Stopping The Bleeding: NERC’s Battle Against Revenue Losses In Nigeria’s Power Sector

By Clement Nwoji, Abuja 

Nigeria’s quest for reliable electricity continues to be undermined by a persistent challenge that extends far beyond power generation, transmission and supply shortages. The big elephant in the room remains massive revenue losses across the electricity value chain. 

Latest data from the Nigerian Electricity Regulatory Commission (NERC) show that the Nigerian Electricity Supply Industry (NESI) lost nearly ₦270 billion in revenue in the first half of 2026 alone, highlighting a financial crisis that threatens investments, infrastructure expansion and improved service delivery. The figures contained in NERC’s first and second quarter reports reveal that Aggregate Technical, Commercial and Collection (ATC&C) losses remained alarmingly high at 37.44 per cent in Q1 and 36.23 per cent in Q2, more than double the regulatory benchmark of 16.92 per cent. These losses translated into estimated revenue shortfalls of ₦140.64 billion in Q1 and ₦129.07 billion in Q2. 

At a time when Nigeria faces growing electricity demand driven by a population estimated at 250 million people, the scale of the losses raises concerns about the long-term sustainability of the power sector. The missing revenue represents funds that could have been invested in upgrading ageing networks, replacing faulty transformers, expanding metering programmes and improving service reliability nationwide. 

The consequences ripple through every segment of the electricity value chain. Generation companies (GenCos) require adequate revenue to maintain plants and secure fuel and gas supplies, while the Transmission Company of Nigeria (TCN) depends on continuous investments to strengthen grid infrastructure. Distribution companies (DisCos), which serve as the industry’s revenue collection point, need sufficient cash flow to modernise networks and improve customer service. This implies that when revenue recovery falls short, the entire system suffers. 

The reports show that while collection efficiency improved modestly over the period, significant gaps remain. In Q1, DisCos billed ₦756.93 billion and collected ₦597.56 billion, while in Q2 they received electricity valued at ₦946.57 billion but billed only ₦744.67 billion. Millions of naira worth of electricity supplied to consumers never translated into recoverable revenue because of technical losses, energy theft, inaccurate customer enumeration, billing inefficiencies and non-payment. 

The implications extend beyond utility balance sheets. Reduced revenue recovery limits the ability of operators to invest in network expansion and service improvements. As infrastructure deteriorates and investment slows, consumers face prolonged outages, poor voltage quality and delayed responses to faults. Businesses, already burdened by unreliable supply, continue to rely on expensive self-generation, increasing production costs and reducing economic competitiveness. 

Revenue leakages also contribute to the sector’s dependence on government support. NERC disclosed in its Q2 report that the Federal Government assumed responsibility for ₦321.26 billion of generation costs through electricity subsidies. While subsidies cushion consumers from tariff increases, they expose public finances to significant obligations that may become increasingly difficult to sustain. 

Dr. Musiliu Oseni, NERC Chairman

Recognising the urgency of the situation, NERC under the leadership of the Chairman, Dr. Musiliu Oseni, has intensified efforts to close revenue gaps and strengthen market discipline. One of the Commission’s most significant interventions is accelerating nationwide metering. More than 357,000 meters were installed during Q1 2026 and a further 350,270 in Q2, pushing the national metering rate above 61 per cent. The initiative is expected to reduce estimated billing, improve customer confidence and enhance revenue collection. 

Beyond metering, NERC has expanded regulatory oversight through new orders, market monitoring mechanisms and enforcement measures aimed at improving operational efficiency. The Commission has also promoted consumer protection through town hall engagements, complaint resolution platforms and energy caps for unmetered customers. These initiatives are designed to strengthen trust between customers and service providers while improving compliance across the industry. 

NERC has equally focused on strengthening market liquidity. Improved remittance performance by DisCos to market operators and bulk traders signals growing accountability and supports the financial stability of upstream market participants. The licensing of captive power plants, mini-grids and other electricity projects is also helping to diversify supply options and expand access to electricity. 

However, industry analysts note that metering alone will not solve the problem. Sustainable improvement will require a combination of aggressive anti-energy theft measures, accurate customer enumeration, stronger billing systems, network modernisation and better collection practices. Addressing transmission losses and improving operational efficiencies across the value chain will also be critical. 

The message emerging from NERC’s first-half 2026 reports is clear that the Nigeria’s electricity crisis is as much a revenue crisis as it is a supply challenge. Every naira lost through inefficiency reduces the industry’s capacity to invest, expand and deliver reliable electricity. Conversely, every improvement in revenue recovery brings Nigeria closer to a financially sustainable electricity market capable of powering economic growth and improving the quality of life for millions of citizens. 

As NERC intensifies reforms and stakeholders work to plug persistent leakages, the success of these efforts will determine whether the sector can finally break the cycle of underinvestment, poor service and financial instability that has long constrained Nigeria’s power industry.