NERC Implements New Guidelines for Transmission Loss Reporting
The Nigerian Electricity Regulatory Commission (NERC) has announced revised guidelines for reporting regional transmission loss factors (TLF) as part of its ongoing efforts to enhance transparency and operational efficiency in Nigeria’s electricity sector. In a statement released on Monday, the commission noted that the national average TLF has decreased from 8.71% in 2024 to 7.24% in 2025, based on data from the Nigerian Independent Operators (NISO).
Despite this improvement, the figure still overshoots the 7% threshold established under the Multi-Year Tariff Order (MYTO).
According to NERC, the directive outlined in Order No. NERC/2026/026, dated April 8, 2026, creates a formal framework for the reporting of transmission losses across regions managed by the Transmission Company of Nigeria (TCN).
Implementation Timeline and Regulatory Empowerment
This new order is set to take effect on April 13, 2026, supported by provisions in the Electricity Act of 2023. This legislation gives NERC the authority to oversee and ensure the efficiency of the electricity market.
Main Provisions of the Guidelines
Among the key provisions, the new regulations mandate NISO to install smart meters at all regional border interconnection points by December 2026, aimed at ensuring precise measurement of energy flows. System operators are expected to track and document energy flow through transmission substation transformers and submit quarterly TLF reports to the regulatory body.
NERC has also instructed TCN to deliver a comprehensive action plan by July 2026 detailing strategies to reduce transmission losses within the allowable 7% benchmark. Furthermore, more ambitious targets set by the commission stipulate that transmission losses should not exceed 6.5% by December 2026.
The commission emphasizes that these measures are designed to enhance accountability in transmission operations and boost overall performance through structured and transparent loss reporting.
Persistent Challenges in Nigeria’s Electricity Sector
This directive arrives amidst ongoing challenges in Nigeria’s electricity landscape, characterized by inadequate infrastructure, frequent grid failures, and continuous supply shortages. For years, insufficient electricity availability has compelled households and businesses to depend heavily on gasoline and diesel generators, as well as solar energy, substantially raising operational costs.
These increased costs frequently translate into higher prices for consumers, affecting the cost of goods and services. In a bid to address financial difficulties within the power sector, President Bola Tinubu has recently approved a N3.3 trillion payment plan intended to settle long-standing debts under the Presidential Power Sector Financial Reform Programme. The debts, accumulated between February 2015 and March 2025, underwent a rigorous verification process prior to the final settlement amount being determined.
Declining Revenue Recovery in the Sector
Despite regulatory efforts, inefficiencies in revenue collection remain a significant concern affecting the sector’s overall performance. NERC’s latest fact sheet, released in January, indicates a notable decline in the revenue recovery efficiency of electricity distribution companies (DisCos).
The report highlights a drop in average revenue collection efficiency from 72.31% in 2025 to 69.16% in January 2026, a decrease of 3.15 points. The billing efficiency stood at 79.72%, revealing that nearly one-fifth of the electricity supplied went unbilled. On the collection efficiency front, 76.34% of the billed amounts remained unpaid, indicating persistent liquidity challenges within the sector.
The data presents a stark picture: DisCos received electricity valued at N336.43 billion, billed N268.2 billion yet managed to recover only N204.74 billion. This highlights a growing gap in earnings and the tightening financial landscape within Nigeria’s power sector.
