Electricity Distribution Companies, popularly known as DisCos, recorded measurable operational gains in the third quarter of 2025 as tariff collection efficiency rose to 80.7 per cent, according to the latest industry report released by the Nigerian Electricity Regulatory Commission (NERC).
The figure represents a 4.63 percentage-point increase from the 76.07 per cent recorded in the second quarter, signalling gradual improvements in revenue recovery despite persistent challenges linked to non-cost-reflective tariffs.
The regulator disclosed that DisCos collected ₦570.21 billion out of the ₦706.61 billion billed to electricity consumers between July and September 2025.
NERC noted that the improved performance came even as end-user tariffs for some customer categories remained frozen at July 2024 levels, despite rising generation and operational costs across the electricity value chain.
According to the report, the total naira value of energy offtake by all DisCos during the period stood at ₦854.53 billion.
Billing efficiency also improved marginally to 82.69 per cent, up from 81.61 per cent in the previous quarter, reflecting better invoicing practices by the utilities.
However, the commission revealed that cumulative billing losses during the quarter amounted to ₦147.92 billion, underscoring lingering inefficiencies in the sector.
FG Pays ₦458.75 Billion Subsidy In Three Months
Naijaonpoint understands that despite the operational gains, government subsidies remained a major support for the power sector.
NERC disclosed that the Federal Government paid ₦458.75 billion in electricity subsidies in the third quarter, accounting for 58.63 per cent of total invoices issued by power generation companies.
The regulator attributed the continued subsidy burden to the absence of fully cost-reflective tariffs.
“In the absence of cost-reflective tariffs, the government undertakes to cover the gap between the cost-reflective and allowed tariffs through subsidies,” the report stated.
“For ease of administration, the subsidy is applied to the generation cost payable by DisCos to NBET in the form of a Disco’s Remittance Obligation.”
The commission noted that the subsidy figure represented a ₦55.59 billion, or 10.81 per cent, reduction from the ₦514.35 billion recorded in the second quarter of 2025.
It added that subsidies accounted for a slightly lower share of GenCos’ invoices compared to 59.60 per cent in Q2.
According to NERC, the reduction was driven by a 6.08 per cent decline in energy offtake by DisCos and a 0.98 per cent drop in the actual cost of generation per kilowatt-hour, even as consumer tariffs remained unchanged.
On bilateral transactions, the report showed weak remittance performance by international customers.
International bilateral customers remitted only $7.125 million out of the $18.69 million invoiced by the Market Operator, representing a remittance rate of 38.09 per cent.
In contrast, domestic bilateral customers recorded stronger compliance, paying ₦3.19 billion out of ₦3.64 billion billed, translating to an 87.61 per cent remittance rate.
The report revealed that total energy received by DisCos during the quarter stood at 7,348.95 gigawatt-hours, but only 6,158.54GWh was billed to end-users.
This resulted in an energy accounting efficiency of 83.80 per cent, an improvement from 82.43 per cent recorded in Q2.
However, NERC identified customer unwillingness to pay, dissatisfaction with service delivery, and inadequate metering as major contributors to under-recovery across the electricity market.
A breakdown of individual Disco performance showed that Ikeja Electric recorded the highest collection efficiency at 100 per cent.
Eko Disco followed with 88.74 per cent, while Benin (86.44%) and Abuja (81.60%) also achieved collection efficiencies above 80 per cent.
Conversely, Kaduna Disco recorded the weakest performance, with a collection efficiency of 45.67 per cent.
Quarter-on-quarter analysis showed significant improvements by Ikeja (+17.58 percentage points), 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) DisCos recorded the steepest declines, while four other DisCos also experienced drops in collection efficiency during the quarter.
NERC stressed that prompt settlement of upstream market obligations remains crucial to sustaining power generation and transmission, noting that the existing waterfall payment structure places strong incentives on DisCos to improve revenue collection.