Nigeria’s 12 electricity distribution companies collected approximately ₦2.16 trillion from customers in 2025, with revenues continuing to climb in 2026. Yet instead of celebrating rising collections, the industry is locked in a fierce battle over who gets to spend that money, a dispute that threatens to reshape the entire governance structure of Africa’s largest electricity market.
On July 1, 2026, the Nigerian Electricity Regulatory Commission (NERC) activated Order No. NERC/2026/062, a directive requiring DisCos to establish dedicated Capital Expenditure (CapEx) Provision Accounts and surrender control over a substantial portion of their residual revenues. The backlash was immediate and fierce. DisCos, state regulators, and industry experts have all pushed back, turning what NERC described as a “financial discipline” measure into the most significant regulatory showdown since the Electricity Act 2023.
Under the new framework, the math is brutal. DisCos without outstanding market debts must remit 70% of their earned non-administrative operating expenditure into the dedicated CapEx Provision Account, retaining just 30% for operations. For DisCos with outstanding market debts, the squeeze is even tighter: 25% goes to the Nigerian Bulk Electricity Trading Plc (NBET), another 25% to the Market Operator (MO), 35% into the CapEx account, leaving a mere 15% for operational use.
But the percentages tell only half the story. The order also dictates that funds in the CapEx account can only be used for NERC-approved Performance Improvement Plan (PIP) projects. Before any expenditure, DisCos must obtain a “No Objection” from the commission, secure another approval before contract awards, and get fresh approval before every payment milestone.
As one utility executive put it: “NERC is, in effect, taking control of how DisCos spend their surplus revenue. The Order leaves a DisCo with market debts only 15 per cent of residual revenue for its own operations and even a DisCo without debts retains only 30%. Everything else is either owed to market participants or locked in a NERC-controlled account”.
The commission insists the order is designed to ensure tariff revenues earmarked for infrastructure are actually invested in electricity networks, not diverted elsewhere. Citing findings from its review of DisCos’ utilisation of earned non-administrative operating expenditure during the 2025 market cycle, NERC argues that stronger oversight is necessary after years of underinvestment that left many communities relying on self-funded transformer repairs.
The utilities argue this is not regulation, it is expropriation of managerial authority. One northern-based distributor lamented: “This Order does not regulate, it manages. It assumes control and takes over the role of the boards of DisCos. By mandating exactly where a DisCo’s earned revenue must go, in what percentages, into what specific accounts, and with regulatory approval required before a single naira of it can be spent, NERC has stepped out of its regulatory role and into the role of a financial controller of private companies”.
The core of their grievance is fundamental: “The DisCos were privatised. Their revenues are private earnings, not public funds held in trust for NERC. A regulator can say, ‘you must invest X amount in your network’, that is legitimate regulation. But a regulator that says, ‘we will decide which account your money sits in, and you must ask us for permission before you spend it,’ has crossed from regulation into administration of the business.
This dispute is not really about CapEx accounts. It is about the future of electricity governance in Nigeria.The Electricity Act 2023 allows states to establish and regulate their own electricity markets. Several states, including Oyo, Edo, and Kogi, have already taken over regulatory oversight. But the Forum of Commissioners of Power and Energy in Nigeria (FOCPEN) argues that the transfer of regulatory oversight from NERC to State Electricity Regulatory Commissions (SERCs) is “not being honoured in practice”.
Citing Section 230(6) of the Electricity Act 2023, which states that NERC “shall have no further regulatory responsibility whatsoever for electricity market activities carried on entirely within the State to which regulatory responsibility has been transferred” FOCPEN argues that commercial regulation should rest exclusively with the relevant SERC once the transition is complete.
One state regulator told THEWILL: “This Order does not just regulate DisCos, it regulates states. By imposing financial control over utilities operating within our jurisdictions, NERC is effectively nullifying the decentralisation that the Electricity Act was meant to achieve.”
The numbers are staggering. DisCos’ revenue jumped from ₦1 trillion in 2023 to ₦1.7 trillion in 2024, and further to approximately ₦2.31 trillion in 2025. In the first quarter of 2026 alone, they collected another ₦597.56 billion. Aggregate technical, commercial, and collection losses reached 39.61 per cent as of Q1 2025. The House of Representatives Ad Hoc Committee examining power sector reforms from 2007 to 2024 has accused DisCos of chronic underinvestment, stagnated network expansion, and failure to fulfill commitments made in their original business plans.
The DisCos warn that the order could discourage private investment in Nigeria’s power sector. One utility executive cautioned: “Investors put money into privatised utilities expecting to manage their own finances. If a regulator can arbitrarily seize control of revenue allocation, why would anyone invest new capital?”.
Representatives of NERC, the Federal Ministry of Power, SERCs, the Senate Committee on Power, and other stakeholders met earlier this week to address the growing dispute. The meeting reportedly agreed to establish a seven-member committee comprising the Ministry of Power, NERC, SERCs, the Office of the Special Adviser on Power, the Senate Committee on Power, and the Bureau of Public Enterprises to review the issues and recommend a way forward.
But the fundamental question remains unresolved: In a sector where the federal government still controls the national grid but states are increasingly asserting regulatory authority, where does NERC’s power end, and where does state. The answer will determine not just how hundreds of billions of naira are invested across Nigeria’s electricity distribution network, but the entire future governance structure of the country’s most critical infrastructure sector.
For now, the battle lines are drawn. On one side, a regulator determined to enforce investment discipline. On the other, private utilities fighting for financial autonomy. And in the middle, 12 million electricity customers wondering when or if the lights will ever stay on.
