Electricity distribution companies are set to face sanctions over about N1.5tn in outstanding obligations to the Nigerian electricity market after the Nigeria Independent System Operator rejected repayment proposals submitted by some of the firms.
NISO disclosed in a statement posted on its social media handles on Tuesday that this decision followed a four-day public hearing with the DisCos on their outstanding obligations to the Nigerian Electricity Market and service providers.
The hearing, which began on September 1 and ended on September 4, was convened to review the outstanding obligations of the DisCos and examine payment arrangements for settling the debts.
NISO said some of the payment proposals presented by the DisCos were unacceptable, particularly because of the size and age of the outstanding obligations.
“Following extensive deliberations, the payment proposals presented by some of the DisCos were considered unacceptable to NISO at the hearing, particularly in view of the magnitude and age of the outstanding obligations,” it said.
The latest development comes amid a persistent debt crisis in the power distribution segment, with the combined indebtedness of 11 DisCos rising to N1.3tn as of September 25, 2025, from about N1tn as of December 31, 2024.
According to a report by The PUNCH in April, the increase was driven largely by accumulated interest and persistent payment defaults.
The figures showed that Kaduna DisCo had the highest liability at N303.81bn, followed by Abuja with N275.17bn. Jos owed N104.38bn, while Ibadan had N103.41bn in outstanding obligations.
Kano DisCo owed N96.62bn, Port Harcourt N88.40bn, Benin N82.11bn, the old Yola DisCo N61.20bn, Ajaokuta N58.59bn, Ikeja N47.64bn and Enugu N39.11bn. Eko DisCo had N16.49bn, while the new Yola entity had N241.68bn. The total liability of the power firms is over N1.5tn.
The development is a continuation of a debt problem that dates back several years. The PUNCH had reported in August 2025 that 11 DisCos collectively owed N2.6tn as of September 30, 2020, based on documents submitted by the Nigerian Bulk Electricity Trading Company to the House of Representatives Public Accounts Committee.
At the time, Abuja DisCo owed N330.4bn, Eko N231bn, Benin N233.2bn, Enugu N258.3bn, Ibadan N325.7bn and Ikeja N310bn. The same records showed that Jos owed N161.7bn, Kaduna N277.7bn, Kano N211.7bn, Port Harcourt N239.7bn and Yola N107.4bn.
The huge legacy obligations subsequently became the subject of legislative interventions, including a debt restructuring package approved for three DisCos. In April, the House Public Accounts Committee approved financial reliefs and a 10-year debt restructuring plan worth N248.64bn for Kano, Jos and Ikeja DisCos.
The package comprised N128.60bn in accrued interest on debts between 2015 and 2025 and N120.06bn in historical principal obligations. The committee also recommended that the three DisCos be allowed to restructure and repay their historical debts totalling N120.06bn over a period of not more than 10 years.
It further recommended that NERC direct NBET to waive N128.58bn in interest accrued by the three DisCos between 2015 and September 2025, following regulatory intervention over disputed interest charges.
Based on the various interventions, NISO said the Federal Government had already netted off approximately 97 per cent of the DisCos’ outstanding obligations for the 2015–2020 period. The system operator said the affected companies should therefore take immediate steps to liquidate their remaining balances.
“The committee noted that the Federal Government had magnanimously netted off approximately 97 per cent of the DisCos’ outstanding obligations for the period 2015–2020, and consequently stressed the need for the affected DisCos to take immediate steps towards liquidating their remaining balances,” the operator said.
NISO threatened that it would now proceed with enforcement measures against the affected companies. “NISO will therefore proceed with the next steps, including the application of applicable sanctions as provided under the market rules, while maintaining its commitment to constructive engagement, transparency and due process,” the statement explained.
The latest action followed a separate engagement involving the House of Representatives Committee on Power, which urged indebted DisCos to urgently settle their outstanding market obligations.
The committee had participated in the NISO hearing involving Benin, Enugu, Ibadan, Jos, Kaduna, Port Harcourt and Kano DisCos over outstanding debts, events of default and other compliance matters.
The renewed pressure on the DisCos highlights the persistent liquidity challenge in Nigeria’s electricity market, where unpaid obligations have continued to affect participants across the value chain.
NISO said the engagement underscored “the critical importance of market discipline, compliance and accountability among market participants”, as well as the need to strengthen confidence and ensure the sustainability of the Nigerian electricity market.