The Nigeria Governors’ Forum (NGF) has announced plans to license new power distribution companies (DisCos) in the distribution segment of the power sector to improve electricity supply across all states in the country.
This information is contained in the NGF’s report on electricity policy and recommendations to the federal government.
The NGF stated that the idea is to stimulate market competition and enhance efficiency within the sector.
Currently, Nigeria’s electricity distribution landscape is made up of 11 DisCos, including Abuja. Despite their private ownership and management, these DisCos operate under the auspices of the federal government.
Following the enactment of the Electricity Act 2023, which grants state governors autonomy over power generation, distribution, and regulation within their respective states, the NGF are now pursuing approval for additional licenses to foster increased liquidity in the sector.
Under the recommendation for the development of a multi-tier electricity market, the governors are targeting a state electricity market that will be appropriate for each state. The market design may include energy resources within the states such as gas, hydro, wind, biomass, solar, etc., among other things.
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Also, the governors suggest licensing new DisCos and creating a new business model that is suitable for each state.
“To cultivate robust competition and facilitate innovation, it is essential for states to expand the constellation of electricity providers and business models accessible within a state electricity market beyond successor DisCos operating within the state territory,” the governors said.
“Consequently, states will license new players and develop new business models that would introduce more competition in both the wholesale and retail markets within their territories.”
Despite the privatisation initiative of the power distribution companies (DisCos) in 2013, Nigeria still struggles with persistent challenges in its power sector, primarily characterised by inadequate power supply.
The country currently relies on only eleven DisCos to cater to its electricity needs nationwide.
