DisCos Miss Loss Targets as FG Spends ₦321bn on Electricity Subsidy

All 11 electricity distribution companies (DisCos) in Nigeria failed to meet their loss-reduction targets in the second quarter of 2026, as the Federal Government spent ₦321.26 billion to subsidise electricity generation, according to the Nigerian Electricity Regulatory Commission (NERC).

The DisCos recorded a combined technical, commercial and collection (ATC&C) loss of 36.23 per cent during the quarter, more than twice the 16.92 per cent target set under the 2026 Multi-Year Tariff Order (MYTO). The performance resulted in an estimated ₦129.07 billion in unrecovered revenue.

NERC disclosed this in its Second Quarter 2026 Report, noting that aggregate losses improved by 1.21 percentage points from 37.44 per cent recorded in the first quarter. However, none of the 11 DisCos achieved their respective regulatory targets.

“All the DisCos failed to meet their ATC&C targets during the quarter,” the regulator stated.

Kaduna DisCo recorded the highest ATC&C loss at 67.70 per cent, against a target of 18.18 per cent, while Kano DisCo recorded the sharpest deterioration, with its losses increasing by 15.35 percentage points to 60.43 per cent.

Ibadan DisCo recorded the strongest improvement, reducing its losses by 8.07 percentage points to 40.03 per cent.

The poor loss performance came amid continued financial pressure on Nigeria’s electricity market, with the Federal Government absorbing ₦321.26 billion, equivalent to 49.60 per cent of the ₦647.72 billion generation invoice during the quarter.

NERC attributed the subsidy to the continued freezing of end-user electricity tariffs at July 2024 rates.

Meanwhile, DisCos collected ₦603.64 billion out of ₦744.67 billion billed to customers during the quarter, representing a collection efficiency of 81.06 per cent. This was an improvement from the 78.95 per cent recorded in the first quarter.

Billing efficiency, however, declined marginally from 79.24 per cent to 78.67 per cent.

On market remittances, the DisCos paid ₦385.44 billion of the ₦410.38 billion invoiced by the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator, leaving an outstanding balance of ₦24.94 billion.

Kaduna DisCo paid only 50.10 per cent of its NBET invoice, while Jos and Kano DisCos recorded payment performances of 62.39 per cent and 66.51 per cent respectively.

The NERC report also showed that grid electricity generation declined by 1.11 per cent to 8,784.93 gigawatt-hours (GWh) during the quarter, while average available generation capacity stood at 4,454.17 megawatts.

Plant availability was 32.69 per cent of installed capacity, leaving 67.31 per cent unavailable for dispatch.

Hydropower generation fell by 6.92 per cent, with NERC attributing the decline partly to unit shutdowns at Kainji for repairs and annual maintenance.

Transmission losses averaged 8.44 per cent, exceeding the 7.00 per cent regulatory target and resulting in an estimated ₦13.54 billion in losses.

The national grid recorded no system disturbance during the quarter. However, NERC reported that average lower and upper voltages of 301.63kV and 349.94kV were outside the range prescribed by the grid code.

Meter installations also fell by 17.97 per cent to 350,270 during the quarter, leaving Nigeria’s national metering rate at 61.51 per cent.

The regulator further reported 36 accidents across the electricity sector during the period, resulting in 20 fatalities. NERC said investigations had commenced into all the reported incidents.