Allocation will rise to 60% from February 2027 as regulator targets network upgrades and improved electricity supply…..
The Nigerian Electricity Regulatory Commission, NERC, has directed electricity distribution companies, DisCos, to commit half of their earned non-administrative operating expenditure to capital projects, in a move aimed at accelerating investment in the country’s electricity distribution network.
The revised order on the utilisation of earned non-administrative operating expenditure by successor DisCos was signed by NERC Chairman, Musiliu Oseni, and Vice Chairman, Yusuf Ali, and released on Wednesday.
Under the new directive, debt-free DisCos are required to transfer 50 percent of their earned non-administrative operating expenditure into dedicated capital expenditure provision accounts from August.
That allocation will increase to 60 percent from February 2027.
Earned non-administrative operating expenditure refers to the portion of revenue generated from a DisCo’s operations that is separate from basic administrative expenses and is subject to regulatory reinvestment requirements.
NERC said the measure is designed to ensure more of the sector’s available revenue is channelled into infrastructure rather than being absorbed by operational costs.
The commission said the policy would help accelerate network upgrades, improve electricity supply reliability and ensure revenues are directed towards critical power infrastructure.
As part of the new framework, DisCos are required to establish and maintain dedicated capex provision accounts through which approved rehabilitation, reinforcement and network expansion projects will be financed.
The regulator said the amount each company is required to set aside will be determined partly by its debt position.
NERC also stipulated that any project funded through the capex provision accounts must first obtain regulatory approval, with DisCos required to submit quarterly reports on the implementation of such projects.
Beyond infrastructure investment, the revised order places additional obligations on DisCos with outstanding debts to the Nigerian Bulk Electricity Trading Company and the market operator.
The indebted companies have 180 days to complete debt reconciliation and submit repayment plans approved by the commission.
NERC said the revised framework is intended to strengthen electricity distribution infrastructure, improve service delivery and encourage greater financial discipline among DisCos.
The order took effect on September 4, following the commission’s review of revenue utilisation by the distribution companies during the 2025 market cycle.
