A report released by the Nigerian Electricity Regulatory Commission (NERC) has revealed that Nigeria’s 11 electricity distribution companies (DisCos) collected a total of N509.8 billion out of the N658.40 billion billed to customers in the fourth quarter of 2024. This translates to a collection efficiency of 77.44%, marking an improvement from the previous quarter.
In comparison, DisCos collected N466.6 billion out of N626 billion billed in the third quarter, representing a 74.55% collection efficiency. The report noted that the 77.44% recorded in Q4 2024 reflects an increase of 2.89 percentage points (pp) over the Q3 performance.
Eko and Ikeja DisCos emerged as the best-performing electricity distributors, recording the highest collection efficiencies of 90.00% and 82.63%, respectively. Conversely, Jos DisCo posted the lowest collection efficiency at 49.68%, struggling significantly in revenue recovery from customers.
Performance Variations Across DisCos
The NERC report highlighted that eight DisCos improved their collection efficiency between Q3 and Q4 2024, with Yola DisCo leading the improvement with a remarkable increase of 13.93 percentage points, followed closely by Kano DisCo with a 9.88 percentage-point rise. However, three DisCos recorded declines in collection efficiency, with Jos DisCo dropping by 3.61 percentage points and Abuja DisCo experiencing a decline of 3.39 percentage points.
Rising Government Subsidy on Electricity
Despite the improved revenue collection, the report emphasized that electricity tariffs remain below cost-reflective levels, forcing the federal government to shoulder a significant subsidy burden. In Q4 2024, the federal government incurred a subsidy obligation of N471.6 billion, covering 56.65% of the total invoice issued by the Nigerian Bulk Electricity Trading Plc (NBET).
This marked an increase of N7.5 billion from the N464.1 billion subsidy obligation recorded in Q3 2024, when the government covered 54.71% of the total NBET invoice. The report attributed this growing subsidy obligation to the federal government’s decision to maintain a freeze on customer tariffs, despite rising cost-reflective tariffs during the period.
Declining Power Generation on the National Grid
The report further noted a decline in power generation on the national grid. The average hourly electricity generation in Q4 2024 stood at 4,207.41 megawatt-hours per hour (MWh/h), translating to a total power generation of 9,289.95 gigawatt-hours (GWh). This represented a 1.70% decline compared to Q3 2024, where the hourly generation was 4,280.24 MWh/h and total generation reached 9,450.76 GWh.
Implications for Nigeria’s Power Sector
The findings underscore the persistent challenges in Nigeria’s electricity sector, including the burden of government subsidies, inefficient collection by some DisCos, and declining power generation. The increase in revenue collection efficiency in Q4 2024 suggests some progress in reducing financial losses, but the shortfall in cost-reflective tariffs remains a pressing issue.
Unless fundamental reforms are implemented—such as tariff adjustments, improved metering, and enhanced power generation capacity—Nigeria’s electricity sector may continue to face financial sustainability challenges. Industry stakeholders and policymakers will need to address these issues to ensure long-term stability and efficiency in power distribution across the country.
Source: The Peoples’ Insight
About the Author
