Nigeria: NERC Tightens Discos' Spending Controls Despite Industry Pushback

What the report says

Nigeria’s electricity regulator has introduced a revised rule that limits how much surplus operating revenue distribution companies can use at their own discretion, according to a report by Leadership carried on AllAfrica. The Nigerian Electricity Regulatory Commission (NERC) says the measure is meant to direct more funds into network expansion and rehabilitation through dedicated capital expenditure accounts.

The order applies to the 11 electricity distribution companies, or DisCos, and changes how earned non-administrative operating expenditure is split between day-to-day operations and approved investment accounts. For debt-free DisCos, NERC said the operational share will be 50% of eligible revenue from August 2026 through January 2027, then drop to 40% from February 2027. Companies with market debts face a different allocation, with part of the revenue first going to obligations owed to upstream market entities such as Nigerian Bulk Electricity Trading Plc and the Market Operator.

The commission said it reached the new framework after reviewing how DisCos used earned revenue in the 2025 market cycle. NERC found that while many companies still struggled to fully cover market obligations, some generated surplus revenue beyond those needs. The regulator has now required a dedicated capital account for projects under each company’s performance improvement plan.

The report says some DisCos strongly opposed the policy, arguing that it goes beyond oversight and amounts to direct control over private companies’ spending decisions. They warned it could weaken incentives for investment and operational improvement, especially as the sector continues to face liquidity and maintenance pressures. The dispute highlights the broader tension in Nigeria’s power market between consumer protection, regulatory control and the need to attract private capital.