NERC reports higher billing and collection efficiency despite frozen tariffs and rising generation costs
Electricity Distribution Companies (DisCos) recorded noticeable operational improvements in the third quarter of 2025, with tariff collection efficiency rising to 80.7 per cent, according to the latest industry report released by the Nigerian Electricity Regulatory Commission (NERC).
The increase represents a 4.63 percentage-point improvement compared to the previous quarter and signals gradual progress in revenue recovery within the power sector, despite the continued challenge of non–cost-reflective electricity tariffs.
NERC’s Q3 report revealed that DisCos collected ₦570.21 billion out of the ₦706.61 billion billed to electricity consumers between July and September 2025. However, the regulator noted that government intervention remains crucial to sustaining the sector.
According to the report, the Federal Government spent ₦458.75 billion on electricity subsidies during the quarter, accounting for 58.63 per cent of total invoices issued by Generation Companies (GenCos). Although significant, this figure represents a ₦55.59 billion reduction, or 10.81 per cent, compared to the ₦514.35 billion subsidy recorded in the second quarter.
NERC attributed the persistent subsidy burden to the decision to retain certain end-user tariffs at July 2024 levels, even as generation costs continued to rise. This, it said, occurred despite the introduction of the Band ‘A’ tariff regime.
The report showed that the total value of energy offtake by DisCos stood at ₦854.53 billion in Q3. Billing efficiency improved marginally to 82.69 per cent, up from 81.61 per cent in the previous quarter, though the sector still recorded ₦147.92 billion in cumulative billing losses.
NERC stressed that timely settlement of upstream market obligations remains essential to maintaining power generation and transmission capacity. It explained that the existing waterfall payment structure places pressure on DisCos to improve collections, as many of their allowed revenues rank below mandatory market obligations.
“In the absence of cost-reflective tariffs, the Federal Government covers the shortfall between actual costs and approved tariffs through subsidies,” the commission stated, adding that the subsidy is applied to generation costs payable by DisCos to the Nigerian Bulk Electricity Trading Plc (NBET) under the Disco Remittance Obligation framework.
The regulator explained that the reduction in subsidy spending during the quarter was driven by a 6.08 per cent decline in energy offtake by DisCos and a 0.98 per cent drop in average generation cost per kilowatt-hour, while consumer tariffs remained unchanged.
On bilateral market transactions, NERC disclosed that international customers remitted just $7.13 million out of $18.69 million invoiced, representing a 38.09 per cent remittance rate. In contrast, domestic bilateral customers paid ₦3.19 billion out of ₦3.64 billion billed, achieving a stronger 87.61 per cent remittance performance.
The report further indicated that while DisCos received 7,348.95 gigawatt-hours (GWh) of electricity during the quarter, only 6,158.54GWh was billed to consumers. This resulted in an energy accounting efficiency of 83.80 per cent, an improvement from 82.43 per cent recorded in Q2.
NERC identified customer unwillingness to pay, dissatisfaction with service quality, and inadequate metering as major contributors to revenue shortfalls across the electricity distribution segment.
In terms of individual performance, Ikeja Disco recorded the highest collection efficiency at 100 per cent, followed by Eko (88.74 per cent), Benin (86.44 per cent), and Abuja (81.60 per cent). At the lower end, Kaduna Disco posted the weakest performance at 45.67 per cent.
Quarter-on-quarter analysis showed notable improvements by Ikeja (+17.58pp), Port Harcourt (+8.83pp), Yola (+8.72pp), Abuja (+5.24pp), Jos (+4.90pp), Eko (+0.94pp), and Benin (+0.89pp). However, Kaduna (-2.70pp) and Ibadan (-1.34pp) recorded the sharpest declines, alongside four other DisCos that also experienced reduced collection efficiency during the period.
