⚡ New Rules For Fintechs In Nigeria’s Electricity Sector: What You Need To Know

By O.I.D. Legal Consult www.oidlegalconsult.com

📌 Introduction

Nigeria’s electricity sector is seeing a major shift with new opportunities — and new compliance obligations — for fintech companies. On May 27, 2025, the Nigerian Electricity Regulatory Commission (NERC) rolled out formal guidelines that now regulate how electricity distribution companies (DisCos) can engage Third-Party Collection Service Providers (CSPs) — including fintechs — for bill collection services.

If you’re a fintech offering payment solutions for DisCos, here’s what you need to know to operate legally and strategically under these new rules.

⚙️ Why CSPs Matter in the Power Sector

DisCos have long struggled to efficiently collect electricity payments from millions of households and businesses. CSPs — which are often fintechs — bridge this gap by providing:

✅ Digital payment channels: Mobile apps, USSD, internet banking, wallets, and more.✅ Wider reach: Especially in rural and underserved areas where physical offices are few.✅ Better traceability: Automated reconciliations, secure settlements, and real-time payment tracking.

These services help DisCos boost revenue, reduce debt recovery challenges, and comply with regulatory standards.

🏛️ Key Highlights of the New Guidelines

Below are the headline requirements under the NERC’s new regime:

1️⃣ Mandatory NERC Registration

Every CSP must now register with NERC and secure approval before working with any DisCo. DisCos are barred from partnering with unregistered CSPs.

Registration fee: ₦100,000 (non-refundable).

2️⃣ CBN Licensing & NIBSS Integration

To qualify, CSPs must hold a valid license or permit from the Central Bank of Nigeria (CBN). Additionally, their systems must be integrated with the Nigeria Inter-Bank Settlement System (NIBSS) for secure, traceable transactions.

3️⃣ Contract Transparency

Each DisCo must submit its CSP agreements to NERC within 90 days of the Guidelines taking effect. These agreements must:

✔️ Clearly define service standards and performance benchmarks.✔️ Be available for NERC review and audit.

4️⃣ New Commission Caps

One of the biggest changes is the introduction of maximum commission rates for different payment channels. CSPs can no longer charge fees above these caps — and no commission is allowed on payments from maximum demand customers.

Here’s a snapshot:

Channel	Max Rate / Cap
USSD	₦20 (≤₦5,000) or ₦50 (>₦5,000)
Bank Payments	0.75% (cap ₦1,000); ATM & NIBSS channels up to 1.25% (cap ₦1,000–₦2,000)
Mobile Wallets	1.10%–1.50% (cap ₦2,000)
POS / Agency	1.50%–2.00% (cap ₦2,000)
Rural Services	Up to 3.25% (cap ₦2,000)

The aim is to keep collection costs reasonable and protect consumers.

🔍 Why This Matters For Fintechs

This new framework clarifies expectations for all parties:

✅ Fintechs must comply with dual regulation: Both financial (CBN) and sector-specific (NERC).✅ Transparency and accountability: CSP agreements are now auditable, and payment flows must be traceable.✅ Fee structures are no longer negotiable: Clear caps prevent exploitative charges.

🏢 What Should Fintechs & DisCos Do Next?

✔️ Register with NERC: If you’re a CSP, initiate your registration immediately to avoid breaching the rules.✔️ Update contracts: Ensure all agreements with DisCos meet the new requirements and submit them within the 90-day window.✔️ Align tech systems: Integrate fully with NIBSS and ensure robust data security and transaction traceability.✔️ Educate your teams: Compliance, finance, and legal units must stay up to date on operational limits and reporting obligations.

📚 Conclusion

The new NERC Guidelines represent a huge step forward in modernising Nigeria’s electricity payment ecosystem. They open doors for fintechs to expand their services while maintaining fair and transparent practices.

Whether you are an electricity distributor, a fintech, or an investor exploring Nigeria’s evolving energy market, now is the time to review your structures and processes for compliance.

🔗 Need Expert Advice?

At O.I.D. Legal Consult, we help fintechs and energy sector players navigate regulatory changes with confidence — from licensing and contract reviews to dispute resolution and compliance audits.

📧 Email: oidlegalconsult@outlook.com 🌐 Website: www.oidlegalconsult.com

or call/Whatsapp +234 905 845 4839

✅ Disclaimer: This article provides general information and should not be taken as legal advice. Always seek specialist guidance on your unique circumstances.