Nigeria’s Distribution Companies (DisCos) have seen significant revenue increases due to aggressive tariff hikes, but this hasn’t improved power supply for many Nigerians.
The Nigerian Electricity Regulatory Commission (NERC) approved a tariff increase from N66 to N225 per kilowatt-hour (kWh) in April 2024, which was later reviewed to N206/kWh for Band A customers.
These customers receive at least 20 hours of electricity daily, while others were left under the former tariff.
This increase led to a significant revenue push for DisCos, which soared to over N2 trillion in 2025.
According to the report, DisCos‘ revenue showed a 175 per cent increase in four years, rising from N842.42 billion in 2022 to N2.32 trillion in 2025.
Despite this revenue increase, service delivery to the Nigerian populace hasn’t improved, with experts citing gas shortages and a volatile grid as prevailing bottlenecks.
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Yakubu Usman, a power sector analyst, said the liquidity from increased revenues is being swallowed by a broken value chain, leaving the underlying infrastructure starved of capital investment.
Usman explained that power generation in Nigeria suffers from gas supply constraints and obsolete infrastructure, keeping power generation at 4,000 megawatts (MW) or below.
Many Nigerians are paying more for electricity, and DisCos are collecting more revenues, but the actual volume of electrons pushed into the national grid hasn’t matched the financial growth, he said.
Nigeria’s power sector is heavily challenged, with several issues that must be addressed to enjoy reliable electricity, according to Usman.
Challenges in the Power Sector
The national grid often operates below capacity due to persistent gas shortages and outdated infrastructure at generation plants.
Usman stated that while higher electricity bills should fund new transformers and modern substations, the reality is that the sector operates at a massive structural deficit that swallows up a major part of the revenue.
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They are recording losses due to widespread power theft, technical losses from weak distribution networks, and a failure to provide meters to all customers.
Ayodele Oni, partner at Bloomfield Law Practice, said the Service-Based Tariff framework and Band A classification helped mitigate DisCos‘ balance sheets but didn’t address fundamental structural challenges.
Oni emphasized that the initiative didn’t resolve bottlenecks in the gas-to-power value chain or transmission capacity expansion, and didn’t force them to make large-scale capital investments into their distribution networks.
Until those areas are addressed in a coordinated way, alongside the resolution of legacy market debts, tariff reform at the DisCo end will continue to disappoint on supply outcomes, he said.
The electricity sector in Nigeria requires a comprehensive approach to address its challenges and improve power supply for the Nigerian populace, which is crucial for making a long lasting impression on the economy.