Nigeria’s electricity distribution companies, commonly referred to as Discos, have collectively generated an impressive N3.95 trillion in revenue between 2019 and the first quarter of 2024, according to data from the National Bureau of Statistics (NBS). The data highlights a consistent increase in revenue over this five-year period, with the Discos earning N482.6 billion in 2019, N526.8 billion in 2020, N761.2 billion in 2021, N828.1 billion in 2022, N1.07 trillion in 2023, and N291.6 billion in the first quarter of 2024.
Experts attribute this steady growth to several factors, including ongoing tariff adjustments aimed at achieving cost-reflective pricing. These adjustments have enabled the Discos to better align their revenues with the actual costs of providing electricity. Additionally, the National Mass Metering Programme has played a crucial role by increasing the number of metered customers, thereby reducing the reliance on estimated billing and enhancing the accuracy of revenue collection.
The programme has also contributed to reducing the Aggregate Technical, Commercial, and Collection (ATC&C) losses that have long plagued the power sector. Enhanced regulatory oversight, coupled with the adoption of modern technology in billing and collection processes, has further streamlined operations, minimised revenue leakages, and improved overall efficiency.
Despite these positive trends, the Discos continue to face significant challenges, including high levels of unpaid bills, electricity theft, infrastructure deficits, and ongoing energy losses. These issues have hindered the Discos’ ability to fully capitalise on the potential of Nigeria’s electricity market.
Kunle Olubiyo, President of the Nigeria Consumer Protection Network, has expressed concern over the Discos’ efficiency, calling for urgent reforms. In a recent interview, he criticised the Discos for failing to meet their pre-privatisation commitments to meter customers, despite the improved collection and billing efficiencies. “We cannot score the Discos more than five per cent,” Olubiyo remarked, highlighting the companies’ inadequate complaint resolution systems and overall poor performance.
Olubiyo also raised concerns about the implementation of the Federal Government’s National Mass Metering Programme, accusing some meter vendors and Discos of conspiring to misrepresent the number of customers who have been metered. He pointed out that the programme’s requirement to attach GPS coordinates to every metered point has not been consistently followed, further questioning the effectiveness of the Discos’ operations.
Reflecting on the power sector’s performance since privatisation, Olubiyo lamented the stagnation in electricity generation. He noted that Nigeria’s peak grid generation has remained relatively unchanged since 2013, failing to surpass 6,000 megawatts. He described this situation as “a decline or backward growth, progressing in error.”
Despite these challenges, Olubiyo welcomed recent developments in the sector, such as the licensing of companies like MTN and Honeywell to engage in Nigeria’s bulk electricity trading or captive generation. He argued that off-grid generation and independent power plants are crucial steps towards stabilising power supply, particularly for industrial areas.
In related developments, the Transmission Company of Nigeria (TCN), a Federal Government-owned entity responsible for transmitting electricity from power generation companies to distribution firms, recently disclosed that it is grappling with significant funding shortfalls. TCN’s Managing Director, Abdulaziz Sule, revealed that the company faces a funding gap of N637.37 billion, out of a total required amount of N1.79 trillion, which has stalled the completion of 129 critical projects. Sule appealed to the National Assembly for intervention to address these challenges and ensure the timely completion of these projects.
Meanwhile, Minister of Power, Adebayo Adelabu, recently revealed that the cost of generating one kilowatt-hour of electricity in Nigeria is N120. During an oversight visit by members of the House of Representatives, Adelabu explained that this cost contributes to the Federal Government’s significant expenditure on electricity subsidies. He noted that the cost does not include additional charges borne by power utilities within the Nigerian Electricity Supply Industry.
To address the inefficiencies in electricity production, Adelabu announced that the Federal Government is considering the introduction of a differential tariff system during off-peak periods. This system would apply different rates based on usage patterns and demand levels, with the aim of stimulating electricity demand and enhancing energy access across Nigeria.
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Adelabu also highlighted the importance of restoring trust and confidence in the national grid. He pointed out that many bulk electricity consumers, particularly industries, have shifted to using their own captive power plants due to past issues with grid reliability. However, he noted that the costs associated with captive power generation are significantly higher compared to grid electricity. The Minister emphasised that by improving grid stability and reliability, the government aims to encourage these bulk users to reconnect to the grid for a more affordable and dependable power source.
