The Nigerian Electricity Regulatory Commission (NERC) has introduced revised rules limiting how Electricity Distribution Companies (DisCos) can use part of their earned operating revenue, despite opposition from some operators.

Under Order No. NERC/2026/062A, debt-free DisCos will retain 50% of their earned non-administrative operating expenditure (OpEx) for operations between August 2026 and January 2027. The other 50% must go into dedicated Capital Expenditure (CapEx) accounts for approved investments.

From February 2027, the rules become stricter: DisCos will retain 40% for operations, while 60% will be directed towards CapEx. This is actually a revision of the earlier June order, which proposed a 70% CapEx allocation and only 30% for operations.

NERC says the move is aimed at ensuring more money goes into upgrading distribution networks, rehabilitating feeders and delivering projects under the DisCos’ Performance Improvement Plans.

But the DisCos are pushing back. They argue that restricting how privately owned companies deploy their earned revenue could reduce their financial flexibility, make it harder to respond quickly to faults and increase the burden of getting regulatory approval for projects.

At the centre of the debate is a bigger question: should a regulator decide how much of a private utility’s revenue goes into operations versus infrastructure?

For NERC, the priority is getting more investment into a distribution network that needs major upgrades. For DisCos, the concern is having enough cash to maintain that network and keep their businesses financially sustainable.

How this balance is managed could have a direct impact on the reliability of electricity customers receive.