Nigeria: Power DisCos Miss Revenue Targets Amid Efficiency Concerns

The data shows that DisCos received electricity worth ₦336.43 billion, billed ₦268.20 billion, and collected only ₦204.74 billion.

Nigeria's Electricity Distribution Companies (DisCos) recorded a decline in revenue recovery performance in January 2026, despite stricter loss reduction targets introduced by the regulator.

In the January factsheet published on Wednesday by the Nigerian Electricity Regulatory Commission(NERC), the data indicated that the average revenue recovery efficiency across the DisCos dropped to 69.16 per cent in January 2026, down from 72.31 per cent in 2025, reflecting a 3.15 percentage point decline.

The decline occurred even as the regulator reduced the Aggregate Technical, Commercial and Collection (ATC&C) loss targets for 2026, expecting improved performance following investments made by the companies in 2025.

Lower targets, weaker performance

According to the data, the average ATC&C loss target was reduced from 20.54 per cent in 2025 to 16.92 per cent in January 2026, a decrease of 3.62 percentage points.

However, instead of improved outcomes, DisCos posted weaker revenue collection than allowed under the tariff structure.

The commission attributed the decline in January performance to the enforcement of the newly approved loss benchmarks.

A review of the published data reveals that, while the average allowed tariff stood at ₦124.30/kWh, DisCos realised only ₦85.97/kWh in actual collections, indicating a significant gap between expected and realised revenues.

Across individual operators, Eko DisCo recorded the highest recovery efficiency at 87.92 per cent, though still below its 2025 performance. Ikeja DisCo followed with 81.64 per cent, while Abuja DisCo posted 75.02 per cent, also declining year-on-year.

At the lower end, Kaduna DisCo recorded 36.29 per cent, one of the weakest performances. Jos DisCo followed at 43.54 per cent. Yola DisCo saw a sharp drop to 55.42 per cent, representing the largest negative variance (14.85 percentage points).

Billing and collection gaps persist

Further breakdown shows systemic inefficiencies across the value chain. The NERC noted that billing efficiency stood at 79.72 per cent, indicating that about one-fifth of energy received was not billed.

Collection efficiency was 76.34 per cent, meaning a significant portion of billed revenue remained uncollected.

In monetary terms, the data shows that DisCos received electricity worth ₦336.43 billion, billed ₦268.20 billion, and collected only ₦204.74 billion.

This translates to a substantial revenue shortfall, worsening liquidity challenges in the sector.

On Sunday, President Bola Tinubu approved a N3.3 trillion payment plan to settle outstanding debts in Nigeria's electricity sector under the Presidential Power Sector Financial Reforms Programme.

According to the presidency, the decision followed a final review of legacy debts that have plagued the power sector for over a decade.

The government said the liabilities accumulated between February 2015 and March 2025, adding that after verification, ₦3.3 trillion was agreed as a full and final settlement.

The intervention comes amid persistent electricity shortages across Nigeria, forcing households and businesses to rely heavily on petrol and diesel generators and solar alternatives. Similarly, electricity grids have collapsed multiple times this year, leaving millions across the country in the dark.

The power supply challenge has significantly increased operating costs for businesses, many of which pass the additional burden on to consumers through higher prices of goods and services.

While these challenges persist, the inability of electricity distribution providers to effectively collect electricity bills across many parts of the country has also compounded the problem. Inefficient metering, bypassing by many households, and inadequate electricity supply have consistently led power-generating companies and Discos to record losses.

Implications for the power sector

The data underscores persistent structural issues in Nigeria's power distribution segment, including energy losses, weak metering, and poor revenue collection.

Despite regulatory efforts to tighten performance benchmarks, the latest figures suggest that DisCos are yet to translate investments and reforms into measurable efficiency gains.

Experts have also argued that sustained underperformance could continue to strain the entire electricity value chain, affecting generation, transmission, and ultimately power supply to consumers.

The regulator is expected to intensify oversight and enforce compliance as part of ongoing reforms aimed at improving the financial viability of the sector.

This article originally appeared on Premium Times.