Electricity Distribution Companies (DisCos) have rejected a new order from the Nigerian Electricity Regulatory Commission (NERC) requiring them to open dedicated Capital Expenditure (CapEx) Provision Accounts, alleging regulatory overreach.

They said the directive, which took effect on July 1, transferred control of privately earned revenue from company boards to the regulator.

Order No. NERC/2026/062 requires DisCos without market debts to remit 70 per cent of earned non-administrative operating expenditure into the CapEx account, retaining 30 per cent for operations.

DisCos with outstanding market debts face stricter terms. They must pay 25 per cent of residual revenue to the Nigerian Bulk Electricity Trading Plc (NBET), 25 per cent to the Market Operator (MO), and 35 per cent into the CapEx account, leaving 15 per cent for operations. Where a DisCo owes only one of NBET or the MO, the other’s share is also diverted into the CapEx account.

Funds in the account can only be spent on NERC-approved Performance Improvement Plan (PIP) projects.

NERC said the measure followed a review of DisCos’ spending during the 2025 market cycle, which found that some operators generated enough revenue to cover administrative costs and recover tariff components while defaulting on upstream payments.

The commission said the order would ensure resources are channelled into network rehabilitation and would complement the World Bank-funded Distribution Sector Recovery Programme (DISREP) and the Presidential Metering Initiative (PMI).

NERC said its authority derived from Sections 34(1) and 116(2) of the Electricity Act 2023, which empower it to promote an efficient electricity industry and ensure tariffs support prudent investment. DisCos with outstanding upstream obligations were also directed to conclude reconciliation with NBET and the MO within 180 days. (The Nation)

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