The Minister of Power, Chief Bayo Adelabu, has revealed that all electricity distribution companies (DisCos) in Nigeria currently operate with negative balance sheets, rendering them incapable of securing bank loans for critical investments.
Adelabu made the disclosure at the PwC Power Roundtable in Lagos, speaking on the theme, “Nigeria’s Multi-Tier Electricity Market: Imperatives for Successful Evolution.”
He explained that once legislated, the minimum capital requirement for DisCos will become a key factor in renewing their operating licences, which are set to expire in 2028.
According to the Minister, DisCos will also be required to submit performance improvement plans as part of the licence renewal process.
He stressed that most companies remain vulnerable and unbankable, unable to provide the capital necessary to significantly reduce Aggregate Technical, Commercial, and Collection (ATC&C) losses, which currently average around 40 percent.
Since their acquisition in 2013, Adelabu noted, many DisCos have failed to invest adequately in infrastructure to improve efficiency.
While Eko Electricity (EKEDC) and Ikeja Electric have shown some progress, several others have seen their losses worsen over time.
He highlighted that the funds used to acquire these companies were largely borrowed, leaving them with little capacity to finance the investment needed for operational upgrades.
“Power infrastructure requires significant investment. Even countries with reliable systems like the US, Europe, South Korea, China, and Singapore continue to invest billions of dollars in their power sectors. Nigeria cannot afford to do otherwise,” Adelabu said.
The Minister explained that the minimum capital requirement will compel DisCos to submit detailed performance plans outlining infrastructure upgrades, cost estimates, and funding sources.
He emphasized that addressing these financial and operational challenges is critical for national development, impacting sectors such as education, health, transportation, and aviation.
Adelabu praised the Tinubu administration’s decisive approach to reforming the power sector, acknowledging that initial challenges are inevitable but expressing confidence in long-term benefits.
“Reforming Nigeria’s power sector will require courage and boldness. No one can have an omelette without breaking eggs.
“By addressing these challenges now, Nigeria will reap lasting improvements in service delivery and national growth,” he said.
