With the recent increase in electricity tariffs and stable market indices, the income of Nigeria’s electricity distribution companies (Discos) is expected to rise significantly in 2023, writes Opeoluwani Akintayo. Historically, Discos have complained that the tariffs they were forced to charge were not reflective of market conditions, causing them to operate at a loss. In response, the government approved an upward review of electricity tariffs. Estimates now suggest that the 11 Discos could double their revenues, generating combined earnings of around N6 trillion from electricity sales this year.
The Nigerian Electricity Regulatory Commission (NERC) released a report titled “Discos’ Energy Sales by Service Band Data for 2022,” which placed revenue from electricity sales at about N597 billion for the previous year. Had tariffs not been increased, experts projected 2023 revenue would have been around N1 trillion, based on last year’s earnings trend. Sunday Oduntan, Executive Secretary of the Association of Nigerian Electricity Distributors (ANED), claimed that the utility firms earned N777 billion in the first quarter of 2022. If Oduntan’s figure is correct—contrasting with NERC’s data—the Discos could have made roughly N3 trillion by the end of 2022 and may now reach N6 trillion in 2023 due to the tariff hike.
NERC has not disclosed how much each customer category will pay under the new tariffs. Data from its latest report shows the per‑kilowatt‑hour (kWh) charges as of December: Lifeline at N15.29; Band A non‑MD at N60.62; Band A maximum demand 1 at N64.44; Band A maximum demand 2 at N64.52; Band A maximum demand 3/Bilateral at N60.52. Other rates include Band B non‑MD at N57.75, Band B maximum demand 1 at N57.91, Band B maximum demand 2 at N59.40, and Band C non‑MD at N53.44. Band C maximum demand 1 is N54.45, Band C maximum demand 2 is N63.80. For Band D, non‑MD customers pay N36.14, while maximum demand 1 and 2 pay N49.97 and N51.75 respectively. Non‑maximum demand customers overall pay N37.42 per kWh; Band E maximum demand 1 and 2 are charged N47.46 and N47.61 respectively.
Despite these published rates, Discos have not been able to collect full charges from all customers in each band. NERC estimated that, as of March 2022, there were 12,542,581 registered customers across all Discos, but neither the utilities nor NERC have released official statistics on the distribution of customers among the bands or the exact tariff increments applied.
Social media has highlighted consumer concerns. A Twitter user, Oyibo Ediri, accused the Abuja Electricity Distribution Company (AEDC) of quietly raising the tariff for non‑maximum demand customers by N12.65, from N57.55 to N68.20 per kWh—a 19 percent increase. Although Ediri claimed to be in Band A, verification showed the quoted rate actually fell under a Band B category. Similarly, Lagos resident Oye Sola lamented a rise to N72.20 per unit, up from N66.10, suggesting a nine‑percent increase and warning of future hikes to N100. Checks indicated the N66.10 rate belongs to Band A.
AEDC defended the increase as “in compliance with NERC order.” If Oduntan’s revenue figures are accurate, the 11 Discos could earn more than N6 trillion in 2023. NERC spokesperson Usman Abba has not responded to inquiries about the tariff hike. Historically, NERC has said it will review tariffs every six months, adjusting for foreign‑exchange fluctuations and inflation. Chairman Sanusi Garba emphasized that rate adjustments are straightforward, though not necessarily upward. Given Nigeria’s persistent foreign‑exchange depreciation and high inflation, future tariff reviews may follow a similar upward trend.
Spokespersons for Eko Electricity (Godwin Idemudia), Ikeja Electric (Ayeni Akinola), and Ibadan Discos (Busolami Tunwase) declined comment, directing queries to ANED’s Oduntan, who also did not respond. Nonetheless, low power allocation and resulting load shedding could curb Discos’ revenue projections. Recent statements from several Discos cite inadequate power supply from the national grid, leading to load shedding and reduced consumer supply—some areas receiving as little as one hour of electricity per day.
Ikeja Electric apologized for the intermittent supply, attributing it to insufficient allocation and promising engagement with stakeholders to improve the situation. Eko Electricity Development Company issued a similar apology for Lagos and Ogun states, blaming reduced load capacity from the national grid. Kano Electricity Distribution Company also cited generation company (Genco) shortcomings. Load shedding inevitably reduces the quantity of electricity sold, lowering revenue.
Payment apathy among unmetered customers further threatens revenue expectations. NERC’s first‑quarter 2022 report noted a N7.4 billion reduction in Discos’ billing, with revenue collections falling by about N11 billion—a 5 percent decline from the same period the previous year. The regulator urged Discos to adopt technologies and operational procedures to improve billing and collection, averting long‑term financial challenges.
Technical losses also affect revenue. Energy generated at power stations is partially consumed on‑site, and additional losses occur during transmission to Discos’ metering points and onward to customers. Moreover, poor customer enumeration, low metering rates, inaccurate meters, and electricity theft hinder full billing. In Q1 2022, total energy received by all Discos was 7,300.05 GWh, while billed energy was 5,649.21 GWh, yielding a billing efficiency of 77 percent. Compared with Q4 2021, billed energy fell by 408.57 GWh (‑7 percent), reflecting an 8 percent drop in energy received. NERC affirmed its commitment to work with Discos to reduce distribution losses and steer the industry toward financial sustainability.
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