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According to the commission, the 11 electricity distribution companies (DisCos) operating in Nigeria supplied power valued at N3.68tn during the year under review
Kano —
Nigeria’s power sector recorded a staggering revenue shortfall of N1.36tn in 2025 due to persistent billing inefficiencies and poor revenue collection by electricity distribution companies, according to the latest annual report released by the Nigerian Electricity Regulatory Commission.
The report paints a troubling picture of a sector grappling with deep-rooted commercial and operational challenges, raising fresh concerns about the sustainability of ongoing reforms and the viability of the country’s electricity market.
According to the commission, the 11 electricity distribution companies (DisCos) operating in Nigeria supplied power valued at N3.68tn during the year under review.
However, only N2.99tn of that amount was billed to consumers, indicating that electricity worth N694.8bn was delivered but never invoiced.
The regulator attributed this to weak billing systems, energy losses, and inefficiencies in customer enumeration and metering.
The gap translated to a billing efficiency of 81.14 per cent, leaving nearly one-fifth of electricity supplied unaccounted for in revenue terms.
DisCos Fail To Recover Payments For Billed Electricity
Even more concerning was the inability of the DisCos to recover payments for electricity already billed. Out of the N2.99tn invoiced to consumers, only N2.32tn was successfully collected, leaving N669.49bn unpaid. This represents a collection efficiency of 77.60 per cent.
“The total billing to electricity consumers by the DisCos was N2.99tn, but only N2.32tn was collected, translating to a collection efficiency of 77.60 per cent,” NERC stated in the report.
The energy accounting data also highlighted inefficiencies in tracking electricity supplied and consumed.
The DisCos reportedly received 31,251.77 gigawatt-hours (GWh) of electricity but billed customers for only 25,867.86GWh, resulting in an energy accounting efficiency of 82.77 per cent.
Among the distribution companies, Ibadan DisCo recorded the highest efficiency at 88.84 per cent, while Enugu DisCo posted the lowest at 72.18 per cent, underscoring disparities in performance across operators.
Figures Exceed Regulatory Target
This figure significantly exceeded the regulatory target of 20.54 per cent under the 2025 Multi-Year Tariff Order by 16.49 percentage points.
Breakdown of the losses showed that technical and commercial inefficiencies accounted for 18.86 per cent, while collection losses made up 22.40 per cent.
The persistent losses have drawn sharp criticism from stakeholders, including former senator and businessman Ben Murray-Bruce, who argued that Nigeria’s electricity privatisation has failed to deliver the expected improvements in power supply and infrastructure.
Stakeholder Says Power Privatisation Flawed
In an open letter addressed to President Bola Tinubu, Murray-Bruce described the 2013 power sector privatisation as fundamentally flawed.
“The 2013 privatisation was not a reform. It was a transfer of custody,” he wrote, arguing that investors who acquired generation and distribution assets lacked the financial capacity to sustain and expand them.
According to him, ownership of power assets was mistaken for operational capability, a miscalculation that continues to haunt the sector more than a decade later.
“The individuals who bought the GenCos and the DisCos had enough money to purchase the assets. They did not have enough money to run them,” he said.
Murray-Bruce also criticised the continued reliance on estimated billing, noting that millions of electricity consumers remain unmetered, thereby undermining transparency and accountability in the system.
NERC’s report corroborates this concern, revealing that out of 12.16 million active electricity customers as of December 2025, only 6.97 million were metered.
This leaves a metering gap of 5.20 million customers, representing 42.73 per cent of the total customer base.
Although DisCos installed 972,040 meters during the year, the pace of deployment remains insufficient to close the gap in the near term. Ibadan DisCo led with 180,256 installations, while Yola DisCo recorded the lowest at 14,231.
“A meter is a machine that tells the truth. An estimated bill is a machine that does not,” Murray-Bruce stated, lamenting what he described as an industry that “generates revenue by billing darkness.”
The Nigerian Bulk Electricity Trading Company and the market operator issued invoices totaling N1.72tn to the DisCos for energy purchases and administrative services in 2025.
However, only N1.632tn was remitted, leaving a market shortfall of N89.58bn. This shortfall affects upstream players, including generation companies (GenCos), many of which have long complained about unpaid debts.
While acknowledging the grievances of GenCos, Murray-Bruce argued that all stakeholders share responsibility for the sector’s struggles.
“To the GenCos: you are owed. That is true. But you contracted into a market you knew was insolvent,” he said, adding that operators must shift focus from lobbying for bailouts to making long-term capital investments.
The Federal Government continues to play a significant role in sustaining the electricity market through subsidies. According to NERC, the government incurred a subsidy obligation of N1.93tn in 2025, representing 57.44 per cent of the total N3.357tn invoiced by the bulk trader.
The subsidy burden, the commission noted, is largely due to the government’s decision to freeze tariffs for consumers despite rising costs of power generation and distribution.
Despite the substantial public spending, critics argue that the impact on electricity supply has been minimal. Murray-Bruce estimated that about N10tn in public funds has been injected into the sector over the past 13 years, with little improvement in service delivery.
He called for a fundamental restructuring of the electricity market, proposing a decentralised model that empowers communities and state governments to generate and distribute power independently.
“Every village, every estate, every community in Nigeria should have its own PHCN,” he suggested, advocating for localised solar-powered systems supported by state-backed financing guarantees.
Under this model, state governments would be responsible for powering public infrastructure such as streetlights, schools, healthcare centres and security facilities, while the Federal Government would focus on federal institutions.
Murray-Bruce also urged citizens to hold state governments accountable for electricity provision, noting that recent constitutional changes have placed power generation and distribution on the concurrent legislative list.
“Stop blaming the president for the darkness in your street. Since 2023, electricity has been a concurrent responsibility,” he said.
Meanwhile, the NERC report recorded two grid disturbances during the year, including one full system collapse on September 10, 2025, and a partial collapse on December 29 linked to a transmission fault on the Benin-Onitsha 330kV line.
The recurring system failures, combined with revenue leakages and operational inefficiencies, highlight the fragility of Nigeria’s power infrastructure.
Industry analysts warn that without urgent reforms to address metering gaps, improve billing systems, enforce collections, and attract fresh investments, the sector may continue to struggle under mounting financial pressures.
As Nigeria seeks to expand electricity access and support economic growth, the N1.36tn revenue loss underscores the scale of the challenges confronting a sector widely regarded as critical to national development.