DisCos Revenue Rises As FG Paid ₦458.75bn Electricity Subsidies In Three Months

Electricity Distribution Companies also known as the DisCos posted measurable operational gains, with tariff collection efficiency rising to 80.7 per cent, up 4.63 percentage points in the third quarter of 2025.

The increase in revenue signals gradual improvements in revenue recovery amid non–cost-reflective tariffs, according to the latest data released by the Nigerian Electricity Regulatory Commission (NERC).

According to the report, despite the introduction of the Band ‘A’ tariff regime, government subsidies remained a critical lifeline for the electricity value chain, accounting for 58.63 per cent of total GenCos’ invoices in Q3.

The Federal Government paid ₦458.75 billion in electricity subsidies in the quarter under review.

The regulator’s Q3 report showed that utility companies collected ₦570.21 billion out of the ₦706.61 billion billed to customers between July and September, translating to a collection efficiency of 80.7 per cent.

NERC attributed the continued subsidy burden to the freezing of certain end-user tariffs at July 2024 levels, despite rising generation costs, even as Discos recorded marginal improvements in billing and collection efficiencies.

According to the report, the total naira value of energy offtake by all Discos stood at ₦854.53 billion during the period. Billing efficiency improved to 82.69 per cent, up 1.08 percentage points from 81.61 per cent recorded in the previous quarter.

However, Discos recorded cumulative billing losses of ₦147.92 billion, while collection efficiency rose by 4.63 percentage points to 80.70 per cent, compared with 76.07 per cent in Q2.

NERC noted that prompt settlement of upstream market obligations remains critical to sustaining generation and transmission capacity, stressing that the waterfall payment structure incentivises Discos to improve collections since most allowed 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 represented a ₦55.59 billion (10.81 per cent) reduction compared to ₦514.35 billion recorded in Q2.

The subsidy accounted for 58.63 per cent of total GenCos’ invoices, down slightly from 59.60 per cent in the preceding quarter.

NERC explained that the reduction was driven by a 6.08 per cent decline in energy offtake by Discos and a 0.98 per cent drop in actual generation cost per kilowatt-hour, while end-user tariffs remained unchanged.

On bilateral transactions, the report revealed that international customers remitted just $7.125 million out of $18.69 million invoiced by the Market Operator, representing a 38.09 per cent remittance rate.

In contrast, domestic bilateral customers paid ₦3.19 billion out of ₦3.64 billion billed, achieving a stronger 87.61 per cent remittance rate.

The report further showed that while 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, service dissatisfaction, and inadequate metering as key drivers of under-recovery across the sector.

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In terms of individual performance, Ikeja Disco recorded the highest collection efficiency at 100 per cent, while Eko (88.74%), Benin (86.44%), and Abuja (81.60%) also posted collection efficiencies above 80 per cent.

Conversely, Kaduna Disco recorded the lowest collection efficiency at 45.67 per cent.

Quarter-on-quarter comparisons showed improvements in collection efficiency by Ikeja (+17.58pp), Port Harcourt (+8.83pp), Yola (+8.72pp), Abuja (+5.24pp), Jos (+4.90pp), Eko (+0.94pp), and Benin (+0.89pp), while Kaduna (-2.70pp) and Ibadan (-1.34pp) recorded the steepest declines.

The report noted that the remaining four Discos experienced declines in collection efficiency, with Kaduna (-2.70pp) and Ibadan (-1.34pp) Discos recording the most significant decreases across the quarters.