INTRODUCTION

Pursuant to Sections 34 and 226(1) of the Electricity Act 2023 (the “Act”), the Nigerian Electricity Regulatory Commission (“NERC”) published the Code of Corporate Governance for the Nigerian Electricity Supply Industry (the “Code”) on May 30, 2025. The aim of the Code is to promote accountability and transparency of Licensees within the Nigerian Electricity Supply Industry (“NESI”), thereby restoring stakeholder confidence and attracting the much-needed investment for sustainable growth.

In this article, we juxtapose the Code with the Nigerian Code of Corporate Governance 2018 (“NCCG”), highlighting key improvements and sector-specific enhancements introduced under NERC’s framework.

Scope of Application

Prior to the introduction of the Code, the NCCG served as the primary corporate governance framework, setting minimum standards for regulated entities across different Sectors. With the advent of the Code, all Generation, Transmission, Distribution and Supply, System Operation and Trading Licensees (“Licensees”) within the NESI, are now also subject to minimum governance requirements under the Code.

Key Highlights of the Code

1. Minimum Governance Requirements for Small and Large Entities: The Code outlines varying governance requirements for small and large entities/companies within the NESI. While the Code does not provide a threshold for categorising companies as “small” or “large”, it adopts by reference, the thresholds set by the Companies and Allied Matters Act 2020 (“CAMA”).

Under CAMA, a small company is defined as a private company with a turnover and net asset value not exceeding N120 million and N60 million respectively; its membership excludes aliens, government entities and its directors between themselves hold at least 51% of its share capital, where the company has a share capital. Although CAMA does not define “large companies,” any entity falling outside the threshold of a small company might be considered a large company under the Code.

2. Appointment and Reappointment to the Board: Under the NCCG, the committee responsible for nominations is required to ensure that candidates presented for Board appointments are fit and proper persons. The Code, however, goes a step further by mandating the Governance, Remuneration and Nomination Committee to conduct thorough background checks on prospective appointees and disclose the findings to both the Board and shareholders before any appointment is made. Furthermore, while the NCCG recognises attendance at meetings as a criterion for re-election, it defers the specific threshold to the Director’s letter of appointment. In contrast, Paragraph 3.5.4 of the Code requires attendance of at least two-thirds at Board and Committee meetings as an eligibility criteria for reappointment.