Nigeria’s power sector faces N63bn shortfall as DisCos struggle under new NERC targets

Nigeria’s electricity distribution companies (DisCos) recorded a significant ₦63.46 billion revenue shortfall in January 2026, underscoring persistent inefficiencies in the power sector despite tighter regulatory oversight.

According to the latest Commercial Performance Factsheet released by the Nigerian Electricity Regulatory Commission (NERC), DisCos recovered only ₦204.74 billion out of ₦268.2 billion billed to customers, translating to an average recovery efficiency of 69.16%.

Stricter Targets, Weaker Recovery

The decline comes as NERC implements more stringent Aggregate Technical, Commercial and Collection (ATC&C) loss targets, reducing the industry benchmark to 16.92% for 2026 from 20.54% in 2025.

While the revised targets aim to drive operational efficiency, early data suggests that distribution companies are struggling to meet the new thresholds.

Recovery efficiency dropped by 3.15 percentage points year-on-year, highlighting the widening gap between regulatory expectations and actual performance.

Tariff-Revenue Mismatch Deepens

Despite an approved average tariff of ₦124.30 per kilowatt-hour (kWh), actual collections averaged just ₦85.97/kWh, reflecting a persistent disconnect between cost-reflective pricing and realised revenue.

Operational inefficiencies further compounded the challenge:

Billing Efficiency: 79.72% (₦268.2bn billed out of ₦336.43bn energy received)

Collection Efficiency: 76.34%

These figures point to ongoing issues including metering gaps, energy theft, and weak payment discipline across the customer base.

Performance Disparities Across DisCos

The report highlights significant regional variations in performance:

Top Performers:

Eko Electricity Distribution Company – 87.92% recovery

Ikeja Electric – 81.64%

Weakest Performers:

Kaduna Electric – 36.29%

Jos Electricity Distribution Company – 43.54%

The sharpest decline was recorded by Yola Electricity Distribution Company, where recovery efficiency fell by 14.85 percentage points to 55.42%, despite a significant reduction in its ATC&C loss target.
Other operators, including Abuja, Benin, Enugu, Ibadan, Kano, and Port Harcourt DisCos, also recorded declines, indicating a sector-wide downturn.

Liquidity Pressure Across Value Chain

The revenue gap at the distribution level has broader implications for the entire electricity value chain.

Lower collections limit remittances to upstream entities such as Nigerian Bulk Electricity Trading Plc and generation companies, exacerbating longstanding liquidity constraints.

The January data suggests that while capital investments made in 2025, such as network upgrades and metering expansion, were expected to improve efficiency, their impact has yet to fully materialise in revenue performance.

Regulatory Perspective

NERC noted that the revised ATC&C targets were designed to reflect expected gains from recent infrastructure investments. However, the early signs indicate that DisCos are in a transitional phase, adjusting to stricter benchmarks without immediate improvements in cash flow.
The Nigerian power sector faces a critical balancing act between enforcing efficiency standards and maintaining financial viability for operators.

In the near term, liquidity pressures are expected to persist, while longer-term improvements will depend on:
Effective implementation of metering programmes

Enhanced revenue assurance mechanisms

Stronger customer compliance and enforcement

Without these reforms, the sector’s structural challenges may continue to hinder sustainable growth and reliable electricity supply.