The Nigerian Electricity Regulatory Commission (NERC) has issued a sweeping new Code of Corporate Governance that aims to reform boardroom practices in the power sector, placing a firm ban on multiple directorships and setting fresh conditions for leadership roles within the Nigerian Electricity Supply Industry (NESI).
In a move seen as an attempt to deepen transparency and corporate discipline, NERC has declared that no individual may concurrently serve on the boards of more than two companies operating in the power sector. The directive applies to electricity distribution companies, generation firms, transmission and system operators, and all other licensees.
“An individual shall not concurrently serve as a director of more than two companies in NESI,” the code states. “Simultaneous service on numerous boards may impede an individual’s capacity to discharge their duties equitably and impartially, potentially leading to conflicts of interest.”
The code, which was published on NERC’s website and communicated to licensees, mandates that current directors with more than two appointments within NESI must resign from the excess positions. Prospective board nominees are now required to disclose all other board roles during nomination, with sitting directors obligated to notify the board of new potential appointments.
According to NERC, the goal is to reinforce ethical standards and foster a governance environment conducive to long-term investment and improved service delivery.
Governance Shake-up
The new code lays out a range of stringent governance criteria. Large electricity companies are now required to have a minimum of seven board members, with at least two serving as executive directors—one of whom must be the Chief Executive Officer. Importantly, every board must include at least one independent director, while larger firms must have no fewer than two.
To ensure turnover and fresh ideas, NERC has limited board service to a maximum of 12 years, split into three four-year terms. The code also stipulates that one-third of directors must retire periodically by rotation at each Annual General Meeting, although they remain eligible for reappointment.
In addition to restricting tenure, the code clearly delineates the roles of the board chairman and the CEO. The chairman must be a non-executive director and is barred from participating in day-to-day operations of the company. Their responsibility is to facilitate the effective functioning of the board and act as a strategic liaison with the CEO.
CEO Criteria and Tenure
New rules also apply to the position of Managing Director or CEO. NERC now requires CEOs to have a minimum of a bachelor’s degree and at least 10 years of management experience. They must also hold advanced degrees or relevant professional certifications. A proven record of ethical leadership, strategic thinking, and financial acumen is mandatory, along with completion of the National Youth Service Corps or possession of an exemption.
CEOs may serve for no longer than two terms of five years each, capping leadership tenure at 10 years.
“The chairman of the board, who must be a non-executive director, shall be elected by the directors from within their ranks,” the code added. “The chairman’s performance and ongoing ability to contribute value to the board shall be evaluated on an annual basis.”
Enforcing Compliance
The regulatory body made it clear that these governance rules are not advisory but mandatory. All licensees are required to disclose their level of compliance in their Annual Compliance Report. Non-compliance will trigger sanctions in accordance with the Electricity Act 2023 and other regulatory instruments.
“The commission is responsible for overseeing licensee compliance and will enforce adherence when necessary,” the code warned.
Sanusi Garba: “We Must Restore Confidence”
Speaking on the rationale behind the far-reaching reforms, NERC Chairman Sanusi Garba explained that the governance overhaul is aimed at addressing long-standing inefficiencies in the electricity sector, including poor accountability and governance loopholes that have hampered investor confidence and operational efficiency.
“The challenges faced by the industry range from infrastructural deficits and financial constraints to operational inefficiencies and governance gaps,” Garba said.
He stressed that the Electricity Act 2023 grants the commission wide-ranging powers to implement structural reforms and reposition the sector for stability and growth. “This code is a significant step towards fostering a culture of good governance, ethical conduct, and operational excellence in NESI.”
Garba added that the commission is determined to establish a robust governance framework that can attract fresh investments, drive better service delivery, and reposition the electricity sector as a reliable backbone of Nigeria’s economic transformation.
“By promoting accountability, transparency, and sustainability, the code seeks to restore confidence among investors, consumers, and other stakeholders,” he said.
Industry Reactions
Some sector analysts say the code is a much-needed intervention in a sector plagued by weak governance and overlapping interests.
“Boardroom politicking and cross-ownership have often blurred accountability in the power sector. This move by NERC is long overdue,” said Chika Nwachukwu, an energy governance consultant based in Abuja. “What remains to be seen is how strictly NERC will enforce these rules, particularly among politically connected companies.”
Similarly, Ifeoma Ogbonna, a corporate governance researcher at Lagos Business School, said the reforms could strengthen investor confidence if properly implemented.
“Investors are looking for transparency and predictability, and this is a solid step in that direction. The ban on multiple directorships eliminates a major source of conflict of interest that has dogged the sector for years.”
However, others warned that implementation may face resistance. A former director in one of the DISCOs, who asked not to be named, said, “This is a good policy in theory, but enforcement in Nigeria is always the issue. Will NERC really compel major players to comply, or will there be selective enforcement?”
The Nigerian power sector, despite extensive reforms, remains plagued by erratic supply, financial insolvency among distribution companies, and widespread public dissatisfaction. Analysts say that without a culture of corporate discipline and ethical leadership, much of the billions poured into the sector will continue to yield subpar results.
For now, NERC has laid down the law. Whether licensees will follow—and whether the regulator will enforce its new code without fear or favour—remains a critical test in Nigeria’s ongoing power sector reform.
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