Nigeria electricity distribution order from NERC ring-fences DisCo surpluses for network capital

The directive took effect on 1 July and requires the twelve companies to seek approval before spending money set aside for infrastructure and market debt. State regulators, the Federal Ministry of Power and lawmakers have all been drawn into a dispute over who now decides.

Since the start of July, Nigeria’s distribution companies have been required to commit a defined share of their surplus operating revenue to capital expenditure and to repaying market debt, and to obtain the Nigerian Electricity Regulatory Commission’s approval before that money is spent. The order turns the regulator into a party to the investment decisions of privately held businesses.

None of the companies has issued a public statement. Nairametrics reported in July that the distributors oppose the directive, drawing on multiple industry sources and on coverage across several national newspapers, and that the disagreement has since pulled in state electricity regulators, the Federal Ministry of Power and members of the National Assembly.

The revenue the order reaches for is substantial. NERC’s own quarterly reporting puts collections by the twelve distributors at roughly N2.16 trillion across 2025, rising each quarter from N406.51 billion in the first to N630.93 billion in the fourth. In the first quarter of this year the companies billed N756.93 billion and recovered N597.56 billion, a collection efficiency of 78.95 per cent against 79.36 per cent in the preceding quarter, leaving N159.37 billion uncollected.

What the same reporting shows is a business taking less power. Federal subsidy fell to N358.32 billion in the first quarter, down N60.46 billion or 14.44 per cent on the final quarter of 2025, and NERC attributed that decline to an 8.56 per cent drop in the distributors’ energy offtake rather than to any improvement in tariff recovery. Performance varies widely, with Ikeja at 90 per cent collection efficiency, Eko at 89.64 per cent, Benin at 85.16 per cent, Port Harcourt at 81.22 per cent and Abuja at 80.90 per cent.

The dispute runs alongside a second shift in who holds authority. The Electricity Act 2023 allows states to set up their own markets and regulators, and NERC records sixteen states as having fully transitioned to state electricity regulation. A federal instruction on how distributors spend their surpluses arrives while the question of which regulator those distributors answer to is still being settled state by state.

This follows the same regulator’s earlier move to hold buyers to their commitments, when the National Council on Privatisation approved performance agreements covering Afam Power and Afam III Fast Power six years after sale. Nigeria convenes investors in Abuja in November for the Nigeria NOW! Global Investors Expo, and the second-quarter collection figures, due before then, will show whether ring-fenced capital has begun to reach the wires or whether the argument has simply moved upstairs.