Nigerian Electricity Distribution Companies Experience Revenue Decline
Nigerian electricity distribution companies (DisCos) observed a downturn in revenue recovery during January 2026, despite the regulator’s implementation of stricter loss reduction targets. According to a fact sheet released by the Nigerian Electricity Regulatory Commission (NERC), the average revenue collection efficiency across DisCos fell from 72.31% in 2025 to 69.16% in January 2026, constituting a decline of 3.15 percentage points.
This decline occurred even as regulators modified their technical, commercial, and recovery (ATC&C) loss targets for 2026, hoping that prior investments by the companies would yield better outcomes. The average ATC&C loss target was reduced by 3.62 percentage points, dropping from 20.54% in 2025 to 16.92% in January 2026.
Performance Issues Amid Lowered Targets
Despite the adjusted targets aimed at encouraging better performance, DisCos underperformed financially compared to what was allowed within the prescribed fee structure. The decline was attributed to the application of newly established loss benchmarks. A review of the released data reveals that while the average tariff allowed was ₦124.30 per kilowatt-hour (kWh), actual collections only amounted to ₦85.97 per kWh, indicating a substantial gap between anticipated and realized revenues.
When examining individual operators, Eko DisCo achieved the highest collection efficiency at 87.92%, though it still did not reach its performance levels from 2025. Ikeja DisCo followed with an efficiency of 81.64%, while Abuja DisCo recorded 75.02%, reflecting year-on-year decreases. On the lower end, Kaduna DisCo showed poor performance at just 36.29%, followed by Jos DisCo at 43.54%. Yola DisCo experienced a significant drop, reaching only 55.42% efficiency and recording the most considerable negative shift at 14.85 percentage points.
Billing and Collection Inefficiencies Persist
Further analysis underscores the long-standing systemic inefficiencies throughout the electricity distribution value chain. NERC indicated that billing efficiency stood at 79.72%, suggesting that approximately one-fifth of the energy received remains unbilled. The collection efficiency was recorded at 76.34%, highlighting that a considerable portion of the billed revenue is still uncollected.
Financially, DisCos received ₦336.43 billion worth of electricity but claimed only ₦268.2 billion, ultimately recovering just ₦204.74 billion. This scenario spells significant revenue shortfalls, further deepening liquidity challenges within the sector. In response to these ongoing issues, President Bola Tinubu approved a ₦3.3 trillion payment plan aimed at addressing the outstanding debts of the Nigerian power sector under the Presidential Power Sector Financial Reform Programme.
Government Initiatives Amidst Power Shortages
The decision, according to the president’s office, followed a thorough review of legacy debts that have burdened the power sector for over a decade. The government revealed that this debt accumulated between February 2015 and March 2025, and after careful assessment, ₦3.3 trillion was determined to provide a complete and final settlement.
This government intervention arrives during a period of persistent power shortages in Nigeria, compelling households and businesses to increasingly rely on petrol, diesel generators, and solar energy alternatives. The national power grids have faced repeated collapses this year, leaving millions in darkness and significantly increasing operational costs for businesses, which often pass these costs onto consumers through higher prices for goods and services.
Structural Challenges in the Electricity Distribution Sector
The data highlights ongoing structural challenges within Nigeria’s electricity distribution sector, including extensive energy losses, outdated meters, and ineffective revenue collection methods. While regulatory agencies strive to tighten performance metrics, the latest figures suggest that DisCos are struggling to convert prior investments and reforms into measurable efficiency improvements.
Industry experts argue that continued underperformance threatens to destabilize the entire electricity value chain, potentially affecting power generation, transmission, and ultimately supply to consumers. In response, regulators are expected to enhance oversight and enforce compliance as part of broader reforms that aim to bolster the financial viability of the industry.
