Distribution companies must divert a majority of earned non-admin operating expenditure into capital accounts, a shift that channels revenue away from routine spending and toward network investment. The Nigerian Electricity Regulatory Commission said the measure, effective September 4, 2026, will require DisCos to remit at least 60 per cent of those earnings into a CapEx provision account from February 2027.
The Commission set a phased timetable for firms without legacy market debt, requiring those operators to start remitting 50 per cent of earned non-admin OpEx to CapEx from August 2026 and to increase that transfer to 60 per cent by February 2027. NERC framed the change as a way to prioritise funds for rehabilitation, reinforcement and expansion of distribution networks and to strengthen financial discipline across the sector.
NERC said its April 2026 review of how DisCos used earned non-admin OpEx during the 2025 market cycle showed mixed outcomes. The review found that while many DisCos failed to recover enough revenue to meet upstream market obligations, a subset recovered amounts that exceeded those upstream obligations and thus covered other revenue requirement components. That divergence underpinned the Commission’s decision to set clear rules for revenue allocation to essential CapEx projects.
The order also imposes compliance steps on indebted DisCos. Companies that owe the Nigerian Bulk Electricity Trading company and the Market Operator must finish debt reconciliation and file Commission-approved repayment plans within 180 days. NERC requires DisCos to create and maintain dedicated CapEx provision accounts, to obtain Commission approval for projects financed from those accounts, and to report project activity every quarter.
The directive reprioritises cashflow toward infrastructure work while limiting the discretionary use of operating receipts. It leaves open how each DisCo will balance short-term liquidity needs against the mandate to fund network improvements, and it places a compliance clock on firms with outstanding market debts.
