DisCos Reject NERC's Directive on CapEx Accounts

The Nigerian Electricity Regulatory Commission (NERC) issued a directive requiring electricity distribution companies (DisCos) to establish dedicated capital expenditure (CapEx) accounts, effective July 1, 2026. DisCos have rejected this directive, describing it as an unprecedented intrusion into the operations of privately owned power firms.

They argue that the order discourages private investment in Nigeria's electricity sector by placing regulatory control over their revenue deployment. According to the directive, a significant portion of the residual revenue paid to settle upstream market obligations must be allocated to the CapEx account, with DisCos required to remit 70% of earnings for non-administrative operational expenditures.

DisCos claim that this measure effectively allows NERC to control their spending, which they argue should remain under the management of their boards. They also express concerns that this directive could deter investors and lead to rent-seeking behavior among contractors, undermining the financial discipline necessary for improving service delivery.