Nigeria’s power sector continues to grapple with a deepening liquidity crisis as the Electricity Distribution Companies (DisCos) recorded a staggering ₦1.591 trillion in revenue losses over the last three years.
The losses, driven by inefficiencies in the collection of bills, highlight the persistent struggle of the Nigerian Electricity Supply Industry (NESI) to achieve financial sustainability amid tariff hikes and regulatory interventions.
Pinnacle Daily’s analysis of the commercial performance report by the Nigerian Electricity Regulatory Commission (NERC) shows that DisCos recorded a loss of ₦385 billion in 2023. According to the NERC annual report for 2023, the total revenue collected by the DisCos from customers that year was ₦1.077 trillion out of a total of ₦1.463 trillion billed to customers, leaving an outstanding balance of ₦385.73 billion.
Pinnacle Daily’s checks on the NERC report for 2024 indicate that the revenue shortfall rose by 39.20 per cent to ₦536.95 billion in 2024. The total revenue collected by the 11 DisCos from customers in 2024 was ₦1.659 trillion out of the total bill of ₦2.196 trillion issued to customers, leaving an outstanding balance of ₦536.95 billion.
While the DisCos recorded a collection efficiency of 73.64 per cent in 2023 and 75.56 per cent in 2024, the outstanding, counted as losses, highlights the persistent liquidity crisis and operational inefficiency in the Nigerian electricity sector. Collection efficiency is a critical financial metric that measures how effective a distribution company is at recovering money for the electricity it has actually billed to its customers. It is the ratio of the amount that is collected from customers compared to the amount billed to them by the DisCos.
In 2025, Pinnacle Daily’s checks revealed that the DisCos’ revenue losses rose further by 24.55 per cent to ₦668.76 billion.
Quarterly breakdown of the 2025 figures shows fluctuations. The DisCos recorded a loss of ₦190 billion in the first quarter, ₦177.63 billion in the second quarter, ₦136.36 billion in the third quarter and ₦164.13 billion in the fourth quarter of 2025.
NERC said the losses are primarily driven by a combination of high Aggregate Technical, Commercial, and Collection (ATC&C) losses, energy theft, and a widening gap between the cost of power supplied and the revenue actually collected from consumers.
“The reason for significant under-recovery of the bills issued to customers by DisCos is driven by a lack of willingness of customers to pay bills when due, unsatisfactory DisCos’ services and inadequate customer metering, among other challenges,” NERC stated in its Q1 2025 report.
Aside from the collection issues, there is also a persisting challenge of billing inefficiency. The quarterly reports show that in 2025 alone, the billing efficiency fluctuated between 82 per cent and 84 per cent. This means that for every ₦100 worth of electricity received from the national grid, approximately ₦17 was lost before a bill even reached a customer.
This means that more revenues are lost between the value of energy received by the DisCos and what is billed to customers.
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The reports showed that in the second quarter of 2025, the naira value of the total energy offtaken by all DisCos was ₦909.59 billion, while the value of the total energy billed was ₦742.34 billion, which translates to a billing efficiency of 81.61 per cent. This means that ₦167.25 billion was a potential revenue lost due to billing inefficiencies.
In the third quarter of 2025, the naira value of the total energy offtaken by all DisCos was ₦854.53 billion, but the value of total energy billed was ₦706.61 billion. This means the DisCos collectively recorded billing losses of ₦147.92 billion.
This trend also extended to the fourth quarter of 2025, when the billing losses rose by 17.71 per cent to ₦174.13 billion. The value of the total energy supplied by all DisCos in the fourth quarter 2025 was ₦969.19 billion, and the value of the total energy billed was ₦795.06 billion.
Cumulatively, the DisCos recorded ₦489.3 billion as billing losses in the eight months of 2025. When added to the ₦668.76 billion recorded in the four quarters of 2025 as collection losses gives a total revenue loss of ₦1.158 trillion in the year.
