Nigeria’s electricity market recorded a staggering revenue shortfall of about N1.36tn in 2025, with electricity distribution companies failing to bill consumers for power worth N694.8bn and unable to collect another N669.5bn from bills already issued.
The latest figures, contained in the 2025 Annual Report of the Nigerian Electricity Regulatory Commission, highlight the deep financial and operational weaknesses confronting the country’s power sector, despite years of reforms, privatisation and substantial government intervention.
According to the report, the 11 electricity distribution companies supplied electricity valued at N3.68tn to consumers during the year but billed customers for only N2.99tn. This translated to a gross billing efficiency of 81.14 per cent, leaving electricity worth approximately N694.8bn outside the billing system.
The revenue problem deepened after billing. Of the N2.99tn billed to consumers, the DisCos succeeded in collecting only N2.32tn, leaving N669.49bn outstanding.
NERC stated, “The total billing to electricity consumers by the DisCos was N2.99tn, but only N2.32tn was collected, translating to a collection efficiency of 77.60 per cent.”
Taken together, the unbilled electricity and unpaid bills produced a combined billing and collection gap of approximately N1.36tn during the year.
The figures underscore one of the sector’s most persistent problems: electricity supplied to customers does not consistently translate into revenue that can flow through the value chain to generation companies, the transmission system and other market participants.
Energy losses remain high
The regulatory commission also disclosed significant gaps in the amount of electricity received by DisCos and the quantity ultimately billed to customers.
The companies received 31,251.77 gigawatt-hours of electricity at their trading points in 2025 but billed customers for only 25,867.86GWh.
That resulted in an energy accounting efficiency of 82.77 per cent.
Ibadan Electricity Distribution Company recorded the highest energy accounting efficiency at 88.84 per cent, while Enugu Electricity Distribution Company posted the lowest at 72.18 per cent.
The broader losses in the distribution segment remained a major concern. NERC put the weighted average aggregate technical, commercial and collection loss across the 11 DisCos at 37.03 per cent during the year.
The figure was made up of 18.86 per cent technical and commercial losses and 22.40 per cent collection losses.
More significantly, the combined loss level was 16.49 percentage points above the 20.54 per cent target set under the 2025 Multi-Year Tariff Order.
The gap between the regulatory target and actual performance illustrates the difficulty the distribution companies continue to face in reducing electricity losses, improving billing and ensuring that customers pay for the electricity they consume.
Murray-Bruce: Privatisation ‘was not a reform’
The latest NERC figures have reignited criticism of Nigeria’s electricity privatisation model, with former senator and businessman Ben Murray-Bruce questioning whether the structure has delivered the investment and reliability promised to Nigerians.
In an open letter to President Bola Tinubu, Murray-Bruce argued that the 2013 privatisation did not fundamentally reform the industry but merely changed ownership of existing assets.
“The 2013 privatisation was not a reform. It was a transfer of custody,” he wrote.
According to the former senator, one of the central weaknesses of the arrangement was that investors acquired generation and distribution assets without having sufficient financial capacity to rehabilitate, expand and properly capitalise the businesses.
“The men and women who bought the GenCos and the DisCos had enough money to purchase the assets. They did not have enough money to run them. Owning a power station and capitalising a power station are two different economic acts, and we confused them,” he said.
His criticism comes at a time when the industry continues to grapple with inadequate investment, weak distribution infrastructure, commercial losses and liquidity shortages across the electricity market.
Metering gap leaves millions exposed
The metering challenge remains another major weakness in the distribution system.
NERC reported that Nigeria had 12.16 million active registered electricity customers as of December 2025. Of that number, only 6.97 million, representing 57.27 per cent, were metered.
This means that about 5.20 million customers, or 42.73 per cent, remained without meters at the end of the year.
The regulator said the DisCos installed 972,040 meters during 2025. Ibadan DisCo recorded the highest number of installations with 180,256 meters, while Yola Electricity Distribution Company recorded the lowest, with 14,231.
The continued reliance on estimated billing has remained a source of tension between consumers and DisCos, particularly where customers dispute the amount they are charged for electricity.
Murray-Bruce was particularly critical of the metering deficit, arguing that the inability to accurately measure consumption undermines accountability within the market.
“A meter is a machine that tells the truth. An estimated bill is a machine that does not. An industry that cannot generate power has discovered it can still generate revenue by billing darkness,” he stated.
GenCos, DisCos caught in liquidity crisis
The financial difficulties extend beyond the relationship between DisCos and electricity consumers.
