The Nigerian Electricity Regulatory Commission (NERC) has directed electricity distribution companies (DisCos) to channel 50 per cent of their earned non-administrative operating expenditure into capital expenditure (CapEx) for electricity infrastructure upgrades.
Gatekeepers News reports that the revised order on the “utilisation of earned non-admin opex by successor DisCos” was signed by NERC Chairman, Musiliu Oseni, and the commission’s vice-chairman, Yusuf Ali, and released on Wednesday.
Under the new directive, debt-free DisCos are required to “remit 50 percent of their earned non-admin opex to capital expenditure (capex) provision accounts from August, increasing to 60% from February 2027”.
Earned non-administrative operating expenditure refers to the portion of revenue generated by DisCos that is available after excluding basic administrative and office-related operating costs. Under the revised regulatory framework, part of the funds must be reinvested in electricity infrastructure.
Capital expenditure, meanwhile, covers long-term investments such as the expansion, rehabilitation and upgrading of electricity distribution networks.
NERC said the directive is aimed at “accelerating network upgrades, improving service reliability, and ensuring that available revenues are invested in critical electricity infrastructure projects”.
The commission ordered DisCos to establish and maintain dedicated CapEx provision accounts through which funds would be used to finance approved network rehabilitation, reinforcement and expansion projects.
According to NERC, the amount to be allocated to the accounts will depend partly on the individual DisCos’ debt profiles.
The regulator also stipulated that every project financed through the CapEx provision accounts must receive prior regulatory approval and be reported to the commission on a quarterly basis.
For DisCos with outstanding debts to the Nigerian Bulk Electricity Trading Company (NBET) and the market operator, NERC directed them to complete debt reconciliation and submit commission-approved repayment plans within 180 days.
The commission said the revised order is designed to strengthen electricity distribution infrastructure, improve service delivery and promote greater financial discipline within the sector.
NERC added that the revised order took effect on September 4, following a regulatory review of DisCos’ revenue utilisation during the 2025 market cycle.
