Nigeria’s electricity distribution companies (DisCos) failed to bill for about N568.70 billion worth of electricity in the first eight months of the year, exposing persistent weaknesses in revenue collection, metering and the management of the country’s fragile power market.
BusinessDay’s analysis of the Nigerian Electricity Regulatory Commission (NERC) January to August report showed that the 11 analysed DisCos received electricity worth N2.58 trillion from electricity generation companies (GenCos) within the period, but billed customers only N2.01 trillion, leaving a difference of N568.70 billion.
The figures indicated that the companies billed for approximately 78.05 percent of the value of electricity received during the period.
It was observed that in the first quarter, the companies received electricity worth N955.19 billion and billed N756.93 billion, representing a billing efficiency of 79.24 percent.
Between April and June, electricity received stood at N946.57 billion, while the amount billed declined to N744.67 billion, bringing billing efficiency down to 78.67 percent.
Further analysis showed that in July and August, electricity distribution companies received energy worth N680.43 billion and billed for only N511.89 billion, representing a billing efficiency of 75.23 percent.
Overall, billing efficiency declined by approximately four percentage points between the first quarter and July-August, raising concerns about the distribution companies’ ability to account for electricity supplied to their networks.
Lanre Elatuyi, an electricity market analyst, said NERC must impose stiffer penalties on DisCos that fail to meet industry revenue benchmarks to prevent continued underperformance.
“We need stiffer punishment for DisCos who are below certain industry thresholds,” Elatuyi said.
He noted that the widening gap also threatens efforts to attract private capital into electricity distribution, where investors are expected to improve infrastructure, expand metering and strengthen commercial operations.
Read also: Acquisition costs, debt squeeze oil firms’ N525bn profit growth
The billing shortfall comes amid persistent financial pressures across the electricity market, with distribution companies remitting less to generation companies than the value of invoices issued for electricity supplied.
Although DisCos are expected to pay for the electricity supplied to their networks, the amount collected from customers frequently falls short of the cost of power purchased from GenCos.
In the first quarter of the year, GenCos sent a cumulative amount of N647.72 billion in invoices to the 11 DisCos. However, they only remitted N312.48 billion.
“In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff subsidies,” the regulator said.
Between April and June, BusinessDay gathered that DisCos owed GenCos almost half of the invoices sent. They remitted only N 306.62 billion, after owing N689.72 billion for the electricity they received in the period.
Tariff reform aims to let customers pay what supply actually costs, so that the state can step back. But a tariff only raises revenue on energy that is metered, billed and collected.
Why billing falls short
According to NERC, the financial loss stalling growth in the power sector is caused by energy theft, poor energy accounting, and the inability of DisCos to bill energy at the weighted average allowed tariff.
“The key drivers of billing losses are technical – energy loss along the distribution network and commercial – DisCos’ inability to account for 100 percent of the energy supplied,” NERC said in a note.
The commission explained that commercial losses could result from customer theft, including meter bypasses, as well as factors under the control of distribution companies, such as inadequate customer enumeration and inaccurate meters.
It was gathered that the biggest naira losses came from the larger networks.
Abuja DisCo billed its customers N346.79 billion within the eight months, against N428.63 billion worth of energy received from generation companies, leaving more than N80 billion in unbilled electricity on the table.
With N272.89 billion worth of electricity received, Benin DisCo billed for only N156.49 billion, reflecting a shortfall of N116.4 billion.
The anomaly is also seen within the camp of smaller electricity networks. Yola DisCo billed N35.83 billion against electricity worth almost double what it received at N57.16 billion.
Similarly, Kano DisCo received N141.69 billion in electricity but billed customers only N119.99 billion, losing N21.7 billion in unbilled electricity.
Gaps in meter deployment
The regulator said the proven fixes are accurate customer enumeration and meters for end users. Although progress has grown over the years, some communities remain unmetered.
Findings from NERC reports show that over one million meters were installed between January and August.
Between January and March, 357,495 customers were metered. By the second quarter, it slipped to 350,270 customers. And by July and August, 301,726 grid customers were metered.
During the first quarter, 129,224 metres, or 36.14 percent were installed under the DISREP framework. Another 118,681 metres were installed under the MAP framework, 97,992 metres were installed under the MAF framework, 10,589 metres were financed by DisCos, and 1,009 metres by vendors.
Of the second-quarter installations, 205,486, or 58.67 percent, came under the DISREP framework. Another 123,833 were installed under the MAP framework, 13,028 under MAF, 7,643 financed by DisCos and 280 financed by vendors.
The national metering rate stands at 61.51 percent, which leaves millions of households and businesses on estimated bills.
To protect unmetered customers, NERC has continued to issue monthly energy caps for every feeder in states that have not yet taken over regulation of their electricity markets.
Related News
Feyishola Jaiyesimi is a writer and storyteller. She currently writes for the energy desk at BusinessDay with a focus on renewable energy and environmental issues. She began her journalism career as an agricultural reporter and now covers the energy sector, including oil, gas, electricity, environment, and renewables. She has been selected for professional training by the US Consulate, Lagos. She is a 2025 Dataphyte Biodiversity Reporting Fellow. Feyishola holds a bachelor’s degree in Zoology and Environmental Biology from Ekiti State University.
Source: