The Nigerian Electricity Regulatory Commission has introduced firm limits on commissions paid to all external electricity bill collectors and instructed distribution companies to re-validate all collection partners before December 31, 2025, or face penalties.
The new framework, issued under NERC’s Guidelines for the Engagement of Third-Party Collection Service Providers in NESI, takes effect on November 1, 2025, and directly confronts non-transparent revenue practices that have hindered Nigeria’s electricity market.
Signed by the Commission’s Vice Chairman, Musiliu Oseni, the document streamlines how customers can pay electricity bills—via USSD, banking applications, PoS terminals, and rural agents—and establishes enforceable ceilings on what these channels may charge. It also represents another push to implement Nigeria’s long-standing cashless electricity payment policy.
In 2019, the commission released Order NERC/183/2019, which compelled DisCos to move industrial and commercial users to cashless platforms by January 31, 2020, and residential MD consumers (formerly R3) by March 31, 2020. The measure was designed to cut leakages, strengthen transparency, and ensure that collections reached utility accounts without diversion.
Although this mandate was issued years ago, cash-based transactions—particularly in remote areas and through agency banking—continued, with numerous uncertified agents imposing unapproved charges. Operators noted that some vendors applied arbitrary rates well above official limits, worsening revenue losses and deepening liquidity shortages within the sector.
Under the updated rules, only companies licensed by the Central Bank of Nigeria—such as banks, PSSPs, PTSPs, MMOs, switching firms, card schemes, and super-agents—can function as Collection Service Providers. The guideline also introduces compulsory upper limits on commissions for every USSD, PoS, mobile, banking, and rural payment system.
The document read, “In furtherance of the policy direction of the Federal Government of Nigeria on the settlement of electricity bills by certain classes of end-use customers, the commission issued Order No. NERC/183/2019 (the ‘Order’) mandates DisCos to migrate industrial and commercial customers to cashless settlement platforms by 31 January 2020 and R3 customers (now MD residential) by 31 March 2020. Pursuant to the Order, the commission authorised the use of available banking channels and collection service providers to enhance transparency in billing and collection.
“The cashless payment system is a shift from conventional transactions to more efficient, practical, and secure methods of payment for customers. These include but are not limited to banking applications, mobile platforms, credit cards, debit cards, QR/Scan to pay, USSD, payment links, and digital wallets.
“To register, each CSP must submit: A valid CBN licence or permit, A signed agreement with the relevant DisCo, CAC incorporation documents, A banker’s reference, three years’ tax clearance, VAT registration, A list of sub-agents, an API integration agreement with NIBSS, and Proof of payment of a non-refundable N100,000 registration fee. No CSP may commence operations without NERC’s approval, and no DisCo may engage any partner that is not fully cleared by the regulator.”
The guidelines further categorise payment channels into USSD mobile transactions, Banking and Switching platforms—including apps, ATMs, Interswitch, Flutterwave, Paystack, and NIBSS—Mobile Payment Systems covering transfers, VANs, wallets, web and IVR platforms, as well as NQR and payment links, Agency Services such as PoS, kiosks, and cash vendors, and Rural Services involving agents in underserved communities.
New commission caps, compliance rules intensify pressure on DisCos
According to the guidelines, collection partners must not exceed N20 for USSD transactions below N5,000, and N50 for those at N5,000 and above; 0.75 to 3.25 per cent depending on the payment channel for mobile wallets, PoS, kiosks, agency banking, and rural agents; and a hard limit of N2,000 to N5,000 per transaction, whichever is lower.
NERC also reaffirmed the N100,000 non-refundable registration fee for all collection service providers and insisted that only firms with valid Central Bank of Nigeria licences may operate. Any agreement not re-validated by December 31, 2025, automatically becomes void.
“To end arbitrary commission charges, NERC has now fixed maximum rates for all categories: USSD below N5,000 – N20, Above N5,000 – N50; Banking & Switching: Banks, gateways – 0.75 per cent, capped at N2,000, ATM – 1.10 per cent, capped at N2,000, Wallets – 1.25 per cent, capped at N2,000.
“Mobile Services: Web, chat, IVR, NQR – 1.50 per cent, capped at N2,000, Payout, mobile, VAN – 1.50 per cent, capped at N2,000. Agency & Rural PoS – 1.50 per cent, capped at N2,000, Kiosks – 2.00 per cent, capped at N2,000, Agents – 2.0–3.0 per cent, capped at N5,000, Rural agents – 3.25 per cent, capped at N5,000,” it added.
The guidelines specify that CSPs may only earn commissions for collection duties, with deductions for unrelated services—such as IT support or marketing—strictly prohibited. The regulator also stated that all collection contracts must be prepaid, except for banks and switching companies, which must settle transactions on a T+1 basis.
Maximum Demand customers are excluded from third-party collections and must remit payments directly into DisCos’ accounts, with no commission applicable to any agent. “These rules will remain in force until amended by the Commission,” NERC declared.
Meanwhile, agents worry that the 3.25 per cent ceiling and N5,000 cap could force smaller operators out of the market, especially in remote regions where low electricity supply and customer numbers reduce viability.
With the deadline approaching, DisCos must now rush to re-certify thousands of collection agreements—from fintech platforms to rural cash agents—or face regulatory penalties under NERC’s compliance system.
The commission emphasised that any CSP not registered by December 31, 2025, “shall cease to operate.” If fully enforced, the policy could significantly cut revenue leakages, strengthen liquidity for DisCos, and help narrow NESI’s persistent financial deficit.
