Nigerian states are seeking to recover equity stakes in electricity distribution companies (DisCos) that they claim were financed through their investments in power infrastructure before the sector was privatised in 2013.
The dispute has now moved to court after a coalition of public-interest lawyers, operating under the name SPI, filed a suit against the Federal Government and the Bureau of Public Enterprises (BPE), seeking the return of the disputed shares to the states.
The states maintain that they invested heavily in infrastructure such as transformers, electricity feeders and overhead lines before the privatisation of the power sector. Records from the Nigerian Electricity Regulatory Commission (NERC) reportedly documented some of these contributions.
Lagos State, for example, increased its investment in Eko Electricity Distribution Company from about N1.5 billion between 2005 and 2010 to approximately N18 billion by 2013. The investment was said to have translated into a five per cent stake in the company, while the Federal Government retained a 35 per cent interest.
In the Abuja DisCo, the Federal Capital Territory, Nasarawa, Niger and Kogi states were reported to collectively hold 27.27 per cent of the government-retained equity, with the remaining portion held by the Federal Government.
The ownership dispute intensified in 2024 after the Ministry of Finance Incorporated sought to transfer the Federal Government’s 40 per cent interest in the DisCos from the BPE to itself. The move triggered disagreements and questions over whether the transfer complied with previous decisions concerning state equity and the management of the distribution companies.
The matter comes as Nigeria’s electricity distribution sector undergoes significant changes, with nine of the country’s 11 DisCos having changed ownership. While new investors are expected to improve the companies’ financial and operational performance, the sector continues to face challenges involving liquidity, infrastructure and regulation.
The Federal Government has also expressed support for increased state participation in electricity, making the dispute over the shares an important test of its position on greater responsibilities for state governments in the power sector.
