Emmanuel Addeh in Abuja
The 11 electricity Distribution Companies (Discos) operating across the nation generated a total revenue of N603.64 billion in the second quarter of 2026, even as the federal government incurred a fresh tariff subsidy obligation exceeding N321 billion during the same period, new regulatory data has shown.
According to the latest quarterly report released by the Nigerian Electricity Regulatory Commission (NERC), the revenue collected by the power distribution companies represented an increase from the N597.56 billion recorded in the first quarter of the year.
The sector regulator noted that the total revenue collected out of the N744.67 billion billed to customers in the second quarter translated to an aggregate collection efficiency of 81.06 per cent, reflecting a 2.11 percentage point increase when compared to the 78.95 per cent collection efficiency achieved in 2026/Q1, when total billing stood at N756.93 billion.
NERC attributed the under-recovery of issued invoices to persistent market challenges, including customer dissatisfaction with power supply services, inadequate customer metering, and a historical unwillingness by some consumers to settle utility bills on time.
A breakdown of individual Disco performances showed that Benin Disco recorded the highest collection efficiency in 2026/Q2 at 92.68 per cent, followed closely by Ikeja Disco at 92.20 per cent, Eko Disco at 89.39 per cent, Port Harcourt Disco at 87.27 per cent, Abuja Disco at 83.45 per cent, and Ibadan Disco at 80.33 per cent. Conversely, Kano Disco logged the lowest collection efficiency across the country at 47.74 per cent.
Despite the marginal revenue gains, the report highlighted a continued strain on public finances, revealing that the federal government incurred a tariff subsidy obligation of N321.26 billion in 2026/Q2 to cover the gap between cost-reflective electricity tariffs and allowed consumer tariffs.
The subsidy requirement, however, dropped by N37.06 billion, that is 10.34 per cent, compared to the N358.32 billion recorded in 2026/Q1. The NERC explained that the monthly breakdown of the government’s subsidy obligation for the quarter comprised N108.40 billion in April, N112.93 billion in May, and N99.93 billion in June.
According to the regulatory agency, with the absence of full cost-reflective tariffs across all Discos, the government covers the resultant gap in the form of tariff subsidies applied directly at source to the generation cost payable by Discos to the Nigerian Bulk Electricity Trading Plc (NBET). This mechanism operates under the Disco’s Remittance Obligation (DRO) framework, which replaced the previous Minimum Remittance Obligation (MRO) setup in January 2024.
Under the DRO regime, NBET invoices the portion of generation company (Genco) costs not covered by consumer tariffs directly to the Federal Ministry of Finance for immediate settlement.
During the quarter under review, total Gencos’ invoices issued for energy delivered to all 11 Discos amounted to N647.72 billion. The DRO-adjusted NBET invoice to the power distributors stood at N326.46 billion, leaving the government subsidy to account for 49.60 per cent of the total Gencos’ bills.
This represented a slight decrease of 2.35 percentage points compared to 2026/Q1, when the government subsidy absorbed 51.95 per cent of total generation costs. NERC also identified a 3.40 per cent decline in energy offtake by the Discos between the two quarters as the primary driver behind the reduced subsidy burden.
On market remittances, Discos paid a total of N306.62 billion against the DRO-adjusted NBET invoice of N326.46 billion, achieving a 93.92 per cent remittance performance in 2026/Q2 compared to 94.29 per cent in 2026/Q1.
Seven power distributors namely: Benin, Eko, Enugu, Ibadan, Ikeja, Port Harcourt, and Yola Discos, achieved a 100 per cent remittance performance to NBET. Kano, Jos, and Kaduna Discos, however, recorded lower compliance rates of 66.51 per cent, 62.39 per cent, and 50.10 per cent, respectively.
In addition, the power distributors made a total remittance of N78.82 billion to the Market Operator (MO) for transmission and administrative services, out of a cumulative invoice of N83.92 billion. This represented a remittance rate of 93.92 per cent, up by 0.64 percentage points from 93.28 per cent recorded in 2026/Q1.
Besides, the report highlighted severe operational deficiencies, disclosing that all 11 DisCos failed to meet their Aggregate Technical, Commercial, and Collection (ATC&C) loss reduction targets for the quarter.
The average ATC&C loss recorded across the industry stood at 36.23 per cent, comprising 21.33 per cent in technical and commercial losses and 18.94 per cent in collection losses. Although this represented a 1.21 percentage point improvement over the 37.44 per cent loss recorded in 2026/Q1, it was 19.31 percentage points worse than the regulatory target of 16.92 per cent allowed under the Multi-Year Tariff Order (MYTO) for 2026.
The Q2 NERC figures revealed that the excess operational inefficiencies incurred by the utilities translated to an estimated cumulative revenue loss of N129.07 billion in 2026/Q2. Kaduna Disco posted the widest variance from its target at 49.52 percentage points, followed by Kano Disco at 48.47 percentage points and Jos Disco at 47.47 percentage points.
The commission emphasised that these excess inefficiency losses are non-recoverable from electricity consumers and could pose significant risks to the long-term financial health and viability of the affected utility companies.
To address these financial leaks, NERC reiterated the need for aggressive customer enumeration and accelerated deployment of end-use meters. It urged Discos to optimise existing metering interventions to reduce commercial losses and stabilise the Nigerian Electricity Supply Industry (NESI).