Nigeria's electricity market could face a deeper revenue shortfall after the Federal Government confirmed it has no immediate plan to raise tariffs, leaving distribution companies with limited room to improve collections through pricing while supply costs continue to outstrip recovered revenue.
Minister of Power Joseph Tegbe said on Monday that the administration was prioritising stability across the electricity value chain, improved supply and stronger market discipline. Industry experts, however, say the stance shifts the burden to collections, loss reduction and supply performance to prevent the existing funding gap from widening.
Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, said the sector was already carrying a major financing gap that had forced the government into subsidies and debt financing. He put the outstanding subsidy at about N6 trillion, adding that this was why the government had to raise a bond to offset debts owed to generation companies and gas suppliers.
"The current structure of running the sector is clearly not sustainable because it's government that is subsidising. It's looking more like the former subsidy regime that we had," Yusuf said.
A source within the Abuja Electricity Distribution Company said the absence of an immediate tariff increase means DisCos would have to rely more heavily on collection efficiency and loss reduction. The source added that the key issue is how much revenue DisCos can recover from electricity supplied, not simply the tariff level.
NERC data shows the scale of the gap. In June 2026, DisCos received electricity valued at N315.73 billion but collected N191.86 billion, leaving a N123.87 billion shortfall. For 2025, the 11 DisCos supplied electricity valued at N3.68 trillion, billed N2.99 trillion and collected N2.32 trillion, producing a combined revenue gap of about N1.36 trillion.
Of that figure, N694.8 billion represented electricity supplied but not billed, while N669.49 billion represented electricity billed but not recovered.
Electricity-sector analyst Azeez Abegunde said DisCos cannot rely on pricing to improve their revenue position if tariffs remain unchanged. "If tariff remains where it is, the only way for DisCos to improve their cash position is to sell more energy, bill more accurately and collect a higher percentage of what they bill," he said.
