Stakeholders demand stronger investment, regulatory enforcement and consumer protection as N6trn debt burden compounds Nigeria’s electricity crisis
Nigeria’s electricity distribution companies (DisCos) have recorded a dramatic increase in revenue over the past eight years, but the growth has done little to match improvements in electricity supply, raising fresh questions about investment, service delivery and the performance of the power sector following privatisation.
Data from the Nigerian Electricity Regulatory Commission (NERC), analysed by Financial Vanguard, showed that DisCos’ revenue rose from N218.16 billion in the first half of 2018 to N1.2 trillion in the corresponding period of 2026, representing an increase of approximately 450 per cent.
Over the same period, electricity supplied to consumers grew by only 4.8 per cent, from 16,861 gigawatt-hours (GWh) to 17,668GWh. Average available generation capacity also declined by about 41 per cent, from 7,565.5 megawatts (MW) to 4,456MW.
The figures highlight the widening gap between the money collected by distribution companies and the growth in electricity available to Nigerians, even as millions of households and businesses continue to grapple with unreliable power supply.
The challenge extends beyond revenue collection. NERC data indicated that DisCos failed to collect N700.53 billion in the first half of 2026. While the utilities received electricity valued at about N1.9 trillion from the market, they collected only N1.2 trillion from consumers, leaving a substantial balance outstanding.
The figures have intensified concerns about the financial sustainability of the Nigerian Electricity Supply Industry (NESI), the adequacy of investments in distribution infrastructure and the extent to which consumers are receiving value for the tariffs they pay.
The Rural Electrification Agency (REA) has also estimated that about 85 million Nigerians still lack access to electricity, underscoring the scale of the country’s electricity access challenge.
Revenue growth outpaces electricity supply
The disparity becomes more pronounced when the figures are examined over a longer period.
According to NERC data, annual revenue collected by DisCos increased from N302.925 billion in 2016 to N2.3188 trillion in 2025, a rise of approximately 666 per cent.
Annual electricity supply, however, increased from 23,742GWh in 2016 to 31,251GWh in 2025, representing growth of about 31.6 per cent.
While revenue increased by approximately N2.016 trillion over the period, average daily power generation rose from 3,276MW in 2016 to 4,475MW in 2025, an increase of about 36 per cent.
The revenue growth was relatively gradual in the early years before accelerating sharply from 2021.
DisCos’ collections rose to N370.456 billion in 2017, before climbing to N448.749 billion in 2019 and N542.729 billion in 2020. Revenue subsequently increased to N775.336 billion in 2021 and N841.811 billion in 2022.
The upward trajectory continued, with collections reaching N1.0775 trillion in 2023, N1.6597 trillion in 2024 and N2.3188 trillion in 2025.
Electricity supply followed a less consistent pattern. From 23,742GWh in 2016, annual supply rose to 33,489.17GWh in 2019 and 35,242.17GWh in 2020. It increased further to 36,710.60GWh in 2023 before peaking at 37,093.70GWh in 2024.
However, supply fell to 31,251GWh in 2025, a decline of approximately 15.7 per cent, even as DisCos’ revenue increased from N1.6597 trillion to N2.3188 trillion.
The contrasting trends have renewed debate over whether higher collections have translated into commensurate investment in electricity infrastructure, improved distribution efficiency and more dependable service for consumers.
13 years after privatisation, questions persist
Nigeria’s power sector was largely privatised in November 2013, when generation companies and 11 electricity distribution companies were transferred to private investors, while the Federal Government retained control of the transmission segment.
The reform was designed to improve efficiency, attract private investment, reduce government involvement in commercial operations and establish a more financially sustainable electricity market.
However, 13 years after the exercise, the industry continues to face persistent supply constraints, mounting debts and concerns about the pace of infrastructure development, despite more than N10 trillion in public investment in the sector.
NERC data showed that in 2016, three years after privatisation, the average available generation capacity of 27 power plants stood at 7,527MW, while actual average generation was 3,276MW.
By 2025, installed generation capacity had exceeded 13,000MW, but average available capacity had fallen to 5,398MW, a decline of about 28.3 per cent from the 2016 level. Average generation, meanwhile, rose to 4,475MW.
The figures suggest that the sector’s challenge is not simply the construction of additional generating plants, but also the ability to maintain existing facilities, make sufficient capacity available and deliver electricity reliably through the transmission and distribution networks.
The poor conversion of installed capacity into dependable electricity has also raised concerns about the commercial framework governing the sector and the ability of market participants to finance operations and new investments.
FG turns to bonds as GenCos’ debt approaches N6trn
The financial difficulties confronting the sector are further compounded by the Federal Government’s outstanding obligations to electricity generation companies (GenCos), which reportedly approached N6 trillion at the end of 2025.
The government’s inability to fully fund electricity tariff subsidies through annual budgetary allocations has contributed to the accumulation of debts across the electricity market, placing additional pressure on generation companies and their associated gas suppliers.
