DisCos leave N128.4bn electricity revenue gap as power market

Nigeria’s electricity distribution companies left N128.41 billion of electricity value unrecovered in July, exposing a widening cash-flow weakness in the power market that threatens the ability of operators to pay for generation, invest in networks and deliver more reliable electricity to consumers.

The 11 DisCos received electricity valued at N333.94 billion during the month but billed customers for only N250.79 billion, leaving N83.15 billion unbilled. Of the amount billed, another N45.26 billion remained unpaid, leaving the companies with actual collections of N205.53 billion.

The figures, contained in the July 2026 commercial performance factsheet of the Nigerian Electricity Regulatory Commission (NERC), show that the sector converted only 61.55 per cent of the value of electricity received into cash collections during the month.

The weakness is important because electricity is not a conventional retail product in Nigeria: when DisCos fail to recover sufficient revenue from customers, the resulting liquidity shortfall can move backwards through the entire electricity value chain, affecting DisCos’ ability to settle obligations to the Nigerian Bulk Electricity Trading Plc, generation companies and other market participants.

NERC put aggregate billing efficiency at 75.10 per cent and collection efficiency at 81.95 per cent in July, while overall revenue recovery efficiency stood at 74.91 per cent. The regulator also reported that the average allowed tariff was N130.15 per kilowatt-hour, compared with an actual average collection of just N97.50, leaving a gap of N32.65 per kilowatt-hour.

The performance varied sharply across the country. Eko recorded the strongest recovery efficiency at 94.67 per cent, followed by Port Harcourt at 84.95 per cent, while Kaduna and Jos posted much weaker recovery rates of 39.71 per cent and 46.27 per cent respectively.

The collection problem is particularly significant as the Federal Government holds off on an immediate electricity tariff increase and focuses instead on improving supply, metering and market efficiency. Higher tariffs cannot by themselves fix a sector that struggles to convert billed electricity into cash.

For consumers and businesses, the consequences are broader than unpaid electricity bills. Persistent liquidity weakness limits investment in distribution infrastructure, reinforces dependence on diesel and petrol generators and increases the cost of running factories, shops, offices and other enterprises.

NERC’s data also point to a second problem: the sector is failing to monetise a substantial portion of the electricity already delivered to DisCos. That means the challenge is no longer simply generating more power, but ensuring that electricity supplied to the market is accurately metered, billed and paid for.

The latest figures therefore expose the central economic problem facing Nigeria’s electricity market. Until the gap between power delivered, electricity billed and cash collected is substantially narrowed, additional generation capacity alone may not produce a financially sustainable electricity industry or the reliable power needed to lower costs across the wider economy.