NERC Issues New Guidelines on Third-Party Electricity Bill Collections

In a major policy move aimed at reforming revenue collection in Nigeria’s electricity sector, the Nigerian Electricity Regulatory Commission (NERC) has introduced new guidelines for the registration and engagement of third-party collection service providers. The directive, which took effect on May 27, 2025, was signed by NERC Chairman Sanusi Garba and is part of efforts to standardize and digitize electricity bill payment processes across the country.

The framework is anchored on Section 226 of the Electricity Act, 2023, and is designed to eliminate cash-based collections, streamline revenue channels, reduce losses due to untracked payments, and improve accountability. It also aligns with the Federal Government’s broader push toward a cashless economy, as more services shift to electronic payment systems.

Under the new framework, Distribution Companies (DisCos) are no longer allowed to work with unlicensed third-party agents for bill collections. Only authorized Collection Service Providers (CSPs) with valid Central Bank of Nigeria (CBN) licenses, verified integration with the Nigeria Inter-Bank Settlement System (NIBSS), and clear tax compliance will be eligible to collect electricity bills on behalf of the DisCos. These CSPs must also comply with the Know Your Customer (KYC) requirements and must have an established track record of reliability and security in payment processing.

One of the key highlights of the new regulation is the emphasis on digitization. NERC now mandates that all electricity bill payments must be made through digital channels. These include USSD codes, mobile banking apps, internet platforms, POS terminals, and other verified online platforms. This effectively phases out cash-based payments and informal collection methods, especially in urban areas where digital access is relatively widespread.

To protect consumers from excessive service fees, NERC has introduced a system of capped commissions. For example, payments made through USSD channels for amounts below ₦5,000 will attract a maximum charge of ₦20. In rural areas where digital access may be limited, agents operating in these regions can charge up to 3.25% of the transaction amount, provided the fee does not exceed ₦2,000. This cap is meant to encourage fair pricing, particularly for low-income and rural electricity consumers. Meanwhile, maximum demand (MD) customers—typically large industrial or commercial users—will continue to enjoy zero commission charges on their payments.

The guidelines also require that all existing contracts between DisCos and their current third-party agents be submitted to NERC within 90 days of the directive’s commencement. These contracts will be reviewed for compliance with the new framework. Any future contracts must also adhere to detailed performance benchmarks, transparency standards, and specify account information for collections. Importantly, any change to transaction accounts by CSPs must be reported to NERC and receive prior approval.

DisCos are also expected to invest in more efficient and less costly collection mechanisms. This could mean the deployment of more POS devices, partnerships with telecoms for USSD short codes, and working with digital wallet providers to ensure easy access for all customers. According to NERC, these steps are necessary to cut down on collection costs, reduce revenue leakages, and improve operational transparency.

For consumers, the shift may mean a more convenient and predictable experience when it comes to paying electricity bills. The digitization of payments is expected to increase accountability and eliminate some of the issues that have plagued cash-based systems, including underreporting, theft, and disputes over receipts. It also allows for better tracking of payments and provides a clear digital trail that benefits both customers and electricity providers.

Industry stakeholders have responded positively to the guidelines, with many seeing it as a step toward modernizing Nigeria’s power sector. However, there are concerns about the readiness of rural and underserved communities to adapt to fully digital payment systems. In response, NERC has urged DisCos and approved agents to conduct sensitization campaigns and provide support for communities that may lack digital literacy or infrastructure.

Analysts also note that while the new policy will likely reduce revenue losses for DisCos, the real test lies in its implementation. Issues such as network reliability, power outages affecting digital devices, and resistance from agents previously benefitting from the unregulated cash model may pose challenges. Nonetheless, NERC maintains that the policy’s long-term benefits far outweigh its initial hurdles.

In conclusion, NERC’s introduction of standardized guidelines for third-party electricity bill collections marks a major turning point in Nigeria’s effort to reform its power sector. By enforcing strict licensing, promoting digital payments, and setting consumer-friendly commission limits, the commission is targeting a more transparent, efficient, and secure system of revenue collection. While stakeholders have a critical role to play in ensuring smooth implementation, the new framework lays the foundation for a more modern and accountable electricity billing ecosystem in Nigeria.