In its 2025 industry report, NERC put the Federal Government’s gross tariff subsidy obligation at N1.928 trillion, representing 57.44 per cent of the total invoice issued by the Nigerian Bulk Electricity Trading Plc (NBET).
The obligation averaged N160.69 billion monthly and was distributed across the four quarters of 2025. The first quarter accounted for N536.40 billion, followed by N514.36 billion in the second quarter, N458.76 billion in the third quarter and N418.79 billion in the fourth quarter.
The 2025 figure was slightly lower than the N1.949 trillion subsidy obligation recorded in 2024.
Against this backdrop, the Federal Government has turned to the capital market to address verified legacy debts and restore liquidity to the industry.
In September 2026, the government signed the N728.979 billion Series 2 bond under its N4 trillion Power Sector Debt Reduction Programme.
The transaction comprised N402 billion in cash bonds raised from the domestic capital market and N326.979 billion in non-cash bonds allotted to participating generation companies.
The Managing Director and Chief Executive Officer of NBET, Akin Odeyemi, said the agency had commenced settlement of participating GenCos and their associated gas companies following the successful issuance and signing of the bonds.
According to him, the settlement represents an important step towards implementing the Presidential Power Sector Debt Reduction Programme.
Odeyemi said the initiative was being pursued “under the visionary leadership of President Bola Ahmed Tinubu, and in furtherance of the objectives of the Renewed Hope Agenda.”
He added that the settlement was being carried out through “a combination of N402,000,000,000.00 in Cash Bonds and N326,979,000,000.00 in Non-Cash Bonds, in accordance with the approved settlement framework”.
While the intervention is expected to ease some of the financial pressures facing participating companies, the broader challenge remains how to prevent new debts from accumulating and ensure that settlements translate into improved generation, gas supply and electricity delivery.
Power supply has improved, minister insists
Despite the concerns raised by the data, the Minister of Power, Mr Joseph Tegbe, has maintained that electricity supply has improved over the past three months, although some parts of the country continue to experience poor service.
The minister said operational reports showed that generation and transmission had exceeded 5,000MW over several weeks, compared with levels ranging from 3,700MW to 4,700MW before June. He also cited a generation peak of 5,330MW during August and September.
“Operational record reports show generation and transmission above 5,000MW over the past couple of weeks, compared to the 3,700 to 4,700MW range before June, and a generation peak of 5,330MW during August and September,” Tegbe said.
He acknowledged, however, that improvements in national generation figures did not necessarily reflect the experience of every electricity consumer.
“Our next task is to sustain these gains and translate them into more dependable supply at customer level. We are aware that a national peak alone cannot describe the experience of every community,” he said.
Tegbe said the government’s strategy was anchored on three pillars: stabilising the electricity value chain, restoring market discipline and strengthening governance.
As part of the interventions, he said the 375MW Alaoji open-cycle power plant had been restored to the national grid after remaining offline for three years.
The government has also upgraded several transmission facilities, including substations in Lagos and Abuja.
According to the minister, new transformers commissioned at Apapa, Ijora, Alausa and Lekki in Lagos unlocked 672MW of transmission capacity, while a new 300MVA transformer energised at Katampe in Abuja unlocked an additional 240MW.
“These interventions restored existing assets and strengthened the network serving major centres of demand,” he said.
The government is also pursuing alternative energy sources, particularly solar power, to expand access to electricity beyond the national grid.
Tegbe said the completed electrification portfolio under the REA and its partners comprised 62 solar and mini-grid installations across 30 states, representing about 43.6MW of installed solar capacity and 41,735 new connections.
The projects, he added, were estimated to have reached more than 208,000 people.
However, stakeholders maintain that sustained improvements will require coordinated investments across generation, transmission and distribution, rather than isolated interventions at individual facilities.
‘Reform remains unfinished’ — Babalola
Special Adviser to the President on Power and Chairman of the Presidential Task Force on Power Sector Reset and Restoration, Dr Lanre Babalola, has argued that Nigeria’s electricity crisis reflects deeper structural weaknesses that cannot be resolved by increasing generation capacity alone.
According to him, the country has yet to establish a system capable of consistently converting available electricity into reliable supply, commercial value and sustainable investment.
“Our deeper problem is that we have not yet built a system capable of consistently converting available capacity into reliable electricity, commercial value and sustainable investment,” Babalola said.
He described the sector’s reform process as incomplete, noting that although generation and distribution assets had been privatised and a bulk electricity trader established, the transition to a competitive market had not been fully achieved.
“We must also recognise that Nigeria’s electricity reform remains an unfinished transition,” he said.
Babalola recalled that the unbundling of the former vertically integrated electricity utility was intended to create a market driven by private capital, efficiency and commercial discipline.
Under the arrangement, NBET was established as an intermediary between generation companies and distribution companies while market participants developed the creditworthiness needed for direct electricity trading.
