Understanding the Surge in DisCos Revenue
Nigeria’s electricity distribution companies are projected to generate a record N2.3tn in DisCos revenue by the end of 2025, reflecting the most significant financial upturn in the power sector since the post-privatisation era.
Yet, despite this remarkable revenue growth, the Federal Government has strongly criticised the firms for failing to invest adequately in infrastructure, manpower development, and customer metering—issues that continue to undermine efficiency and stall sectoral progress.
The Minister of Power, Adebayo Adelabu, delivered the government’s firm position at PwC Nigeria’s annual power sector roundtable held in Lagos.
The event, themed “Nigeria’s Multi-Tier Electricity Market: Imperatives for Successful Evolution,” brought together regulators, investors, and policymakers to assess the future of the industry as it transitions into a decentralised electricity market.
According to Adelabu, sector-wide reforms introduced by the present administration have directly boosted DisCos revenue within a two-year period, doubling collections and reducing the government’s subsidy exposure.
But he stressed that the distribution companies were “earning without reinvesting,” leaving the financial and technical health of the market dangerously weak.
FG Claims DisCos Revenue Rise Not Matched by Investments
Despite the impressive figures, the Federal Government insists the distribution companies have failed to invest in the assets that should support their operations.
Adelabu expressed concern that the bulk of the earnings had not translated into expanded technical manpower, improved infrastructure, or enhanced service delivery to consumers.
He revealed that many DisCos now operate with negative capital, a situation that renders them unattractive to lenders and prevents them from accessing the financing needed to scale their operations.
“Revenue has grown from N1tn in 2023 to N1.7tn in 2024, and now we are projecting N2.3tn by December 2025,” Adelabu stated.
“However, these gains are not visible in network improvement, manpower capacity, or metering expansion. The companies must do more. The era of earning without reinvesting is over.”
He emphasised that the sector had attracted more than $2bn in fresh capital over the last two years, driven largely by the government’s reforms, including the transition toward commercialisation and the Band A tariff review.
These reforms, according to the minister, increased the liquidity of the sector by 70 percent and cut subsidy obligations by N700bn.
FG Decries Manpower Shortage Despite Rising DisCos Revenue
A critical bottleneck identified by the minister is the acute shortage of skilled technicians.
Although the government recently imported nearly 600,000 meters, Adelabu disclosed that only 200,000 had been installed due to the lack of certified installers.
He attributed the problem to years of poor investment in human capital by the DisCos, noting that the last batch of well-trained engineers came from the days of the defunct NEPA and PHCN.
“Where are the installers? Where are the trained engineers?” Adelabu asked.
“DisCos are making money, but they are not training people. Technical capacity is collapsing, and that must stop.”
To address this gap, the National Power Training Institute of Nigeria and the Nigerian Electricity Management Services Agency will be mandated to train at least 1,000 electrical engineers every year for the next decade.
Metering Gap Widens as DisCos Revenue Climbs
The minister also described Nigeria’s metering gap as “unacceptable.” Of the estimated 13 million registered electricity customers, only 6 million are currently metered, leaving nearly 7 million customers on estimated billing.
He warned that estimated billing is inequitable and erodes public trust in the sector.
To close the gap, the Federal Government has earmarked N700bn for a presidential initiative to deploy 10 million meters over five years.
The World Bank’s $500m Distribution Sector Recovery Programme (DISREP) will complement this effort through supply of additional meters and remote monitoring technology.
Tariff Reforms Drive Higher DisCos Revenue Without Burdening Consumers
Adelabu explained that the rising DisCos revenue does not translate to increased financial burden on households.
Instead, the government reallocated funds previously spent on diesel and generator maintenance into the formal power market.
He noted that Nigerians spent over N15tn on self-generation in 2023 alone, a pattern that justified the government’s reforms to shift consumer spending back into the national grid.
“Our objective is simple: shift a portion of diesel and petrol expenses into grid consumption. This strengthens the sector without overburdening customers,” he said.
The minister further projected that the sector must scale to N5tn in annual revenue to deliver at least 70–80% power reliability, a benchmark he says aligns with service levels in advanced economies.
Stakeholders Call for Collaboration and Market Reinvention
Industry experts at the PwC roundtable echoed the minister’s concerns, warning that the success of the multi-tier electricity market depends on practical implementation of the Electricity Act 2023 and stronger alignment between federal and sub-national regulators.
Pedro Omontuemhen, PwC Nigeria’s Partner for Energy, Utilities and Resources, described decentralisation as essential to Nigeria’s electrification plans.
He emphasised that states must develop capacity to regulate effectively while collaborating with neighbours on regional power structures.
Read more: AfDB’s landmark $500m loan sparks major boost for Nigeria’s energy transition and governance reforms
He also urged market players to evolve their business models in line with global trends such as climate change, artificial intelligence, and green energy transitions.
Another PwC Partner, Bimbola Banjo, argued that competition in the Nigerian Electricity Supply Industry has fundamentally changed.
State-level licensing, sub-franchising, and the separation of distribution from supply functions, he said, mean that operational excellence—not regulatory protection—will determine future winners.
Government Calls for Aggressive Reinvestment to Match Rising DisCos Revenue
Adelabu concluded by urging distribution companies to complement government-led reforms through serious investments in infrastructure, technical competence, customer service, and operational efficiency.
“This market cannot evolve successfully without strong collaboration,” he stated. “Regulators and DisCos must work hand in hand. We must cooperate—not compete—to deliver reliable power for Nigerians.”
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