Nigeria’s electricity regulator has tightened how distribution companies can use part of their earned Non-Administrative Operating Expenditure, directing defined portions into dedicated capital-expenditure accounts for network rehabilitation, reinforcement and expansion.
NERC redirects part of DisCos’ earned Non-Admin OpEx to network upgrades
Nigeria’s electricity regulator has tightened how distribution companies can use part of their earned Non-Administrative Operating Expenditure, directing defined portions into dedicated capital-expenditure accounts for network rehabilitation, reinforcement and expansion.
The Nigerian Electricity Regulatory Commission has revised the framework governing how electricity distribution companies use earned Non-Administrative Operating Expenditure, with part of those funds now earmarked for approved power-network investment.
NERC published the revised order on 9 September 2026, but the order took effect from 4 September 2026.
Separately, the first allocation requirement for debt-free DisCos applies from the August 2026 market cycle.
Under the revised framework, DisCos must establish and maintain dedicated Capital Expenditure Provision Accounts to finance approved network-improvement projects.
The intervention followed NERC’s review of how DisCos used revenues during the 2025 market cycle.
That review showed differing financial positions across the industry, including operators that had not recovered enough revenue to meet upstream market obligations and others that had earned components of their approved revenue requirements after meeting applicable obligations.
The revised framework is designed to direct part of earned Non-Admin OpEx towards the distribution network while maintaining regulatory oversight over how the money is deployed.
Debt-free DisCos must allocate 50%, rising to 60%
For debt-free DisCos, 50% of earned Non-Admin OpEx must be channelled into their CapEx Provision Accounts from the August 2026 market cycle.
That allocation rises to 60% from February 2027.
The percentages apply specifically to earned Non-Administrative Operating Expenditure.
They do not mean that 50% or 60% of a DisCo’s total revenue is being redirected to capital expenditure.
That distinction is critical because the regulatory mechanism applies to a defined revenue-requirement component rather than the entirety of a distribution company’s collections.
Indebted DisCos must also address market obligations
DisCos with outstanding obligations to the Nigerian Bulk Electricity Trading Plc and the Market Operator face additional requirements.
NERC requires affected operators to complete debt reconciliation and submit Commission-approved repayment plans within 180 days.
The regulatory objective therefore combines two pressures:
increase investment in distribution infrastructure while addressing outstanding electricity-market obligations.
The public regulatory material does not support applying one identical funding split to every indebted DisCo regardless of its debt position.
Any more detailed allocation should therefore remain tied to the specific terms of the order and each operator’s applicable regulatory position.
NERC wants internally generated funds directed into the network
Nigeria’s electricity distribution network requires continuing investment in feeders, transformers, substations and other infrastructure needed to move electricity reliably to customers.
The revised framework uses part of the DisCos’ own earned Non-Admin OpEx as one funding route for network improvement.
Funds placed in the dedicated CapEx Provision Accounts are intended for approved projects covering network rehabilitation, reinforcement and expansion.
The structure also separates money earmarked for approved capital works from funds available for ordinary operating purposes.
But earmarking cash is only the first stage.
It does not establish that the money has already been deployed or that infrastructure has already been delivered.
DisCos cannot spend the funds without regulatory oversight
Projects financed through the CapEx Provision Accounts require NERC approval.
DisCos must also provide quarterly reporting on projects funded through those accounts.
That creates an accountability chain around both the cash and the infrastructure expected from it.
The relevant questions are therefore:
How much is transferred into each account?
Which projects does NERC approve?
How much is actually deployed?
Which projects are completed?
And what happens to network performance after completion?
Those distinctions matter because:
earmarked ≠ deployed
deployed ≠ completed
completed ≠ improved service
Revenue allocation is not the same as better electricity
NERC says the revised framework is intended to accelerate network upgrades, improve service reliability and strengthen financial discipline.
Those are regulatory objectives.
They are not yet demonstrated outcomes.
Moving money into a dedicated capital-expenditure account does not by itself rehabilitate a feeder, replace a transformer or improve electricity delivery to customers.
The performance test begins when approved projects move from funding to execution.
Consumers should ultimately be able to see whether the mechanism produces measurable improvements in network reliability and service quality.
The framework reflects different DisCo debt positions
The revised order also highlights an important structural feature of Nigeria’s electricity distribution market:
DisCos do not all have the same debt position.
Debt-free operators are treated differently from companies carrying outstanding market obligations.
That distinction allows NERC to link the use of earned Non-Admin OpEx to each operator’s regulatory and debt position rather than imposing a single undifferentiated treatment across the market.
For indebted operators, available resources may have to support both current network investment and the resolution of existing market obligations.
The next test is what gets built
The revised order establishes how part of earned Non-Admin OpEx must be treated.
It does not establish what infrastructure will ultimately be completed or how much customer service will improve.
That makes the dedicated CapEx Provision Accounts a new accountability point in Nigeria’s electricity market.
The next evidence should show:
how much each DisCo transfers into its account;
which projects receive NERC approval;
how much funding is actually deployed;
whether rehabilitation, reinforcement and expansion projects are completed;
and whether those investments produce measurable improvements in distribution-network performance.
The regulatory framework is now in place.
The infrastructure result still has to be demonstrated.