₦187b lost, real cost is trust: Why Nigeria’s power sector bleeds at the retail end
By Precious Obi
Between July and October 2025, Nigeria’s power sector lost ₦187 billion to unbilled energy. On paper, this looks like a technical failure, poor billing efficiency, weak collections, and operational lapses by electricity distribution companies (DisCos). In reality, it is something deeper and more damaging: a structural breakdown of incentives, accountability, and trust at the very end of the electricity value chain.
Data from the Nigerian Electricity Regulatory Commission (NERC) shows that while DisCos received electricity worth over ₦1.17 trillion during the four-month period, a significant portion never translated into customer bills. Even more worrying, a chunk of what was billed was never collected. The result is a liquidity crisis that continues to ripple upstream from generation companies to gas suppliers threatening the stability of the entire market.
Let us be clear: losing ₦187 billion in unbilled energy in four months is not an accident. It reflects systemic weaknesses that have been flagged repeatedly by NERC, the World Bank, and industry analysts for over a decade.
Three issues stand out: First, metering failure. NERC itself has consistently linked low billing efficiency to inadequate metering. Estimated billing remains widespread, creating perverse incentives. Customers distrust bills they do not understand, while DisCos lack precise consumption data to optimise revenue.
According to World Bank power sector diagnostics, utilities without near-universal metering rarely exceed 85% billing efficiency, a ceiling Nigeria is repeatedly hitting and falling below.
Second, uneven enforcement and accountability. The October 2025 data shows Kano DisCo achieving a billing efficiency of 98.05%, while Benin and Yola DisCos hovered around 65–66%.
This disparity proves that technical constraints alone do not explain the losses. Where management discipline, enforcement, and local engagement are stronger, performance improves. Where they are weaker, inefficiency becomes normalised.
Third, a broken social contract. Collection efficiency averaged just 82.66% in October, with some DisCos collecting less than half of their billed revenue. This is not simply about poverty. It is also about legitimacy. Consumers are less likely to pay when supply is unreliable, billing is opaque, and energy theft appears consequence-free. As the International Energy Agency has noted, willingness to pay is strongly correlated with perceived service quality and fairness.
Here is the uncomfortable truth: inefficiencies at the distribution level do not disappear. They are redistributed.
When DisCos fail to bill or collect, they still owe market operators and the Nigerian Bulk Electricity Trading Plc. The shortfall accumulates as sector debt, which policymakers then attempt to plug through tariff hikes, subsidies, or government bailouts. The result is a cycle where compliant customers subsidise inefficiency, while non-payment and theft continue largely unchecked.
In October, DisCos were allowed to charge an average tariff of ₦116.25 per kilowatt-hour but collected only ₦95.89 on average. That gap is not theoretical, it is the space where sector reform quietly collapses.
Nigeria’s power reforms have spent years debating tariffs, generation capacity, and transmission upgrades. These matter. But the data is clear: the retail end is where value is currently being destroyed at scale.
Countries that have stabilised their electricity markets from India to parts of Latin America did not do so by endlessly recapitalising utilities. They focused on universal metering and data integrity, performance-based regulation with real penalties, clear separation between technical losses and commercial theft, and consumer trust as an explicit reform objective.
The African Development Bank has repeatedly emphasised that distribution reform, not generation expansion, delivers the fastest gains in sector solvency.
If Nigeria is serious about power sector sustainability, three shifts are urgent.
First, metering must become non-negotiable, not aspirational. The National Mass Metering Programme cannot remain a slow-moving intervention. Meter deployment targets should be tied to DisCo licensing conditions, with escalating sanctions for non-compliance.
Second, regulation must move from reporting to consequence. Publishing performance data is not enough. Persistent underperformers should face restructuring, loss of franchise areas, or enforced management changes. Markets respond to incentives, not sympathy.
Third, consumers must be treated as partners, not adversaries. Transparent billing, service-level accountability, and visible enforcement against energy theft are essential to restoring payment discipline. Trust is infrastructure and Nigeria’s power sector currently lacks it.
The loss of ₦187 billion to unbilled energy in four months is alarming, but it is also instructive.
It tells us exactly where reform is failing and where it must now concentrate.
Until Nigeria fixes the last mile where electricity meets the consumer, no amount of generation capacity, tariff adjustment, or policy rebranding will stabilize the sector. The numbers do not lie.
And they are telling us that the real power crisis is not on the grid, but in governance.
- Precious Ebere-Chinonso Obi, CEO of Do Take Action is an independent consultant on edtech, climate change, public policy, and women’s procurement empowerment.
