Nigerian Electricity Regulatory Commission — NG Legal Update

The Nigerian Electricity Regulatory Commission (NERC) recently reported that Electricity Distribution Companies (DisCos) collected N203.61 billion from consumers in April 2026, out of a total billing of N252.43 billion. This translates to a collection efficiency of approximately 80.66%, highlighting persistent revenue assurance challenges within the Nigerian Electricity Supply Industry (NESI). The report underscores the critical role of NERC's regulatory interventions, such as the Service Based Tariff and Meter Asset Provider Regulations, in driving improved financial performance and sector liquidity. For legal practitioners, these figures signal ongoing regulatory scrutiny, potential enforcement actions, and evolving compliance requirements for DisCos and other stakeholders in the dynamic Nigerian power sector.

The Nigerian Electricity Regulatory Commission (NERC) recently released its Commercial Performance Factsheet for April 2026, revealing that the nation's eleven Electricity Distribution Companies (DisCos) collectively generated N203.61 billion from consumers. This collection was against a total billing of N252.43 billion for the same period, indicating a collection efficiency of 80.66%. While this figure represents a marginal improvement in revenue recovery for the sector, it simultaneously highlights the enduring challenges associated with billing accuracy, collection losses, and overall financial viability within the Nigerian Electricity Supply Industry (NESI).

This development is particularly pertinent for legal professionals advising clients within the power sector, as it underscores NERC's intensified focus on DisCo performance and regulatory compliance. The persistent gap between billed and collected revenue has profound implications for the entire electricity value chain, affecting generation companies, transmission infrastructure, and the ability to attract much-needed investment. This article will delve into the legal and regulatory framework governing DisCo operations and revenue collection, analyze the implications of NERC's performance report, and discuss the critical considerations for practitioners navigating Nigeria's evolving electricity landscape.

The legal and institutional framework of the Nigerian electricity sector is primarily rooted in the Electric Power Sector Reform Act (EPSRA) 2005, which unbundled the erstwhile National Electric Power Authority (NEPA) into several successor companies, including the Generation Companies (GenCos), the Transmission Company of Nigeria (TCN), and the eleven Distribution Companies (DisCos). The EPSRA 2005 also established the Nigerian Electricity Regulatory Commission (NERC) as an independent body mandated to undertake the technical and economic regulation of the NESI. NERC's extensive powers include licensing operators, determining tariffs, setting operating codes and standards, and enforcing performance standards and consumer rights.

More recently, the Electricity Act 2023 repealed the EPSRA 2005, providing a comprehensive legal and institutional framework for the sector. This landmark legislation further empowers individual states to regulate, generate, and distribute electricity within their respective jurisdictions, while NERC retains its role as the apex regulator, particularly for interstate transactions and until states establish their own regulatory commissions. The Act aims to guide the post-privatisation phase of the NESI, encourage private sector investments, and address long-standing issues such as inadequate power supply, aging infrastructure, and revenue collection challenges.

The NERC Commercial Performance Factsheet for April 2026 reveals a collection efficiency of 80.66%, meaning that DisCos collected N203.61 billion out of N252.43 billion billed. This indicates a significant 'collection loss' of approximately N48.82 billion for the month, a recurring challenge that severely impacts the liquidity and financial health of the entire NESI. NERC's mandate under the Electricity Act 2023 includes ensuring the financial viability of the sector and protecting consumer interests, which necessitates robust regulatory oversight over DisCo collection performance.

To address these collection inefficiencies and promote revenue assurance, NERC has implemented several key regulations and orders. The Meter Asset Provider (MAP) Regulations 2018, subsequently updated in 2021, mandates DisCos to engage third-party Meter Asset Providers to bridge the metering gap and eliminate estimated billing, a major source of consumer dissatisfaction and collection losses. The Service Based Tariff (SBT), introduced in 2020 and adjusted in April 2024, is another critical intervention. It categorises customers into bands (A-E) based on guaranteed hours of electricity supply, aiming to ensure that consumers pay for the quality of service received, thereby incentivising DisCos to improve supply and collection.

Despite these regulatory efforts, the NERC report highlights significant disparities in performance among the 11 DisCos. Notably, Kano, Kaduna, and Jos Electricity Distribution Companies were flagged as the worst performers, with revenue recovery efficiencies below 50% of the allowed average tariff. This indicates that while the overall sector might show marginal improvements, underlying systemic issues such as energy theft, infrastructure deficits, and inadequate customer enumeration persist in certain franchise areas. NERC's Guidelines on the Registration and Engagement of Third-Party Collection Service Providers, issued in May 2025, further aims to streamline billing and payment collection processes, particularly for non-Maximum Demand customers, to mitigate collection losses.

The Electricity Act 2023's provision for state-level electricity regulation introduces a new layer of complexity and opportunity. While NERC retains its overarching regulatory role, the emergence of state electricity regulatory commissions could lead to localised approaches to tariff setting, licensing, and enforcement, potentially impacting DisCo operations and revenue recovery strategies across different states. Furthermore, NERC's recent commencement of the Net Billing Regulations 2026, designed to promote renewable energy adoption by allowing 'prosumers' to export surplus power to the grid, signifies a forward-looking approach to sector development that will also influence future revenue streams and grid management.

The NERC's April 2026 commercial performance report for DisCos underscores the ongoing efforts to stabilise and improve the financial health of Nigeria's electricity sector, yet it simultaneously exposes persistent challenges in revenue collection. The 80.66% collection efficiency, while an improvement, still leaves a substantial gap that impacts the entire value chain and the sector's ability to attract sustainable investment. NERC's continued reliance on regulatory instruments like the Service Based Tariff and Meter Asset Provider Regulations, alongside new initiatives such as the Net Billing Regulations, demonstrates a multi-pronged approach to enhancing performance and ensuring sector viability.

For legal practitioners, these developments necessitate a keen understanding of the evolving regulatory landscape. Advising DisCos requires a deep dive into compliance with NERC orders on metering, billing, and collection, as well as navigating potential enforcement actions for underperformance. For investors and developers, the collection efficiency figures are crucial indicators of market risk and return, influencing investment decisions in generation, distribution, and renewable energy projects. As states begin to exercise their powers under the Electricity Act 2023, practitioners must also monitor the interplay between federal and state regulations, anticipating potential divergences and new compliance requirements that will shape the future of electricity supply in Nigeria.