Effective as of May 27 2025, the Nigerian Electricity Regulatory Commission ("NERC") issued formal guidelines for the registration and engagement of Third-Party Collection Service Providers (CSPs) by electricity distribution companies ("DisCos"). The Guidelines are issued pursuant to Section 226 of the Electricity Act, 2023 and represent a major shift in how DisCos may partner with fintechs and other entities for electricity bill collection.
Use Case for a CSP Engagement Nigeria's Power Sector
A CSP is any third-party fintech entity engaged by a DisCo to collect electricity payments through physical or digital means. DisCos in Nigeria typically engage CSPs to address a range of operational, financial, and regulatory challenges. One of the most common reasons is the need to offer digital payment channels to customers. CSPs enable electricity bills to be paid through mobile apps, USSD codes, internet banking, and wallets services that most DisCos are not equipped to provide in-house. In addition, CSPs help DisCos expand their geographic reach, especially into rural or underserved areas where physical service centers are limited or non-existent. Many CSPs offer digital reconciliation, settlement automation, and real-time transaction traceability.
Key Highlights of the Guidelines
1. Mandatory Registration with NERC: All CSPs must now obtain registration and approval from the NERC prior to onboarding or transacting with any DisCo. DisCos are also prohibited from engaging unlicensed CSPs. CSPs are required to pay a non-refundable registration fee of N100,000 (One Hundred Thousand Naira) only.
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2. CBN Licensing & NIBSS Compliance: CSPs must hold a valid license or permit from the Central Bank of Nigeria (CBN) and systems must be integrated with the Nigeria Inter-Bank Settlement System ("NIBSS") to ensure secure and traceable digital collections.
3. Contractual Terms & Notification: All DisCos must submit executed CSP agreements to NERC within 90 days of the commencement of the Guidelines. CSP agreements must specify performance benchmarks and are be subject to NERC review and audit.
4. Commission Caps: The Guidelines introduce service fee caps for collections via different payment channels, including via, USSD, mobile apps and wallets, POS terminals, internet banking and payment gateways. Commissions are based on a percentage of the total amount collected and CSPs are prohibited from charging a commission above the caps stipulated in the Guidelines. Additionally, no commissions may be charged on collections from maximum demand customers. The commission caps are as follows:
- USSD Services: For transactions of ₦5,000 or less, the maximum chargeable rate is ₦20, with a cap per transaction of ₦20. For transactions above ₦5,000, the maximum chargeable rate is ₦50, with a cap per transaction of ₦50.
- Banking Services: For payments processed via bank, the maximum rate is 0.75%, with a cap per transaction of ₦1,000. For transactions through NIBSS Web Central Pay, the maximum rate is 1.25%, with a cap of ₦1,000. For ATM-based payments, the maximum rate is 1.25%, with a cap of ₦2,000.
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- Mobile Payment Services: For payments via wallets, the maximum rate is 1.10%, with a cap of ₦2,000 per transaction.For electronic payment channels, the maximum rate is 1.10%, with a ₦2,000 cap. For web, intranet, or internet-based channels, the maximum rate is 1.50%, capped at ₦2,000. For transactions through chat, IVR, or payout platforms, the maximum rate is 1.50%, with a ₦2,000 cap. For mobile-based transactions, the maximum rate is 1.50%, with a ₦2,000 cap. For payments via VAN (Value Added Networks), the maximum rate is 2.00%, also capped at ₦2,000.
- Agency Payment Services: For cash payments made through agents, the maximum rate is 1.50%, with a ₦2,000 cap. For payments made using PoS (Point of Sale) terminals, the maximum rate is 1.50%, with a ₦2,000 cap. For payments made at a vending kiosk, the maximum rate is 2.00%, with a ₦2,000 cap. For payments made through a field agent, the rate can range between 2.00% and 3.00%, but is still capped at ₦2,000 per transaction.
- (e) Rural Services: For payments processed through agents or rural presence, the maximum commission rate is 3.25%, with a cap of ₦2,000 per transaction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
