open to strategic partnerships to mobilize the necessary investments and unlock this potential,” he said.

Adelabu compared Nigeria’s efforts to South Africa’s $25 billion transmission expansion plan, noting that while the latter seeks to build 14,000 kilometres of new power lines to connect 59GW of capacity, Nigeria’s own Presidential Power Initiative, valued at $2.3 billion, is designed to achieve similar transformative impact at scale