DisCos Face Revenue Slump Despite Efficiency Gains

Nigeria’s electricity distribution companies are learning a hard lesson in diminishing returns. Data from the Nigerian Electricity Regulatory Commission shows that improved operational efficiency failed to stop a revenue slide in February. The sector received 17.64% more energy by value than in January, yet total billings dropped by nearly 10%. This gap suggests that while the companies are better at measuring what they sell, they are selling less of it to people who can pay.

Cash collections fell by over N8bn during the month. The total revenue of N196.68bn represents a 3.94% decline from the start of the year. This dip occurred despite collection efficiency rising to 81.17%. Distribution firms are squeezing more money out of the bills they issue, but the total volume of those bills is shrinking. It is a classic case of running faster on the spot.

The regulator notes a persistent gap between what power costs and what consumers pay. The allowed average tariff sits at N124.30 per kilowatt-hour, but the actual collection averages just N100.27. This shortfall keeps the industry in a state of permanent insolvency. The system relies on subsidies or debt to bridge the divide. Until the math adds up, the lights will remain flickery for most Nigerians.

Performance across the country remains a tale of two sectors. Eko DisCo is the star pupil, achieving a recovery efficiency of 100.67%. It managed to collect more than its benchmark, proving that urban markets can be profitable. Abuja and Kano also showed strong billing metrics. These pockets of success show that the private model can work when the customer base is dense and formal.

The northern fringes tell a much darker story. Kaduna DisCo recorded a collection efficiency of just 49.27%. Less than half of the power sent to the region results in actual cash. Yola is not much better. These utilities struggle with vast distances, poverty, and perhaps a lack of will to enforce payments. The national average hides these deep regional disparities.

Investment in 2025 was supposed to fix these leaks. The regulator has set lower loss targets for this year to reflect those upgrades. However, the February data show that technology alone cannot solve a liquidity crisis. Meters help count the units, but they do not provide the money to pay for them. The industry needs a broader economic recovery to make these efficiency gains meaningful.