DisCos’ Revenue Surges 666% to N2.32trn as Power Supply Stagnates, Debt Hits N700bn – Supply rises just 4.8% in eight years as available generation capacity falls 41%

FG turns to bonds to tackle N6trn power sector debt; consumers demand stronger protection

BY FRONTLINE REPORTERS

Revenue collected by Nigeria’s electricity Distribution Companies (DisCos) surged by about 450 per cent in eight years, from N218.16 billion in the first half of 2018 to N1.2 trillion in the corresponding period of 2026, despite marginal growth in electricity supply and a sharp decline in available generation capacity.

Data from the Nigerian Electricity Regulatory Commission (NERC), analysed by Frontline Reporters, showed that electricity supply increased by just 4.8 per cent, from 16,861 gigawatt-hours (GWh) in the first half of 2018 to 17,668GWh in the first half of 2026. Average available generation capacity, however, fell by 41 per cent, from 7,565.5 megawatts (MW) to 4,456MW over the same period. DisCos also recorded a collection shortfall of N700.53 billion in the first half of 2026, receiving energy worth about N1.9 trillion from the market but collecting only N1.2 trillion from consumers.

On an annual basis, DisCos’ revenue rose by approximately 666 per cent, from N302.93 billion in 2016 to N2.32 trillion in 2025. During the same period, annual electricity supply increased by 31.6 per cent, from 23,742GWh to 31,251GWh, while average daily generation rose from 3,276MW to 4,475MW. The widening gap between revenue growth and electricity supply has renewed concerns about service delivery and the benefits consumers have received 13 years after the privatisation of the power sector.

DisCos’ annual collections rose from N370.46 billion in 2017 to N448.75 billion in 2019, N542.73 billion in 2020, N775.34 billion in 2021 and N841.81 billion in 2022. Revenue subsequently climbed to N1.08 trillion in 2023, N1.66 trillion in 2024 and N2.32 trillion in 2025. Electricity supply, however, declined from 37,093.70GWh in 2024 to 31,251GWh in 2025, a drop of about 15.7 per cent, even as revenue increased by nearly 40 per cent.

The figures have intensified scrutiny of the electricity market, particularly as the Rural Electrification Agency (REA) estimates that about 85 million Nigerians still lack access to electricity. Consumers and industry experts have questioned whether the revenue growth recorded by DisCos has translated into corresponding improvements in supply, metering, distribution infrastructure and customer service.

13 years after privatisation, sector struggles

Nigeria’s power sector was largely privatised in November 2013, when generation companies and 11 distribution companies were transferred to private investors, while the Federal Government retained control of transmission. The reforms were intended to improve efficiency, attract investment and establish a commercially sustainable electricity market.

However, more than a decade later, the sector continues to grapple with inadequate generation, transmission constraints, liquidity challenges and poor distribution infrastructure, despite more than N10 trillion in public investment in the industry.

NERC data showed that in 2016, three years after privatisation, the average available generation capacity of 27 power plants stood at 7,527MW, while actual average generation was 3,276MW. By 2025, despite installed generation capacity exceeding 13,000MW, average available capacity had fallen by 28.3 per cent to 5,398MW, while average generation increased to 4,475MW.

The figures highlight the sector’s persistent inability to convert installed capacity into dependable electricity supply. Industry stakeholders have also pointed to gas supply constraints, inadequate infrastructure, accumulated market debts and weaknesses in commercial arrangements as major obstacles to improved performance.

FG turns to bonds to tackle N6trn debt

With the Federal Government’s outstanding obligations to power generation companies reportedly reaching about N6 trillion by the end of 2025, the government has turned to the capital market to address legacy debts and ease liquidity pressures across the electricity value chain.

NERC’s 2025 industry report put the Federal Government’s gross tariff subsidy obligation at N1.928 trillion for the year, representing 57.44 per cent of the total Nigerian Bulk Electricity Trading Plc (NBET) invoice. The obligation averaged N160.69 billion monthly, comprising N536.40 billion in the first quarter, N514.36 billion in the second, N458.76 billion in the third and N418.79 billion in the fourth quarter. The 2025 figure was slightly below the N1.949 trillion recorded in 2024.

In September 2026, the government signed a N728.979 billion Series 2 bond under its N4 trillion Power Sector Debt Reduction Programme to settle verified legacy debts owed to generation companies and restore liquidity to the market. The transaction comprised N402 billion in cash bonds raised from the domestic capital market and N326.979 billion in non-cash bonds allocated to participating generation companies.

The Managing Director and Chief Executive Officer of NBET, Akin Odeyemi, said the company had commenced settling participating generation companies and their associated gas suppliers following the successful issuance and signing of the bonds.

He described the development as a significant step in implementing the Presidential Power Sector Debt Reduction Programme under President Bola Tinubu’s Renewed Hope Agenda.

According to him, the settlement is being carried out through a combination of N402 billion in cash bonds and N326.979 billion in non-cash bonds, in line with the approved framework.