The trend has continued in 2026. According to the NERC Factsheet for January 2026, total energy received by the DisCos was worth ₦336.43 billion, but the value of total energy billed to customers was ₦268.20 billion, meaning that ₦68.23 billion (20.3 per cent) was a billing shortfall. The report also revealed that ₦204.74 billion was the total revenue collected by the DisCos out of the ₦268.20 billion billed to customers, and another ₦63.46 billion was lost due to collection inefficiencies.
Causes of Billing Losses
NERC said some of the major factors that contribute to billing losses include:
“Poor Customer Enumeration: this is the inability of DisCos to identify all electricity consumers.
“Inaccurate Meters/Outdated Meters: this is the inability of DisCos to accurately measure the electricity consumed by end users due to the unavailability of meters or the use of obsolete meters at user sites.
“Energy Theft: This is the deliberate action by some electricity consumers to consume electricity without making payments.
“Technical Loss: this is the energy loss to wires and transformers (technical losses) which also contributes to DisCos’ billing inefficiency, and this is particularly relevant for areas of the network with substandard or aged infrastructure,” NERC stated in its 2024 annual report.
To address the commercial component of billing inefficiency, the national electricity regulator said: “DisCos must undertake holistic asset mapping and customer enumeration process, which will facilitate the identification of illegal electricity consumers.”
The over one trillion losses due to billing and collection inefficiencies come at a time when the power sector is grappling with legacy debt, which has according to the Association of Power Generation Companies (APGC), has risen above ₦6 trillion as of February 2026.
This has affected generation companies (GenCos), who continue to struggle with paying gas suppliers, leading to supply shortages that have impacted power generation in the first four months of the year.
Analysts note that despite efforts to transition toward a cost-reflective tariff system, the structural issues in the distribution network have prevented the power sector from achieving financial self-sufficiency.
They believe that the liquidity crisis has significantly affected power generation and supply across the country. Electricity supply on the national grid has fallen from an average of 4,600 megawatts in 2025 to less than 3,600 MW in the first three months of 2026. This means the power sector has a gross shortfall of 11,900MW when compared to available generation capacity of 15,500MW.
The result has been recurring blackouts in many parts of the country. DisCos, including the Abuja Electricity Distribution Company (AEDC), Ikeja Electric, Eko and Port Harcourt DisCos, have issued a couple of power outage notices to customers this year, with their reasons ranging from low power generation as a result of inadequate gas supply to thermal plants (leading to power load-shedding) to shutdown due to TCN scheduled maintenance of transmission facilities.
Residents of different parts of the country, including Abuja, Nasarawa, Lagos, Delta, Edo, Anambra, Enugu and Kogi, have continued to express frustrations on social media about their daily struggles with power blackouts and the impact on households and businesses.
The ugly power situation has forced the Presidency to take steps towards exiting the national grid, as it is nearing completion of the installation of a solar mini-grid project to ensure an uninterrupted electricity supply to the Presidential Villa.
FG’s Move to Settle Power Debt
Recently, the Federal Government announced the approval of ₦3.3 trillion for the settlement of verified outstanding debts owed to Generation Companies (GenCos) and gas suppliers as part of measures to stabilise the value chain.
However, experts have argued that without aggressive metering to close the gap and a complete overhaul of the distribution and transmission infrastructure, the liquidity crisis will continue to expand. As of December 2025, about 5.1 million out of 12.1 million active customers remained unmetered.
Closing Metering Gap
Chairman of the Electricity Consumers Association of Nigeria, Chijoke James, raised concerns about alleged exploitation of consumers by DisCos through estimated billing.
He claimed that the reason customers resist payment of electricity bills is because of “outrageous bills” issued to them. “No one is willing to pay for electricity not supplied,” he stated.
In a chat with Pinnacle Daily, Executive Director, PowerUp Nigeria, Adetayo Adegbemle, stated that metering electricity consumers would help to drastically reduce revenue collection losses recorded by DisCos. “DisCos need to find an innovative way to close the metering gap and the era of estimated billing,” he stated.
According to him, metering promotes transparency in billing and the willingness of consumers to pay once there is an adequate supply.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in Mass Communication. He can be reached via @VICTOREZEJA on X