Electricity distribution companies record rising revenues despite modest growth in power supply, declining available generation capacity and mounting consumer complaints 13 years after privatisation.
Nigeria’s electricity sector is facing renewed scrutiny as revenue collected by electricity distribution companies (DisCos) continues to rise significantly, despite limited improvements in power supply, declining available generation capacity and persistent complaints over poor service delivery.
Data from the Nigerian Electricity Regulatory Commission (NERC), analysed by Financial Vanguard, showed that DisCos’ revenue increased from ₦218.16 billion in the first half of 2018 to approximately ₦1.2 trillion in the corresponding period of 2026, representing an increase of about 450 per cent.
However, electricity supply grew by only 4.8 per cent over the same period, rising from 16,861 gigawatt-hours (GWh) to 17,668GWh.
The figures have raised questions about the relationship between revenue growth, electricity availability and the quality of service delivered to millions of Nigerian consumers.
The situation has also drawn attention to the financial challenges confronting the electricity market, with DisCos reportedly recording a collection shortfall of approximately ₦700.53 billion in the first half of 2026.
According to the figures, the distribution companies received electricity valued at approximately ₦1.9 trillion from the market but collected only about ₦1.2 trillion from consumers.
Meanwhile, available generation capacity declined by approximately 41 per cent, from 7,565.5 megawatts (MW) in the first half of 2018 to 4,456MW in the corresponding period of 2026.
The contrast between rising revenue and relatively limited growth in electricity supply has intensified debate over the effectiveness of Nigeria’s electricity reforms and whether the current market structure is delivering the expected benefits to consumers.
Revenue Rises While Electricity Supply Struggles
The widening gap between revenue collection and electricity supply becomes more evident when the figures are examined over a longer period.
NERC data showed that DisCos collected ₦302.93 billion in 2016, while annual electricity supply stood at 23,742GWh.
By 2025, revenue had increased to approximately ₦2.32 trillion, representing growth of about 666 per cent. Annual electricity supply, however, rose to 31,251GWh, an increase of approximately 31.6 per cent.
The figures indicate that revenue growth has substantially outpaced the expansion of electricity supplied to consumers.
DisCos’ annual revenue increased from ₦370.46 billion in 2017 to ₦448.75 billion in 2019 and ₦542.73 billion in 2020.
Collections rose further to ₦775.34 billion in 2021 and ₦841.81 billion in 2022 before crossing the ₦1 trillion mark in 2023, when revenue reached approximately ₦1.08 trillion.
The upward trend continued in 2024, with collections reaching ₦1.66 trillion, before climbing to approximately ₦2.32 trillion in 2025.
Electricity supply also increased over much of the period, rising from 23,742GWh in 2016 to 33,489.17GWh in 2019 and 35,242.17GWh in 2020.
Supply reached 36,710.60GWh in 2023 before peaking at 37,093.70GWh in 2024.
However, the figures showed a decline to 31,251GWh in 2025, representing a drop of approximately 15.7 per cent.
The decline occurred in a year when DisCos’ revenue rose from ₦1.66 trillion to ₦2.32 trillion.
Although revenue and electricity supply are influenced by several factors, including tariffs, collection efficiency, billing practices, inflation and the cost of energy purchased from the market, the divergence underscores the need for greater transparency in assessing the performance of distribution companies.
Higher revenue alone does not establish whether a utility is performing efficiently. Equally important are the quantity of electricity delivered, the reliability of supply, the condition of distribution infrastructure and the extent to which customers receive value for their payments.
Thirteen Years After Privatisation, Questions Remain
Nigeria’s electricity sector underwent a major restructuring in November 2013, when generation companies and 11 distribution companies were transferred to private investors.
The Federal Government retained control of the transmission segment, while the reorganisation established the framework for the Nigerian Electricity Supply Industry.
The privatisation programme was expected to improve operational efficiency, attract private investment, expand electricity supply and reduce the financial burden on the government.
More than a decade later, however, persistent supply shortages, infrastructure limitations, market debts and consumer dissatisfaction continue to raise questions about the pace of progress.
NERC data showed that the average available generation capacity of 27 power plants stood at approximately 7,527MW in 2016, while actual average generation was about 3,276MW.
By 2025, despite installed generation capacity exceeding 13,000MW, average available capacity had declined to approximately 5,398MW, while average generation rose to 4,475MW.