The debt reduction initiative is expected to ease financial pressures on generation companies and gas suppliers. However, stakeholders say sustained improvements will depend on addressing the structural weaknesses responsible for recurring market debts, including tariff shortfalls, inadequate revenue recovery and the failure to translate payments into reliable electricity supply.

Power supply has improved, minister insists

Despite concerns over the sector’s performance, the Minister of Power, Joseph Tegbe, has maintained that electricity supply has improved over the past three months, although some parts of the country continue to experience inadequate supply.

Tegbe said operational records showed that generation and transmission had exceeded 5,000MW over several weeks, compared with the 3,700MW to 4,700MW range recorded before June. He added that generation peaked at 5,330MW during August and September.

“Our next task is to sustain these gains and translate them into more dependable supply at customer level. We are aware that a national peak alone cannot describe the experience of every community,” he said.

The minister said the government’s response was built around three priorities: stabilising the electricity value chain, restoring market discipline and strengthening governance.

He cited the restoration of the 375MW Alaoji open-cycle power plant to the national grid after three years offline, as well as upgrades to substations and transformers in Lagos and Abuja. According to him, new transformers commissioned at Apapa, Ijora, Alausa and Lekki unlocked 672MW of transmission capacity, while a new 300MVA transformer at Katampe, Abuja, added another 240MW.

Tegbe also highlighted the government’s efforts to diversify the country’s energy mix through renewable energy. He said the completed electrification portfolio under the REA and its partners included 62 solar and mini-grid installations across 30 states, representing approximately 43.6MW of installed solar capacity and 41,735 new connections, with an estimated reach of more than 208,000 people.

Reform remains unfinished — Babalola

The Special Adviser to the President on Power and Chairman of the Presidential Task Force on Power Sector Reset and Restoration, Dr Lanre Babalola, said Nigeria’s electricity reforms remained incomplete, arguing that the challenge went beyond a shortage of 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,” he said.

Babalola noted that the unbundling of the former vertically integrated electricity utility, the privatisation of generation and distribution assets, and the establishment of a bulk trader were intended to facilitate a transition to a competitive electricity market.

However, he said the transition had not been completed, leaving the industry dependent on a market structure originally conceived as an interim arrangement.

“The single-buyer model was conceived as a transitional mechanism. NBET provided a credible intermediary while market participants developed the creditworthiness required for direct contracting,” he said.

He added that retaining the transitional structure indefinitely could become a constraint on market development, stressing that the objective should be to complete the transition to a competitive electricity market rather than preserve interim arrangements permanently.

Nigerians have been paying for darkness — Fadipe

Reacting to the figures, lawyer and Lead Consultant on Power Sector at Sage Consulting, Bode Fadipe, said the widening gap between revenue growth and electricity supply raised serious questions about value for money.

“What this data has just confirmed is that Nigerians have been paying for darkness,” he said.

Fadipe identified inadequate investment as a major factor limiting improvements in electricity supply. He said the figures reinforced the need for DisCos to comply with NERC’s directive requiring them to retain part of their revenue for investment in distribution infrastructure.

He noted that the companies had protested the directive but commended the regulator for insisting on its implementation. However, he said the extent of compliance needed to be established through effective monitoring and independent verification.

“NERC must dutifully enforce its order on investment. NERC must also set timelines for certain levels of improvement,” he said.

Fadipe called for forensic audits of DisCos’ investments to establish whether funds earmarked for infrastructure development were being properly utilised. He also urged the regulator to work with market participants to address outstanding debts and strengthen revenue recovery.

Consumers demand stronger protection

The Executive Director of the Electricity Consumer Protection Advocacy Centre, Chief Princewill Okorie, said the increase in DisCos’ revenue raised questions about the quality of services delivered to electricity consumers.

Okorie said the decentralisation of electricity regulation under the new legal framework had brought oversight closer to consumers at the state level. However, he argued that weak enforcement continued to expose consumers to estimated billing, disputed charges and alleged non-compliance with regulatory directives.

He alleged that residents in some communities were compelled to contribute money towards transformers and other distribution infrastructure, despite concerns about the responsibilities of DisCos under the regulatory framework.

While poor payment by consumers is frequently cited as a factor affecting service delivery, Okorie said the accuracy, transparency and justification of electricity bills also required scrutiny.

“The appropriate question to ask is: how did they generate these bills? Were they justifiably, accountably and transparently generated?” he asked.

He called for stronger enforcement of electricity regulations, improved consumer awareness and a dedicated mechanism for investigating alleged violations in the sector. He also questioned the absence of a dedicated consumer protection unit in the Federal Ministry of Power and urged consumer protection agencies to play a more active role in educating electricity users about their rights.

Okorie further challenged claims about the Federal Government’s subsidy obligations, arguing that consumers in some communities bear the cost of distribution infrastructure, including poles, cables and transformers, without reimbursement from the utilities.

The competing concerns over rising revenue, declining available capacity, mounting debts and persistent consumer complaints have placed renewed focus on the effectiveness of Nigeria’s power sector reforms. For consumers, the central issue remains whether the financial resources flowing through the electricity market will translate into more reliable supply, transparent billing and better service delivery.