The Nigerian Electricity Regulatory Commission (NERC) has raised the proportion of revenues that electricity Distribution Companies (DisCos) must channel into infrastructure upgrades.
The move aims to accelerate network rehabilitation and improve electricity supply across the country.
The directive is contained in a revised Order on the utilisation of earned Non-Administrative Operating Expenditure (Non-Admin OpEx), issued by the NERC, which takes effect from September 4, 2026.
The order followed a regulatory review of the utilisation of DisCos’ revenues during the 2025 market cycle.
The national electricity regulator directed DisCos to establish and maintain dedicated Capital Expenditure (CapEx) Provision Accounts to fund approved network improvement projects.
NERC said the measure was designed to ensure that available revenues were deployed to critical infrastructure rather than being absorbed by operational expenses, while strengthening service reliability and financial discipline in the distribution segment.
“This Order is aimed at accelerating network upgrades, improving service reliability, and ensuring that available revenues are invested in critical infrastructure projects,” NERC stated in a statement released on Wednesday, September 9.
Under the new framework, a portion of each DisCo’s earned Non-Admin OpEx will be earmarked for network rehabilitation, reinforcement and expansion, with the amount determined partly by the company’s debt profile.
The Commission said debt-free DisCos will be required to remit 50 per cent of their earned Non-Admin OpEx into their CapEx Provision Accounts from August 2026. It added that the proportion will rise to 60 per cent from February 2027.
NERC also mandated that every project financed through the CapEx Provision Account must receive prior regulatory approval and be subjected to quarterly reporting.
The directive effectively places greater emphasis on capital investment by financially stronger DisCos, as the regulator seeks to close infrastructure gaps that have continued to constrain the quality and reliability of electricity distribution.
READ ALSO:
- DisCos Record ₦1.6trn Revenue Losses in 3 Years as Electricity Crisis Persists
- DisCos Record ₦160bn Revenue Shortfall in Q1 2026
- Power Reforms: Can Nigeria End Electricity Subsidies Without Hurting Consumers?
- Tariff Subsidies, Commercial Losses Dominate Nigeria’s ₦3.39trn Power Shortfalls in 2025
- Electricity Consumers Can Now Sell Excess Solar Power to Grid as NERC Launches Net Billing Regulations 2026
Meanwhile, DisCos with outstanding debts to the Nigerian Bulk Electricity Trading Company (NBET) and the Market Operator have been given 180 days to complete debt reconciliation and submit repayment plans approved by the Commission.
NERC emphasised that the requirement was intended to address outstanding market liabilities while creating a clearer financial framework for DisCos to meet their obligations and invest in their networks.
The revised Order comes amid persistent concerns over weak distribution infrastructure, high technical and commercial losses, inadequate investment and poor service delivery in Nigeria’s electricity sector. DisCos have continued to record annual losses running into billions of naira on account of billing and collection inefficiencies and technical challenges.
This is coupled with the lingering metering gap in the Nigerian Electricity Supply Industry (NESI), as over 5 million customers remain unmetered.
By tying part of DisCos’ operating expenditure directly to approved capital projects, the regulator is seeking to ensure that increased revenues translate into tangible improvements in the electricity network.
The Commission said the measures would ultimately strengthen distribution infrastructure, improve service delivery and promote greater financial discipline across the electricity market.
Victor Ezeja is a Nigerian journalist skilled in producing insightful news analyses, feature stories, and interviews that simplify complex issues and drive informed public discourse. His work combines rigorous research, balanced reporting, and compelling storytelling to highlight developments shaping industries and society. Victor, who holds a Master's Degree in Mass Communication, specializes in energy, aviation, business, and economic reporting. He can be reached via @VICTOREZEJA on X