The Nigerian Electricity Regulatory Commission (NERC) has introduced strict new rules for third-party collection services.
Under the regulations, Collection Service Providers (CSPs) are required to remit payments upfront to improve liquidity, prevent leakages, and strengthen financial transparency in Nigeria’s electricity marke
The regulation, titled “Guidelines on Registration and Engagement of Third-Party Collection Service Providers by DisCos, 2025,” was signed by NERC Vice Chairman Musiliu Oseni. It became effective November 1, 2025 and all existing contracts must comply by December 31, 2025.
Under the new framework, all third-party collection contracts must be prefunded, requiring CSPs to remit revenue upfront before collecting customer payments.
NERC said; “this shift ensures immediate fund availability and improves cash flow for Distribution Companies (DisCos).
“Only CSPs licensed by the Central Bank of Nigeria (CBN) may now operate in the sector. Additionally, every collection contract must be submitted to NERC for approval and formal registration before commencement.”
In one of the most consequential changes, NERC has banned third-party agents from handling payments from Maximum Demand (MD) customers — the highest-paying category of consumers in the electricity market. All MD payments must flow directly into dedicated DisCo accounts, with no commissions awarded to CSPs.
To further enhance efficiency, Voice of Nigeria reports that “NERC has also directed all DisCos to transition to digital, automated and standardized payment channels, a move expected to significantly reduce revenue leakages and improve accountability.”
According to the Commission, “contract must also spell out clear and measurable Key Performance Indicators (KPIs), which DisCos are required to review regularly.”
“CSPs providing banking or switching services are exempt from upfront remittance but must comply with a T+1 settlement cycle, ensuring next-day reconciliation.
“All prefunded collections are to be remitted into dedicated DisCo accounts, with any changes to account details reported immediately to NERC,” the Commission stated.
Enforcement and Sanctions
It warned that any DisCo or CSP that fails to comply with the new rules faces stiff penalties, including contract suspension and financial sanctions, signalling a decisive regulatory push to stabilise revenue flows within the national grid.
According to the Commission, the measures are part of a broader effort to “tighten revenue assurance, eliminate leakages, and enhance financial transparency” across Nigeria’s struggling electricity sector.
Mercy Chukwudiebere