In a bold move to modernise revenue collection in Nigeria’s electricity industry, the Nigerian Electricity Regulatory Commission (NERC) has introduced a comprehensive set of guidelines mandating a digitised, transparent, and accountable framework for electricity bill payments.
The new regulatory framework, titled “Guidelines on Registration and Engagement of Third-Party Collection Service Providers,” was officially released on Wednesday, May 29, 2025, and signed by NERC Chairman, Sanusi Garba. It takes effect immediately and is backed by the provisions of Section 226 of the Electricity Act 2023.
Targeted primarily at Electricity Distribution Companies (DisCos) operating in states where independent electricity markets have not yet been established, the directive aims to tighten controls over electricity revenue flows, eliminate inefficiencies in bill collection, and usher in a cashless, digital-first billing ecosystem.
Ending Unregulated Agents and Embracing Licensed Partners
A key provision of the new guidelines is the outright ban on the use of unlicensed third-party agents for revenue collection. Going forward, only Collection Service Providers (CSPs) with valid permits from the Central Bank of Nigeria (CBN), verified integration with the Nigeria Inter-Bank Settlement System (NIBSS), and demonstrated tax compliance will be eligible to handle electricity bill collections on behalf of DisCos.
According to NERC, the move is in alignment with the Federal Government’s cashless policy drive and is intended to enhance revenue assurance in the Nigerian Electricity Supply Industry (NESI).
“These Guidelines seek to provide clear guidance to DisCos on modalities for the registration of third-party collection agents… promote transparency and accountability in revenue collections from electricity sales… and standardise the use and engagement of third-party service providers,” the document reads.
The regulatory update also sets out to minimise revenue leakage, improve service efficiency, and ensure that every kobo collected is accounted for within a standardised digital system.
Commission Caps, Zero Charges for Industrial Consumers
In a sweeping reform of how consumers interact with billing platforms, NERC has introduced capped commission rates across all payment channels. For instance, USSD transactions under ₦5,000 will attract a maximum charge of ₦20. In rural areas, agents may charge up to 3.25% per transaction, with a ceiling of ₦2,000 per transaction.
However, Maximum Demand (MD) customers typically large-scale industrial and commercial consumers will continue to enjoy zero commission fees on their payments, preserving a long-standing policy that encourages digital, non-cash transactions among heavy users.
This builds on NERC Order No. NERC/183/2019, which banned cash payments for large electricity consumers, and marks a further step toward institutionalising digital payments across the sector.
Channels covered under the new regime include:
- USSD Codes
- Point-of-Sale (PoS) Terminals
- Vending Kiosks
- Mobile Wallets
- Internet Banking Platforms
90-Day Compliance Deadline for Existing Contracts
In a decisive tone, NERC has mandated that all DisCos must submit their existing CSP contracts for regulatory review and compliance within 90 days of the guideline’s effective date. Non-compliance will attract sanctions, although specifics were not disclosed in the initial announcement.
Among other key conditions:
- No Disco shall engage a CSP without a CBN license or permit.
- All third-party collection contracts must be approved and registered by NERC before going into effect.
- Contracts must include performance indicators, and CSPs are subject to regular evaluations by DisCos.
- Every contract must clearly state designated transaction account details, with any changes requiring filing with the commission.
- No commissions are to be paid to agents on collections from Maximum Demand customers.
- All approved commission rates shall remain binding until formally amended by the Commission.
“All Discos shall adopt more efficient and cost-effective channels for collection… Collection service contracts shall be refunded… and must detail performance benchmarks for evaluation,” NERC said.
Moving Toward a Transparent, Digitised Power Market
This initiative represents a significant step forward for Nigeria’s embattled power sector, which has long struggled with revenue shortfalls, collection inefficiencies, and widespread consumer distrust.
By institutionalising digital payments, capping service fees, and disallowing informal agents, the new framework is poised to enhance accountability across the revenue chain from consumers to DisCos and eventually the national grid managers.
While the transition may pose short-term challenges for operators reliant on manual or semi-digital systems, NERC’s policy signals a paradigm shift in how electricity is paid for, tracked, and regulated in Nigeria.
As the NESI continues to evolve under the Electricity Act 2023, this digitisation of revenue collection may become one of the most transformative milestones in achieving financial sustainability and consumer confidence in Nigeria’s electricity supply industry.
