NISO rejects DisCos’ debt repayment proposals, warns of sanctions

The Nigerian Independent System Operator (NISO) has rejected payment proposals submitted by some electricity distribution companies (DisCos) to settle their outstanding obligations to the Nigerian Electricity Market and service providers.

NISO disclosed this in a statement issued by its management in Abuja on Sunday, following a four-day public hearing with the DisCos on their outstanding market debts.

The hearing, which held from September 1 to September 4, was convened to review the outstanding obligations of electricity distribution companies and assess their proposed arrangements for settling the balances.

The five-member committee overseeing the process was chaired by NISO’s Executive Director, Market Operations, Edmund Eje.

What they are saying

According to NISO, the committee found some of the payment proposals unacceptable, particularly in view of the size and age of the outstanding debts.

• The committee also raised concerns about the adequacy of the proposed payment frameworks, noting that they did not sufficiently address the DisCos’ outstanding market obligations.
• NISO said the Federal Government had already netted off about 97% of the DisCos’ outstanding obligations incurred between 2015 and 2020.
• It said the committee therefore stressed the need for the affected DisCos to take immediate steps to settle their remaining balances.
• The system operator said it would proceed to the next stage of the process, including the application of sanctions provided under the Market Rules.

However, NISO said it remained committed to constructive engagement, transparency and due process in resolving the outstanding obligations.

The system operator said the four day hearing provided an opportunity to examine the financial obligations of the DisCos and review proposals aimed at liquidating debts that have continued to affect the effective functioning and development of the Nigerian Electricity Market.

NISO said the hearing also highlighted growing concerns over market discipline and the failure of some market participants to meet their financial obligations.

• “This is a situation that has continued to affect service providers and the sustainability of the power sector,” it said.

Get up to speed

The issue of debt in the power sector has been a major concern for both the regulator and the operator. While NISO is battling with the DisCos’ obligations on one hand, the DisCo’s are also struggling with government agencies not paying their bills.

• In 2025, the Association of Nigerian Electricity Distributors (ANED) accused the Nigerian Air Force (NAF) of refusing to settle an outstanding electricity debt of N4.34 billion despite having the financial capacity to do so.
• The dispute followed the disconnection of a NAF facility over unpaid bills, after which personnel of the Air Force attacked and vandalised the headquarters and a business unit of Ikeja Electric in Lagos, according to an earlier Nairametrics report.
• The recurring disputes have highlighted the difficulty DisCos face in recovering revenue while remaining responsible for maintaining and expanding electricity distribution infrastructure.

Meanwhile, The Nigerian Electricity Regulatory Commission (NERC) recently took control of Kaduna Electricity Distribution Company (KAEDC) and dissolved its board over a debt crisis involving about N456.5 billion in cumulative market obligations.

What you should know

Nairametrics previously reported that electricity distribution companies recorded an aggregate billing efficiency of 82.03% in the fourth quarter of 2025, despite posting N174.12 billion in billing shortfalls.

Collection efficiency measures the proportion of electricity bills successfully recovered by DisCos from customers.

Lower collection efficiency affects cash flows across the electricity value chain, reducing payments to generation companies (GenCos), the Transmission Company of Nigeria (TCN) and gas suppliers.