The figures highlight a longstanding challenge in the sector: installed capacity does not necessarily translate into electricity that can be generated consistently and delivered to consumers.
Power plants require reliable gas supplies, adequate maintenance, operational funding and functioning transmission infrastructure. Electricity generated must also pass through the transmission network and distribution systems before reaching homes and businesses.
Weaknesses at any point along this chain can undermine the performance of the entire industry.
The sector’s challenges therefore extend beyond the amount of money collected by DisCos. They also involve the availability of generation capacity, transmission constraints, distribution infrastructure, commercial discipline and the financial relationships among market participants.
The Rural Electrification Agency has estimated that approximately 85 million Nigerians still lack access to electricity, underlining the scale of the country’s electrification challenge.
Federal Government Turns to Bonds as Power Sector Debt Mounts
The financial difficulties confronting the electricity industry have also placed the Federal Government’s outstanding obligations to generation companies under renewed scrutiny.
According to NERC’s 2025 industry report, the Federal Government’s gross tariff subsidy obligation reached approximately ₦1.928 trillion during the year, representing 57.44 per cent of the total invoice issued by the Nigerian Bulk Electricity Trading Plc (NBET).
The amount translated to an average monthly subsidy obligation of approximately ₦160.69 billion.
The obligations were distributed across the four quarters, with ₦536.40 billion recorded in the first quarter, ₦514.36 billion in the second quarter, ₦458.76 billion in the third quarter and ₦418.79 billion in the fourth quarter.
The 2025 figure was slightly lower than the ₦1.949 trillion recorded in 2024.
Against this background, the government has pursued a debt-reduction programme aimed at settling verified outstanding obligations to electricity generation companies and improving liquidity across the market.
In September 2026, the government signed a ₦728.979 billion Series 2 bond under its ₦4 trillion Power Sector Debt Reduction Programme.
The transaction comprised ₦402 billion in cash bonds raised from the domestic capital market and ₦326.979 billion in non-cash bonds allocated to participating generation companies.
The initiative forms part of efforts to address legacy debts that have constrained the financial position of market participants.
The Managing Director and Chief Executive Officer of NBET, Akin Odeyemi, said the organisation had commenced settling participating generation companies and their associated gas suppliers following the successful issuance and signing of the bonds.
Odeyemi described the development as a significant step towards implementing the Presidential Power Sector Debt Reduction Programme under President Bola Ahmed Tinubu’s administration.
He explained that the settlement was being undertaken through a combination of cash and non-cash bonds in accordance with the approved framework.
The broader debt burden, estimated at approximately ₦6 trillion at the end of 2025, illustrates the financial pressure facing the industry.
However, settling accumulated debts will not, by itself, resolve the sector’s structural challenges.
The long-term impact will depend on whether the intervention improves payment discipline, strengthens the ability of generation companies to maintain their plants, supports reliable gas supplies and encourages sustainable investment across the electricity value chain.
There is also a need to ensure that new obligations do not accumulate faster than existing debts can be settled.
Power Supply Has Improved, Minister Insists
Despite the concerns surrounding the sector’s performance, the Minister of Power, Joseph Tegbe, has maintained that electricity supply has improved in recent months.
Tegbe acknowledged that some parts of the country continued to experience inadequate supply but said the government was working to address operational challenges.
According to the minister, operational records showed that electricity generation and transmission had exceeded 5,000MW over several weeks, compared with levels ranging from 3,700MW to 4,700MW before June.
He also cited a generation peak of 5,330MW during August and September.
“Our next task is to sustain these gains and translate them into more dependable supply at customer level,” the minister said.
He added that national generation figures could not fully represent the experiences of individual communities.
The minister identified three areas of focus: stabilising the electricity value chain, restoring market discipline and strengthening governance.
Among the interventions he highlighted was the restoration of the 375MW Alaoji open-cycle power plant to the national grid after three years offline.
He also cited upgrades to transmission infrastructure, including the commissioning of new transformers at Apapa, Ijora, Alausa and Lekki in Lagos.
According to him, the installations unlocked 672MW of transmission capacity.
A new 300MVA transformer at Katampe in Abuja was also energised, reportedly unlocking another 240MW of transmission capacity.
The government has also highlighted investments in solar energy and mini-grid infrastructure as part of its efforts to expand electricity access.
According to the minister, the completed electrification portfolio under the Rural Electrification Agency and its partners comprised 62 solar and mini-grid installations across 30 states.
