Overview
On September 4, 2026, the Nigerian Electricity Regulatory Commission (NERC) issued a Revised Order reshaping how successor Electricity Distribution Companies (DisCos) may utilise their earned Non-Administrative Operating Expenditure. Effective from the August 2026 market cycle, the Order introduces a revised allocation framework that links the use of operating funds to outstanding market debts and progressively reserves a greater share of revenue for capital expenditure.
Under the new regime, a DisCo’s debt position with the Nigerian Bulk Electricity Trading Plc (NBET) or the Market Operator influences the applicable allocation percentages. The Order also establishes conditions governing the management and deployment of funds in the CapEx Provision Account. For DisCos, the implications are significant: operational spending, market debt management, capital investment, and regulatory compliance must now be approached as interconnected priorities.
This insight examines the revised allocation framework, the rules governing the CapEx Provision Account, and the implications for cash flow and capital planning. It also highlights key compliance priorities, including debt reconciliation, alignment of capital expenditure plans with Performance Improvement Plans (PIPs), and quarterly reporting obligations.
