The Fight Over DisCo Money: Why NERC’s New Order Has Thrown Nigeria’s Power Sector Into Crisis
For years, Nigerians have paid for their own transformers, contributed money to fix fallen 11kV lines, and waited months for DisCos to respond to outages. So when the Nigerian Electricity Regulatory Commission announced on July 1, 2026 that it would force distribution companies to set aside most of their surplus revenue for network upgrades, many households breathed a sigh of relief. But that relief has quickly turned into one of the fiercest regulatory battles the power sector has seen since the Electricity Act 2023. What started as a directive about infrastructure spending has exploded into a fight about money, control, and the future of Nigeria’s decentralised electricity market.
At the heart of the dispute is Order No. NERC/2026/062. The Commission is now requiring DisCos to lock away a substantial portion of what they earn above administrative costs, and to get federal approval before touching it. Utilities without market debt must put 70% of eligible surplus into dedicated capital expenditure accounts. Those with debt must split it 50% to debt repayment, 35% to CapEx, and keep just 15% for operations. NERC’s reasoning is straightforward and it leans on the Multi-Year Tariff Order 2024, which already assumes tariff revenue will fund maintenance and expansion. With DisCos collecting ₦2.16 trillion in 2025 and another ₦597.56 billion in Q1 2026, the regulator argues that some now have enough breathing room to invest. For too long, the logic goes, money meant for wires and transformers has stayed in company accounts while communities self-funded repairs.
However, that logic has not convinced the people it affects most. No DisCo has issued a public statement and ANED’s Executive Director declined to comment, but industry sources say the opposition is unified and sharp. Their argument is not against investment, it is against who gets to decide. To them, the Order crosses from regulation into direct management of a private business. By dictating revenue allocation and requiring NERC approval for every spend, the Commission is inserting itself into the day-to-day finances of utilities that are already cash-strapped. Energy consultant Odion Omonfoman warns that this is “a clear intrusion into the financial management of privately owned companies” and that lenders will think twice before funding DisCos whose cash flows can now be frozen by regulatory sign-off. Dr. Muda Yusuf of CPPE puts it more mildly but makes the same point: a guideline to encourage infrastructure spend is fine, but prescribing the exact split is “a bit on the extreme.” He adds that the bigger problem remains liquidity, because tariffs are still below the true cost of supply, so many DisCos simply do not collect enough to make major capex viable.
And that is where the argument expands beyond the DisCos themselves. State electricity regulators have entered the fight with a constitutional case. The Forum of Commissioners of Power and Energy argues that the Electricity Act 2023 transferred oversight of electricity markets that operate entirely within a state to State Electricity Regulatory Commissions. They point to Section 230(6), which says NERC “shall have no further regulatory responsibility whatsoever” once that transfer is complete, and to Item 14 of the Concurrent Legislative List and Section 2(2)(a) of the Act. In a workshop in Abuja, FOCPEN said the problem is that “the transfer of regulatory oversight from NERC to SERCs is, in places, not being honoured in practice.” From their perspective, commercial decisions about revenue should now rest with the relevant state commission, not with Abuja.
NERC, on the other hand, is holding the line with its own section of the law. It cites Section 34(1) of the Electricity Act, which empowers it to ensure efficient use of resources and sufficient investment in infrastructure, and it insists the MYTO framework already obliges DisCos to invest. The Commission says its tools of disallowing capex, downgrading feeders, or fining utilities have not worked fast enough, so a stronger control was needed. Supporters of the Order argue that years of underinvestment are why outages persist, and that without locking the money, tariff revenues will continue to be diverted.
Because the disagreement touches law, finance and politics, it has pulled in more actors. Representatives of NERC, the Federal Ministry of Power, SERCs, the Senate Committee on Power, the Office of the Special Adviser on Power and BPE met this week and agreed to set up a seven-member committee to review the issues and recommend a way forward. That committee will now decide whether the Order stands as written, is modified, or is scrapped.
The reason so much is riding on that decision is money. Even though the Order does not apply to total collections, the amounts are significant. In a sector where DisCos moved over ₦2 trillion last year, redirecting hundreds of billions into NERC-controlled accounts changes how utilities plan, borrow and operate. For investors, the signal matters even more. The 2023 reforms were meant to attract private capital by devolving power and reducing federal interference. If the market now sees federal regulators dictating spending, the risk premium goes up. If states take full control but cannot enforce investment, the networks keep decaying.
Ultimately, this is not just about transformers. It is about the balance Nigeria wants in its power sector. NERC is pushing for centralised enforcement to solve an investment problem. DisCos are defending commercial autonomy. States are asserting their new constitutional authority. Until the committee reports back, the sector is stuck with more revenue in the system than before, but no consensus on who gets to decide how it is used. And for millions of Nigerians waiting on stable power, that uncertainty is the real cost.
