On May 30, 2025, the Nigerian Electricity Regulatory Commission (NERC) issued the Code of Corporate Governance for the Nigerian Electricity Supply Industry (NESI Code), marking a notable step in institutionalizing corporate governance standards across Nigeria’s power sector.
Designed to foster accountability, transparency, and fairness, promote ethical leadership, enhance investor trust, and strengthen stakeholder engagement, the NESI Code introduces a mandatory principles-based governance framework, non-compliance with which is sanctionable by NERC.
This Newsletter explores the objectives, key provisions and practical implications of the NESI Code, positioning the NESI Code within the broader corporate governance landscape.
What the NESI Code covers
NERC made the NESI Code under sections 226(1) and 34(2) of the Electricity Act 2023. It applies to every entity licensed under section 63 of the Act for generation, transmission, distribution, system operation, supply or trading. It does not reach entities licensed by state electricity regulators. Its provisions are mandatory, and NERC can sanction a licensee that does not comply.
The framework rests on nine principles set out in Appendix 1. These run from accountability and fiduciary responsibility to ethical conduct, fairness, independence of judgement and clear disclosure. Every licensee must also file an Annual Compliance Report, signed by the Board Chairman and the Company Secretary, that confirms compliance or explains any deviation.
Board composition and fit and proper rules
The NESI Code tightens board structure. A large licensee must have at least seven directors, while a smaller one follows CAMA. Non-executive directors must form the majority, there must be at least two executive directors including the CEO, and the Board Chairman must be a non-executive director. A director may sit on no more than two NESI licensee boards at once.
Tenure is now capped. A director may serve three terms of four years, up to twelve years in total, and a CEO may serve for a maximum of ten years. The Code also mandates three board committees: audit, regulatory compliance and risk, and governance, remuneration and nomination. The Board Chairman and CEO cannot sit on any of them.
A mandatory fit and proper test applies to directors, senior executives and anyone holding more than 5% of a licensee. Candidates for executive roles must give references from their three most recent employers, pass security vetting, and clear a conflict-of-interest check. Schedule 1 then sets role-specific standards. For example, a Managing Director or CEO needs a first degree and at least ten years of management experience, down from fifteen years under the 2012 Fit and Proper Guidelines.
Our assessment of the NESI Code
The Code is a real shift from soft guidance to binding rules, and it fills a long-standing gap in power-sector governance. However, some drafting needs work. CAMA does not define a “Large Company”, yet the Code relies on that term for board thresholds. The Code also mixes “shall” with “should”, and it uses subjective criteria such as “high ethical standards” that are hard to measure.
Two wider concerns stand out. First, the Code binds only NERC licensees, so state regulators may set different standards and fragment governance for DisCo groups that operate across states. Second, the tenure caps may deter investment in privately held licensees, because lenders price for governance continuity. A “comply or explain” approach, as used in the UK, could keep the rigour while adding flexibility. Our review of the Federal High Court (NESI) Practice Directions 2026 and our NERC Q4 2025 Quarterly Report give the wider regulatory picture.
Click the button above to read our full analysis of the NESI Code and its implications for licensees, directors and investors.