The Minister of Power, Adebayo Adelabu, has warned electricity distribution companies across the country that the Federal Government will enforce stricter conditions for the renewal of their operational licences, including a new capital adequacy requirement.

Adelabu, who spoke on Tuesday at the Nigeria Energy Leadership Summit in Lagos, said many of the DisCos were heavily indebted and undercapitalised, threatening the financial health of the nation’s electricity sector.

He explained that several ongoing federal power programmes, including the Presidential Power Initiative, popularly known as the Siemens Project, are funded through loans that will become financial liabilities to the DisCos.

“The Presidential Power Initiative, which you all know as the Siemens Project, is being funded by a loan obtained by the Federal Government from the German Government and from some Chinese companies. At least, the distribution portion of it is a debt burden on the DisCos, and they must pay it back. It is a liability on the future income of these DisCos,” he said.

Adelabu also revealed that other power sector interventions, such as the Presidential Metering Initiative, jointly funded by the federal and state governments to the tune of $700bn, and the World Bank-funded $500m Distribution Sector Recovery Programme, are additional debt exposures that must be managed prudently.

“Are these debt burdens not too much on the DisCos? And are they supposed to match these loans with improved capitalisation to reduce the leverage? If they don’t do this, the DisCos are not in a good position to invest as required to transform the sector,” he stated.

The minister said the government would not tolerate financially weak operators who cannot meet the new requirements, adding that DisCos unable to recapitalise or meet their obligations risk losing their licences.

“There is a warning: as the tenure of the operational licences of these DisCos approaches renewal, the government intends to introduce a minimum capital adequacy requirement as part of the licence renewal process to strengthen the financial health and liquidity positions of these utilities.

“I must let you know, there will be stringent conditions upon which licences will be renewed. There are automatic interested investors that will take them up. If you want to do good business, you must be able to invest capital. That is the risk you have to take. We know what is happening in the financial sector. You must have a healthy capital adequacy for you to accelerate migration, accelerate expansion, and improve reliability for people to have confidence in you and in the government.”

Adelabu emphasised that the power sector could only grow through sound financial discipline and sustained investment.

He added that the Federal Government had launched targeted national programmes aimed at expanding, modernising, and improving the viability of the national grid to enhance power supply reliability.

“This time, it is not going to be a joke, I must let you know. In the area of infrastructure development, the Federal Government has introduced targeted national programmes aimed at accelerating the viability, expansion, and modernisation of the national grid,” he stated.

The country currently has 11 major DisCos, which were later joined by Aba Power.

The 11 DisCos — Ikeja, Eko, Abuja, Ibadan, Port Harcourt, Enugu, Benin, Kano, Kaduna, Jos, and Yola — came into being when the power sector was privatised in 2013. Since then, there have been complaints among Nigerians that the sector’s crisis has continued to deteriorate.

In his words at the 2025 Nigeria Energy Conference, Adelabu added that there is sector monitoring and enforcement, as the national regulator and state regulatory commissions are working in close synergy to drive performance improvement across the utilities.

He stressed that the distribution companies are also a major focus, saying they need to raise their game.

“The sector continues to face challenges of undercapitalisation among several distribution companies and a severe debt burden that has constrained their operational efficiency and service delivery over the years,” he explained.

He worried that the majority of the DisCos are underfunded, and this is affecting the investment required to ensure a reliable supply of electricity.

The minister stressed that the DisCos are incapacitated, and that is why many Nigerians could not be moved to the Band A tariff category.

He faulted the 2013 privatisation exercise, saying most of those who took over power distribution lacked both technical and financial capacity.

“We have restricted the Band A tariff to just a 15 per cent portion of the industry, not because of anything but because of poor infrastructure and inadequate investments. We have seen a faster and accelerated migration of lots of customers to this Band A, but the DisCos are incapacitated.

“One of the major flaws of the privatisation held in 2013 is the lack of adequate financial backing in addition to poor technical expertise. Yes, a lot of them do not have the expertise in utilities management. To make matters worse, they don’t even have the money to invest,” the minister said.

The spokesman of the DisCos, Sunday Oduntan, could not be reached as of the time of filing this report, as calls to his phone went unanswered yesterday.

However, Oduntan had once told our correspondent that the power distributors are working with the government to aid power supply but will not engage in the politics of the sector.

“We, the DisCos, are working very hard with the Federal Government and state governments to ensure that we bring electricity to Nigerians. The more electricity we are able to distribute, the more money we can collect, and the more prosperity for Nigeria in terms of job creation. So, we are for progress, and we are interested in anything that will improve the power sector. We are interested in the good policies of the Federal Government,” he stated.

Oduntan emphasised that the DisCos are for realistic policies, and they will not deceive Nigerians by telling them what is not possible.

On claims of underperformance, he replied that though the DisCos are not where they should be, they have improved greatly in the past 10 years.

“We are interested in the good policies of the Federal Government led by our able President, Bola Tinubu. We are for performance. We are for realistic policies. We are for the steps that will be taken towards getting electricity to Nigerians.

“We will not deceive Nigerians. We will not tell you what is not possible. We will not tell you what we cannot do, and we will not tell you that we are perfect as DisCos. But I can tell you that we have improved so much in the last 10 years, even though we are not where we are supposed to be. We are trying our best to get there,” Oduntan submitted, while reacting to similar allegations in May when the minister threatened to sanction non-performing DisCos.