However, he argued that the transitional arrangement had remained in place for too long.
“The single-buyer model was conceived as a transitional mechanism. NBET provided a credible intermediary while market participants developed the creditworthiness required for direct contracting,” he said.
“But a transitional mechanism becomes a structural constraint if the transition never happens. The objective cannot be to preserve the institutions of transition indefinitely. The objective must be to complete the transition.”
His position highlights the need for reforms that strengthen market transactions, improve the financial standing of participants and reduce the persistent dependence on government interventions to keep the industry afloat.
‘Nigerians have been paying for darkness’ — Fadipe
Reacting to the revenue and supply figures, a lawyer and Lead Consultant on the power sector at Sage Consulting, Mr Bode Fadipe, questioned whether consumers were receiving adequate value for the money collected by distribution companies.
“What this data has just confirmed is that Nigerians have been paying for darkness,” Fadipe said.
He identified inadequate investment as one of the major factors responsible for the limited improvement in electricity supply, arguing that the figures reinforced the need for distribution companies to commit a portion of their revenue to infrastructure development.
Fadipe recalled that DisCos had strongly opposed NERC’s directive requiring them to retain part of their revenue for investment, but said the regulator had rightly insisted on its implementation.
“You will recall that the DisCos vehemently protested this order, but NERC thankfully insisted on the implementation of the order,” he said.
He stressed, however, that the extent to which the companies had complied with the directive needed to be established through effective monitoring and independent verification.
According to him, regulatory oversight must move beyond issuing directives to ensuring that the required investments are made and produce measurable improvements in service delivery.
“NERC must dutifully enforce its order on investment. NERC must also set timelines for certain levels of improvement,” Fadipe said.
He called for forensic audits of DisCos’ investments to determine whether funds earmarked for infrastructure were being properly utilised.
He also urged the regulator to work with other market participants to address outstanding debts, arguing that the financial difficulties of the industry required coordinated action and stronger accountability.
For consumers, the central question remains whether increased revenue collections and the resolution of market debts will translate into better electricity supply, fewer outages and more reliable service.
Consumers demand stronger protection
Consumer rights advocates have also called for stronger regulatory enforcement, arguing that the sector’s financial difficulties should not be used to justify poor service or practices that place an excessive burden on electricity users.
The Executive Director of the Electricity Consumer Protection Advocacy Centre, Chief Princewill Okorie, said the revenue figures raised fundamental questions about the quality of services delivered by distribution companies.
He noted that the decentralisation of electricity regulation under the new legal framework had brought oversight closer to consumers in the states, but maintained that enforcement of consumer protection provisions remained inadequate.
According to Okorie, consumers continue to face problems involving estimated billing, infrastructure charges and alleged non-compliance with regulatory directives.
He alleged that residents in some communities had been compelled to contribute money towards transformers and other distribution infrastructure, despite what he described as the obligations of distribution companies to provide and maintain essential network assets.
Okorie also challenged the frequent argument that poor electricity service was primarily caused by consumers’ failure to pay their bills.
“Consumers are not paying” has often been cited as a reason for poor service, he said, but argued that the quality and basis of the bills issued to customers must also be examined.
“The appropriate question to ask is: how did they generate these bills? Were they justifiably, accountably and transparently generated?” he asked.
He called for stricter enforcement of electricity regulations, better public awareness of consumer rights and stronger safeguards for vulnerable users, particularly those in rural communities.
Okorie also advocated a dedicated mechanism for investigating alleged violations in the electricity market and questioned why the Federal Ministry of Power did not have a specialised consumer protection unit.
He urged consumer protection authorities to play a more active role in educating electricity users about their rights and the procedures available for seeking redress.
The consumer advocate further questioned the extent to which government subsidies were reaching their intended beneficiaries, arguing that customers often bear the cost of equipment used by distribution companies, including poles, cables and transformers, without reimbursement from the utilities.
His concerns reflect a broader demand for greater transparency in electricity billing, clearer accountability for infrastructure investment and stronger protection against practices that undermine consumer confidence.
The challenge ahead
The latest figures present a difficult picture for Nigeria’s electricity industry. Revenue collections have risen substantially, yet electricity supply has failed to keep pace, available generation capacity has weakened over the longer term and outstanding debts continue to constrain the market.
The Federal Government’s bond programme, the restoration of generating facilities, transmission upgrades and off-grid electrification projects represent attempts to address different aspects of the crisis.
However, stakeholders insist that these measures must be accompanied by verifiable investment by DisCos, stronger regulatory enforcement, improved financial discipline and a clearer transition towards a competitive electricity market.
For millions of Nigerians, the ultimate test of reform will not be the volume of revenue collected, the size of government bonds issued or the installed capacity of power plants, but whether electricity becomes more reliable, accessible and affordable.
More than a decade after privatisation, the gap between the financial growth of distribution companies and the electricity available to consumers remains one of the most pressing questions facing the sector.