DisCos’ Revenue Recovery Declines To  69%,  Translates To N63 billion shortfall

Electricity distribution companies (DisCos) recorded a N63.46 billion revenue shortfall in January 2026 as average recovery efficiency declined to 69.16 per cent, contrary to stricter performance thresholds introduced by the Nigerian Electricity Regulatory Commission (NERC).

The latest Commercial Performance Factsheet released by the Commission showed that out of N268.2 billion billed to customers during the month, only N204.74 billion was recovered, leaving a significant gap that continues to weigh on liquidity in the power sector.

The drop in revenue recovery coincides with newly-enforced Aggregate Technical, Commercial and Collection (ATC&C) loss targets, which were reduced to an industry average of 16.92 per cent for 2026, down from 20.54 per cent in 2025.

The revised cap is aimed at pushing DisCos to improve operational efficiency to align with investments made in the previous year.

Recovery efficiency declined by 3.15 percentage points compared to the previous year, even as the allowed average tariff stood at N124.30 per kilowatt-hour (kWh), significantly higher than the actual average collection of N85.97/kWh.

This gap between cost-reflective tariffs and realisable revenue underscores a persistent structural challenge in the market, where energy delivered is neither fully billed nor fully paid for.

At the operational level, DisCos received electricity valued at N336.43 billion in the month but billed only N268.2 billion, translating to a billing efficiency of 79.72 per cent.

Collection efficiency was slightly lower at 76.34 per cent, reflecting ongoing issues around metering gaps, energy theft and weak payment discipline.

A breakdown of company performance highlights wide disparities across regions. Eko Electricity Distribution Company led the pack with a recovery efficiency of 87.92 per cent, followed by Ikeja Electric at 81.64 per cent. Both firms maintained relatively strong billing and collection metrics, reinforcing their standing as the sector’s top performers.

In contrast, several utilities in the northern axis posted significantly weaker outcomes. Kaduna Electric recorded the lowest recovery efficiency at 36.29 per cent, while Jos Electricity Distribution Company followed with 43.54 per cent, reflecting deep-rooted commercial and infrastructure challenges.

The most pronounced deterioration was recorded by Yola Electricity Distribution Company, where recovery efficiency dropped sharply by 14.85 percentage points to 55.42 per cent. This came despite a substantial reduction in its ATC&C loss target from 44 per cent in 2025 to 29 per cent in 2026, the steepest adjustment across all DisCos.

“Effective January 2026, the Commission approved the reduction in the ATC&C loss targets of the DisCos to reflect the expected impact of the investments made by DisCos in 2025.

The significant decrease observed in the DisCos revenue recovery performance in January 2026 is a result of the application of the approved ATC&C targets for Y2026,” the Commission stated.

Other operators also recorded declines as Abuja DisCo’s recovery efficiency fell to 75.02 per cent, while Benin and Enugu posted 63.46 per cent and 63.17 per cent, respectively.

Ibadan DisCo recorded 57.72 per cent, Kano 57.61 per cent, and Port Harcourt 73.9 per cent, indicating that no operator was insulated from the broader downturn.

The across-the-board decline suggests that the tighter ATC&C targets, while necessary for long-term efficiency, may be exposing underlying weaknesses in the system, particularly around revenue assurance and customer compliance.

NERC had indicated that the revised loss targets were designed to reflect the expected gains from capital investments made by DisCos in 2025. These include network upgrades, metering expansion and improved energy accounting systems intended to reduce technical and commercial losses.

Yet, the January figures point to a transitional phase in which the benefits of those investments have yet to fully materialise in revenue terms. Instead, operators are confronted with stricter regulatory expectations without a commensurate improvement in cash collections.

The implications are significant for the entire electricity value chain. Revenue shortfalls at the distribution level limit remittances to upstream players, including the Nigerian Bulk Electricity Trading Plc and generation companies, thereby perpetuating the sector’s long-standing liquidity crisis