NERC said the Nigerian Bulk Electricity Trading Company and the market operator issued gross invoices totalling N1.72tn to the DisCos during 2025 for energy costs and administrative services.
The DisCos remitted N1.632tn, leaving a market shortfall of N89.58bn.
The figures reflect the liquidity pressures that continue to affect participants across the electricity value chain. Weak collections at the distribution end make it difficult for DisCos to meet their obligations to other market participants, creating a chain of unpaid bills and financial pressure.
Murray-Bruce acknowledged that generation companies had legitimate grievances over unpaid obligations but argued that all players in the electricity market must accept responsibility for the industry's longstanding problems.
“To the GenCos: you are owed. That is true, and I will not pretend otherwise. But you contracted into a market you knew was insolvent, and you have spent a decade lobbying for tariffs and bailouts rather than capital. You cannot be a private company on the day the tariff rises and a public charity on the day the invoice falls due,” he wrote.
Government spends N1.93tn on electricity subsidy
The Federal Government remained a major source of funding for the electricity market in 2025 through tariff subsidies.
According to NERC, the government incurred a subsidy obligation of N1.93tn during the year.
The amount represented 57.44 per cent of the total N3.357tn invoice issued by NBET for the year.
The regulator attributed the large subsidy obligation largely to the government’s decision to keep allowed tariffs paid by consumers below cost-reflective levels despite increases in the cost of supplying electricity.
NERC said the subsidy was “largely attributable to the FGN’s policy to freeze allowed tariffs paid by customers despite the increase in cost-reflective tariffs.”
The scale of the subsidy has raised questions about the sustainability of the existing tariff structure, particularly as the government continues to bear a substantial portion of the cost required to keep electricity prices below cost-reflective levels for eligible consumers.
Murray-Bruce argued that the significant public expenditure on electricity had not produced a corresponding improvement in reliability.
“Roughly N10tn of public money has gone into this sector in 13 years, and the lights are still off,” he said.
Former senator proposes community-based power model
Rather than continue with what he described as a centrally driven electricity structure, Murray-Bruce called for a fundamental rethink of how electricity is generated, distributed and financed across the country.
“Every village, every estate, every community in Nigeria should have its own PHCN,” he proposed.
Under his proposal, communities and residential estates would develop their own metered solar generation systems, while state governments would provide guarantees to facilitate financing. Consumers would then pay regulated tariffs for the electricity supplied.
He further proposed that state governments should take responsibility for powering public infrastructure such as streetlights, police stations, primary healthcare centres and schools, while the Federal Government would concentrate on federal institutions and infrastructure.
His argument comes against the backdrop of constitutional and legal changes that have expanded the role of subnational governments in the electricity sector.
Murray-Bruce urged Nigerians to demand greater accountability from state governments rather than placing responsibility for every electricity failure on the Federal Government.
“Stop blaming the president for the darkness in your street. Since 2023, electricity has been a concurrent responsibility,” he wrote.
Two grid collapses recorded in 2025
The country's electricity supply challenges were also reflected in the performance of the national grid.
NERC recorded two grid collapse incidents in 2025 — one full collapse and one partial collapse.
The full system collapse occurred on September 10, 2025, while the partial collapse recorded on December 29 was attributed to the failure of one circuit breaker on the Benin-Onitsha 330kV transmission line at the Benin transmission station.
Grid instability has historically compounded Nigeria’s electricity problems by disrupting generation, transmission and distribution simultaneously, leaving consumers and businesses to rely heavily on alternative sources of power.
A sector struggling to convert power into revenue
The figures contained in NERC’s report paint a picture of an electricity market facing interconnected financial and operational challenges.
The N1.36tn gap between electricity supplied, billed and collected is only one component of the wider crisis.
High technical and commercial losses, weak collection rates, incomplete metering, unpaid market invoices and a N1.93tn government subsidy obligation all point to a system struggling to generate enough commercial revenue to sustain the electricity value chain.
For consumers, the challenge is particularly acute. More than four in every 10 active customers remained unmetered at the end of 2025, while the DisCos collectively failed to bill for nearly one-fifth of the electricity supplied to them.
The numbers therefore expose a fundamental contradiction at the heart of Nigeria’s electricity market: the country continues to spend heavily to support the sector, yet significant quantities of electricity fail to generate corresponding commercial revenue.
Until the industry can improve metering, reduce technical and commercial losses, strengthen collection, settle market debts and attract sufficient long-term investment, the financial weaknesses documented by NERC are likely to remain a major obstacle to delivering reliable electricity to Nigerian households and businesses.