The projects represented approximately 43.6MW of installed solar capacity and 41,735 new connections, with an estimated reach of more than 208,000 people.
While these interventions represent efforts to improve the system, consumers will ultimately judge their effectiveness by whether electricity becomes more reliable, accessible and affordable.
Improvements in generation and transmission capacity must translate into measurable gains at the distribution level, where households and businesses experience the consequences of inadequate supply.
‘Reform Remains Unfinished’ — Babalola
Special Adviser to the President on Power and Chairman of the Presidential Task Force on Power Sector Reset and Restoration, Dr Lanre Babalola, has acknowledged that Nigeria’s electricity reforms remain incomplete.
According to him, the country’s power challenge cannot be explained solely by insufficient generation capacity.
“Our deeper problem is that we have not yet built a system capable of consistently converting available capacity into reliable electricity, commercial value and sustainable investment,” Babalola said.
He argued that although the sector had undergone unbundling, privatisation and the establishment of a bulk electricity trader, the transition to the competitive market envisaged by the reforms had not been fully completed.
Babalola explained that NBET was established as an intermediary to support the market while participants developed the financial credibility required for direct electricity trading.
However, he warned that a temporary arrangement could become a structural constraint if the transition it was designed to facilitate never materialised.
“The objective cannot be to preserve the institutions of transition indefinitely. The objective must be to complete the transition,” he said.
His comments highlight the need to examine not only the performance of individual companies but also the wider market arrangements governing electricity trading, payment obligations and investment.
A sustainable electricity market requires clear commercial rules, credible enforcement, transparent pricing arrangements and mechanisms that enable participants to meet their financial obligations.
Without these conditions, financial interventions may provide temporary relief without resolving the underlying causes of recurring debt.
‘Nigerians Have Been Paying for Darkness’ — Fadipe
Reacting to the revenue figures, lawyer and Lead Consultant on the Power Sector at Sage Consulting, Bode Fadipe, questioned whether consumers were receiving adequate value for the money paid for electricity.
“What this data has just confirmed is that Nigerians have been paying for darkness,” Fadipe said.
He identified inadequate investment as one of the major factors limiting improvements in electricity supply.
Fadipe also pointed to NERC’s directive requiring DisCos to retain part of their revenue for investment, noting that the companies had protested against the order.
He called on the regulator to ensure compliance and establish clear timelines for improvements in service delivery.
According to him, regulatory oversight should extend beyond issuing directives to verifying whether distribution companies are making the investments required to improve their networks.
He advocated forensic audits of DisCos’ investments to establish whether funds earmarked for infrastructure development were being properly utilised.
He also called for closer collaboration among NERC and other market participants to address outstanding debts.
The concerns raise important questions about accountability in the distribution segment.
Where utilities collect substantial revenue but consumers continue to experience unreliable supply, regulators need credible evidence to establish the factors responsible for the gap.
Such an assessment should consider the volume of electricity allocated to each DisCo, the energy delivered to customers, technical and commercial losses, collection efficiency, infrastructure expenditure and compliance with service standards.
A transparent assessment would help distinguish challenges arising from insufficient electricity allocation from those linked to distribution network limitations or commercial inefficiencies.
Consumers Demand Stronger Protection
Consumer rights advocate and Executive Director of the Electricity Consumer Protection Advocacy Centre, Chief Princewill Okorie, also expressed concern about the relationship between revenue collection and the quality of service provided to customers.
Okorie said the decentralisation of electricity regulation under the new legal framework had brought regulatory responsibilities closer to consumers in the states.
However, he argued that enforcement of consumer protection provisions remained a major challenge.
He identified estimated billing, infrastructure charges and alleged non-compliance with regulatory directives among the issues confronting electricity users.
According to him, some communities have been compelled to contribute money towards transformers and other distribution infrastructure despite regulatory obligations concerning the responsibilities of distribution companies.
Okorie questioned the basis on which bills were generated and argued that claims about consumers’ failure to pay should be examined alongside the transparency and accuracy of billing practices.
“The appropriate question to ask is: how did they generate these bills? Were they justifiably, accountably and transparently generated?” he said.
He called for stronger enforcement of electricity regulations, improved consumer education and better protection for residents, particularly in rural communities.
He also advocated a dedicated mechanism for investigating alleged electricity-related violations and questioned the adequacy of consumer protection arrangements within the Federal Ministry of Power.
Okorie further argued that electricity users should not be left without effective channels for challenging disputed bills,
