Electricity Distribution Companies, popularly known as the DisCos, recorded notable operational improvements in the third quarter of 2025, with tariff collection efficiency increasing to 80.7 per cent — a rise of 4.63 percentage points.
The revenue growth reflects gradual progress in revenue recovery despite non–cost-reflective tariffs, according to the latest figures released by the Nigerian Electricity Regulatory Commission (NERC).
The report noted that even with the implementation of the Band ‘A’ tariff structure, government subsidies continued to play a vital role in sustaining the electricity value chain, making up 58.63 per cent of total GenCos’ invoices in Q3.
During the period under review, the Federal Government paid ₦458.75 billion in electricity subsidies.
NERC’s Q3 report indicated that utility companies collected ₦570.21 billion from the ₦706.61 billion billed to customers between July and September, resulting in a collection efficiency of 80.7 per cent.
The regulator attributed the sustained subsidy pressure to the decision to retain some end-user tariffs at July 2024 levels despite increasing generation costs, even as DisCos posted modest gains in billing and collection performance.
According to the report, the total naira value of energy offtake by all DisCos amounted to ₦854.53 billion within the quarter. Billing efficiency rose to 82.69 per cent, up from 81.61 per cent in the previous quarter, representing a 1.08 percentage point increase.
Nonetheless, DisCos recorded cumulative billing losses of ₦147.92 billion, while collection efficiency climbed by 4.63 percentage points to 80.70 per cent from 76.07 per cent in Q2.
NERC stressed that timely settlement of upstream market obligations remains essential for maintaining generation and transmission capacity, noting that the waterfall payment structure motivates DisCos to enhance collections since most approved revenues rank below market obligations.
“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 (DRO).”
The commission disclosed that the ₦458.75 billion subsidy reflected a reduction of ₦55.59 billion, or 10.81 per cent, compared to the ₦514.35 billion recorded in Q2.
The subsidy accounted for 58.63 per cent of total GenCos’ invoices, slightly lower than the 59.60 per cent recorded in the preceding quarter.
NERC explained that the decline was driven by a 6.08 per cent reduction in energy offtake by DisCos and a 0.98 per cent decrease in actual generation cost per kilowatt-hour, while end-user tariffs remained unchanged.
On bilateral transactions, the report revealed that international customers remitted $7.125 million out of the $18.69 million invoiced by the Market Operator, translating to a 38.09 per cent remittance rate.
By contrast, domestic bilateral customers paid ₦3.19 billion of the ₦3.64 billion billed, achieving a stronger remittance rate of 87.61 per cent.
The report further showed that although total energy received by DisCos in Q3 stood at 7,348.95GWh, only 6,158.54GWh was billed to end-users, resulting in an energy accounting efficiency of 83.80 per cent, an improvement from 82.43 per cent in Q2.
NERC identified customer unwillingness to pay, dissatisfaction with service delivery, and inadequate metering as major contributors to revenue shortfalls across the sector.
In terms of individual performance, Ikeja Disco posted the highest collection efficiency at 100 per cent, while Eko (88.74 per cent), Benin (86.44 per cent), and Abuja (81.60 per cent) also recorded efficiencies above 80 per cent.
In contrast, Kaduna Disco recorded the lowest collection efficiency at 45.67 per cent.
Quarter-on-quarter analysis showed improved collection efficiency for 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) posted the sharpest declines.
The report added that four other DisCos also experienced drops in collection efficiency, with Kaduna and Ibadan recording the most significant quarter-on-quarter reductions.