Electricity Consumers across the Country, especially those in the Rural Communities who due to non-availability of transformers at the time of demand contributed money to buy one can fully recover the money from the Distribution Company (DisCo), following the regulation by the Nigerian Electricity Regulatory Commission (NERC), writes Sunday Etuka.
The Nigerian electricity market has undergone significant transformation over the years, underpinned by the effective regulations issued by the Nigerian Electricity Regulatory Commission (NERC).
The market which was structured to provide reliable and affordable electricity to the consumers, is however, faced with myriad of challenges, including inadequate infrastructure and financial constraints.
This has made the provision of meters, replacement of cables and transformers for the consumers a herculean task, especially in the rural areas.
As the nation’s population increases, the demand for electricity also increases, making it very difficult for the DisCos to effectively serve or provide stable electricity to the consumers.
Industry data shows that electricity demand in the country has increased to 30,000MW, meanwhile, the current supply is still hovering around 4,000MW, leaving the demand largely unmet.
In the May & June 2025 Factsheet published by NERC, out of the 11,821,194 total active electricity customers in Nigeria, only about 6,422,933 customers were metered by the DisCos, revealing the worsening financial status of the power distribution companies.
The DisCos are underfunded, consequently also find it difficult to provide new transformers, or even replace the faulty ones without the support of the consumers. And this has bred a lot of issues in the distribution value chain.
For instance, some electricity consumers complained that their transformers developed faults and they were asked by the DisCos to contribute money towards the repairs.
A community said it applied to be connected to electricity supply, and the DisCo gave them a list of assets to buy before it could be connected.
Another said a transformer was donated to the community, and the DisCo is requesting that it should be donated to them before they can energize it.
While the others complained that the DisCo refused to refund the money used to purchase transformers, poles and other assets bought to connect the community.
As serious as these complaints may be, it should be noted that any investment made in power infrastructure outside of NERC’s rules and regulations may be difficult to recoup.
NERC had posited that electricity consumers are not required to pay for the repair and/or replacement of DisCo assets except in cases where it is proven that the customer(s) willfully destroyed such assets.
It said any customer asked by the staff of a utility to make payment for the repair of any asset should kindly report such person in writing to the DisCo’s office nearest to them or call the whistle blower/customer care numbers of the DisCo to report such incidence. Such customers may also send a written complaint directly to the Commission.
The Commission also clarified that customers are not expected to purchase poles, transformers and other assets for the utilities considering that the cost of such items has already been incorporated for recovery through the electricity tariff paid by the consumers.
Ideally, NERC said the DisCos should finance the purchase of such assets through their Internal Generated Revenue (IGR), loan from banks or shareholders’ funds.
However, the Commission said where the DisCo is unable to source the required funding for the acquisition of required materials, then customers may opt to sign an agreement with the utility for the purchase of such assets with the understanding that the customers will be refunded for the full cost of those assets over an agreed period of time.
“Customers are to please note that it is not the responsibility of communities to buy/supply poles, transformers, and similar items for the DisCos. However, if any community wishes to contribute to the purchase of such assets to facilitate or expedite connection to supply, such communities must ensure that they strictly adhere to the provisions of the NERC regulation on the investment in electricity networks for their guidance as this would ensure the funds provided by such communities are recovered over an agreed period of time,” it noted.
NERC noted that it does not endorse communities purchasing or donating assets to the DisCos unless this is in line with subsisting regulation on third party investment in the electricity network where a provision is made for a refund of the cost to customers.
It explained that any community that voluntarily decides to do so should ensure that they have a well-documented agreement with the DisCo on the terms and conditions for such purchase or donation.
NERC REGULATION ON INVESTMENT IN DISCO NETWORK
The Commission has since 2015 issued a regulation to guide customers on investing in the Nigerian Electricity Supply Networks.
NERC said Investments by Non-Licensees shall be made only in networks owned, operated and maintained by licensees (DisCo). Therefore, Non-licensees desirous of investing in a network shall enter into a project agreement with the licensee of that network.
The Commission said the project agreement shall cover the following areas: (a) Nationwide electricity credit check and control in respect of the entity; (b) Feasibility study; (c) Planning and design; (d) Construction standards; (e) Capital contribution by the entity in comparison with MYTO provisions; (f) Procurement procedure; (g) Construction and Commissioning procedure; (h) Formal hand over and connection of completed project; (i) Payment/Amortization schedule; and (j) Dispute Resolution (iv) All agreements for investment in networks shall be submitted by the Licensee to the Commission for approval.
NERC said it may, where deemed necessary, request further documents from the applicant in support of the application; it shall within 30 days of receipt of the application along with all other necessary documents communicate to the applicant whether or not the application is approved.
Adding that if after thirty (30) days, the Commission’s approval is not communicated to the Licensee, the agreement may be executed by the parties. And where the Commission has given its approval, the Licensee shall ensure strict compliance with the Commission’s approval; The Licensee shall obtain the Commission’s approval prior to any deviation from the approved Project Agreement and milestone.
It said all signed agreements for investment in networks shall be forwarded to the Commission by the licensee for filing. And upon completion of any network investment project, the licensee shall send the following details to Commission: (a) Notice of completion of project and date of completion; (b) As-built single line diagrams and geographical drawings; (c) Commissioning Test Reports and date of commissioning; (d) Schedule of actual investment costs with explanatory notes; and (e) Any relevant information.
NERC noted that where a Licensee is not satisfied with the Commission’s decision, the licensee may apply for a review of the decision in line with Section 50 of the EPSR Act.
EXPERTS SPEAK ON INVESTMENT IN DISCO NETWORK
Speaking on the matter, former Chairman of NERC, Dr. Sam Amadi, said whoever willing to invest in the Distribution Network should sign a contract with the DisCos. Noting that the agreement would guide them on how to recover the money.
“The Community has no agreement with the DisCo, so if they are eager to invest, they must sign an agreement with the DisCo, which NERC has to enforce.
“NERC should ensure that every asset in the sector is provided by the operator. However, if it is provided by the third party, it should be provided under a condition. Because the operator will still make money from the asset.
“The regulator will ascertain whether the asset is free or not. If it’s given free, the regulator will remove it from their allowable revenue,” he noted.
On whether the money invested should be paid back in Cash or electricity bills, Dr. Amadi said it depends on the agreement signed between the DisCo and the investors.
He however, noted that some of the DisCos are not willing to invest in the network even when people are building every day.
On his part, the President of the Electricity Consumer Advocacy Group, Princewill Okorie, said no one puts money in a sector that has no accountability and transparency.
“The power sector in Nigeria was criminally designed to extort money from Nigerians,” he said.
However, he advised that for greater investment in the distribution value chain of the sector, more awareness should be created about the NERC’s Third-party investment policy.
