Reps mandate N500bn recapitalisation for DisCos, to boost efficiency

The House of Representatives has directed electricity distribution companies (DisCos) to undergo a N500 billion recapitalisation to improve their financial stability and enhance service delivery to Nigerians.

This decision followed the adoption of a motion titled “Need to Address the Activities of Distribution Companies in Nigeria,” sponsored by Ayokunle Isiaka, a lawmaker representing Ifo/Ewekoro Federal Constituency in Ogun State.

In his submission, Isiaka criticised DisCos for actions that he said undermine Nigeria’s economic growth and burden consumers unnecessarily.

“Despite Nigerians paying for meter installations, DisCos continue to demand additional payments for replacement meters under dubious pretenses, eroding consumer trust and worsening financial pressures,” Isiaka stated.

The All Progressives Congress lawmaker further accused the companies of sabotaging national development, claiming they exploit essential services at the expense of citizens.

He lamented their non-compliance with regulatory measures, stating, “DisCos have operated with impunity, ignoring consumer rights despite constant regulatory oversight and interventions by the Committee on Power.”

Speaker Tajudeen Abbas, while endorsing the motion, said, “DisCos must undergo a recapitalisation of no less than N500 billion to ensure only financially capable operators that can meet consumer needs remain in the sector.”

Additionally, the House tasked its Committee on Power with investigating DisCos to hold them accountable and protect consumer rights. The committee was also directed to conduct awareness campaigns on consumer rights and evaluate the enforcement of strict regulations to ensure fair and transparent dealings.

What does this mean for DisCos?

Recapitalisation refers to the process of restructuring a company’s financial base by either injecting new capital, reorganising its debt, or both, to strengthen its financial position.

For electricity distribution companies (DisCos), recapitalisation would typically involve raising additional funds, through investments, loans, or shareholder contributions, to improve their infrastructure, operations, and overall financial health.

This process ensures they have the capacity to meet obligations, expand services, and deliver reliable electricity to consumers.

In this context, it also implies holding DisCos accountable by requiring them to meet specific financial standards to remain operational.