Electricity distribution companies have rejected a new directive by the Nigerian Electricity Regulatory Commission requiring them to establish dedicated capital expenditure provision accounts, describing the move as an unprecedented intrusion into the administration of privately owned utilities.
The power firms warned that the order could discourage private investment in Nigeria’s electricity sector by placing regulatory control over how DisCos deploy their revenues.
According to a statement, the opposition followed the implementation of Order No. NERC/2026/062, which took effect on July 1, 2026, and requires DisCos to establish dedicated CapEx provision accounts into which a significant portion of their residual revenues must be paid after settling upstream market obligations and administrative operating expenses.While NERC said the measure was designed to strengthen investment in distribution infrastructure, improve service delivery and promote financial discipline, the DisCos argued that it effectively hands the regulator control over how they spend their earnings
Under the order, it was said that DisCos without outstanding market debts are required to remit 70 per cent of their earned non-administrative operating expenditure into the CapEx Provision Account and retain only 30 per cent.
For DisCos with outstanding market debts, 25 per cent of the residual revenue is to be reportedly paid to the Nigerian Bulk Electricity Trading Plc to offset outstanding obligations and another 25 per cent to the Market Operator, while 35 per cent is to be paid into the CapEx Provision Account, leaving only 15 per cent for the company’s operations.
It was gathered that where a DisCo owes only one of either NBET or the market operator, the share that would otherwise have gone to the other institution is also to be transferred into the CapEx account.
A utility said the order effectively placed NERC in charge of how DisCos deploy their surplus revenue.
“NERC is, in effect, taking control of how DisCos spend their surplus revenue. The order leaves a DisCo with market debts of only 15 per cent of residual revenue for its own operations, and even a DisCo without debts retains only 30 per cent. Everything else is either owed to market participants or locked in a NERC-controlled account,” the utility stated anonymously.
According to the statement, the order also stipulates that funds in the CapEx Provision Account can only be used for NERC-approved Performance Improvement Plan projects. Before any expenditure can be made, DisCos must obtain a “No Objection” from the commission for eligible projects, secure another approval before contract awards, and obtain fresh approval before every payment milestone throughout project execution.
Another distribution company said the directive amounted to NERC taking over the functions of company boards.