NERC Bans Serving on More Than Two Boards in Nigeria’s Electricity Sector: What It Means for NESI
In a major move to strengthen transparency and corporate governance in Nigeria’s power sector, the Nigerian Electricity Regulatory Commission (NERC) has introduced a groundbreaking directive that restricts individuals from serving as directors on more than two boards within the Nigerian Electricity Supply Industry (NESI). The announcement came through a newly published Code of Corporate Governance, dated May 30, 2025.
This development is part of NERC’s broader strategy to ensure accountability, reduce conflicts of interest, and improve efficiency across the electricity sector in Nigeria. The commission is calling for a stricter selection process for board members, aiming to raise the quality of leadership at the helm of power companies nationwide.
Below, NaijaRush breaks down the policy in simple, relatable terms, explores why this directive matters for Nigeria’s electricity sector, and what it means for stakeholders, shareholders, and the Nigerian public.
Why NERC Is Limiting Directorships in the Electricity Sector
According to NERC’s new policy guidelines, no individual is allowed to serve on more than two boards simultaneously within the Nigerian Electricity Supply Industry (NESI). This decision, according to the report, is aimed at reducing the risks of overextension and conflict of interest, which can compromise the effectiveness and neutrality of decision-makers.
“An individual shall not concurrently serve as a director of more than two companies in NESI,” the report stated.
NERC emphasized that when individuals serve on too many boards at once, it can negatively impact their ability to focus, analyze company issues independently, and make unbiased decisions. The Commission made it clear that this kind of multitasking is not only counterproductive but also potentially damaging to the integrity of the electricity supply chain.
“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 report explained.
Understanding the Nigerian Electricity Supply Industry (NESI)
For context, NESI is the umbrella term for all stakeholders in the Nigerian electricity value chain. It includes power generation companies (GenCos), distribution companies (DisCos), transmission companies, service providers, and other regulatory bodies. These organizations are crucial to providing electricity to Nigerian homes and businesses.
Governance in this sector is critical because power supply is one of Nigeria’s most pressing developmental challenges. Poor leadership, lack of transparency, and corporate interference have long plagued the sector, making the delivery of steady and affordable electricity a near-impossible dream for millions of Nigerians.
That’s why this new directive from NERC is a major shake-up.
NERC’s New Guidelines: What Must Companies Do Now?
To ensure full compliance with the new rule, NERC is also mandating stricter internal screening processes when appointing board members.
“The board and shareholders must thoroughly assess the suitability of nominees for appointment, taking into account their other obligations and commitments,” NERC advised.
This means companies within NESI must now evaluate each nominee’s existing directorship roles in other companies before confirming them. It is no longer acceptable to appoint a well-known name without first checking how many other boards the person is sitting on.
Companies must avoid appointing directors who are too busy, distracted, or have potential conflicts due to their ties with other power firms.
Mandatory Disclosure of Other Board Memberships
The report goes a step further by making disclosure of current board positions a legal requirement for prospective appointees. Before anyone is appointed to a new board position, they must inform the company about all other board roles they are currently holding.
“The board shall consider the nominee’s other directorships and ascertain whether the nominee can effectively contribute to the board’s performance and responsibilities prior to endorsing them for appointment,” the commission added.
Serving directors are also not left out. If they receive new invitations to join other boards, they must notify the chairman of the board before accepting the position.
“Serving directors shall inform the board, through the chairman, of any potential appointments to other boards.”
This requirement for proactive disclosure is meant to promote honesty, transparency, and accountability among leaders in the sector.
Directors Already on More Than Two Boards Must Disclose and Adjust
What happens to directors who are already on more than two boards in NESI?
According to the Commission, they are not immediately disqualified—but they must disclose their current positions and any future appointments.
“Individuals already serving as directors on more than two boards within the industry must disclose any further appointments to their respective boards through the chairman,” NERC stated.
However, it’s expected that over time, directors will be encouraged—or even compelled—to scale down their responsibilities to align with the new policy.
The Goal: Eliminate Conflict of Interest in Nigeria’s Electricity Sector
At the heart of this directive is NERC’s desire to remove all forms of conflict of interest in Nigeria’s power sector.
Whether the conflict is direct or indirect, arising from personal, financial, or professional affiliations with other entities, the Commission wants it gone.
“All directors are expected to avoid any form of conflict of interest, whether directly or indirectly, due to affiliations with other entities,” the report emphasized.
This is a crucial step toward restoring public trust in the electricity sector, where corruption, mismanagement, and inefficiency have long been rampant.
How This Affects Stakeholders in Nigeria’s Power Sector
For Directors and Executives:
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You can no longer “double dip” by serving on multiple electricity boards.
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You must disclose all board appointments upfront.
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Your time and loyalty must be to one or two boards—no more.
For Companies:
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You must thoroughly vet all nominees.
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Do not appoint individuals who are already overcommitted.
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Ensure board diversity, not just in gender or ethnicity, but also in availability and objectivity.
For Shareholders:
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You now have a bigger role in accountability.
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Ask the right questions about every director’s background and existing obligations.
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Insist on transparency in all appointments.
For Nigerians:
This move may seem small, but it has long-term implications for improving electricity supply in Nigeria. With more focused and accountable boards, the power sector may finally begin to function better, paving the way for more reliable and affordable electricity.
Final Thoughts: A Positive Step Toward Power Sector Reform
NERC’s new directive limiting board memberships to a maximum of two per individual within NESI is more than just a rule—it is a bold step toward a cleaner, more transparent, and more effective electricity sector in Nigeria.
By enforcing accountability and reducing conflicts of interest, the Nigerian Electricity Regulatory Commission is sending a strong message: the era of scattered loyalties and corporate inefficiency is coming to an end.
For a sector as vital as electricity, this policy could be a major turning point. It may take time to feel the results on the ground, but if enforced properly, it could lead to more professional management, better regulatory compliance, and, ultimately, improved electricity supply for all Nigerians.
