Despite Band A Tariff Increase, DisCos Power Sector’s Weakest Link

The federal government has identified the electricity distribution companies (DisCos) as the weakest link in Nigeria’s power sector, with their poor performance continuing to undermine efforts to improve power supply nationwide.

This despite the increase in tariff for customers under Band A, a development that has improved liquidity in the Nigerian Electricity Supply Industry (NESI).

Speaking at a two-day Senate Committee on Power retreat, minister of power, Adebayo Adelabu, lamented that DisCos’ poor performance, aging infrastructure, and financial mismanagement have left millions of Nigerians without reliable electricity, despite increased generation capacity and a stabilised national grid.

Recall that the Band A tariff customers saw a 240 per cent increase from about N66 to N225 per kilowatt-hour for customers enjoying 20 hours of power supply and above, intended to boost DisCos’ financial viability. However, this tariff adjustment has not translated into improved performance or service delivery, underscoring deeper structural and operational challenges within the distribution companies.

Adelabu urged the National Assembly to enact stricter laws criminalising power infrastructure vandalism, describing it as economic sabotage. He revealed that the Transmission Company of Nigeria (TCN) has installed 74 high-capacity transformers since 2024, worth hundreds of millions of dollars, yet vandalism and illegal connections persist.

“Our towers are toppled, meters are bypassed, and people engage in power theft—these must be treated as criminal offences, not civil matters,” he said.

The minister also highlighted TCN’s financial struggles, noting that the agency operates solely on dwindling internally generated revenue (IGR), which is insufficient for salaries, let alone infrastructure upgrades. He called for TCN’s inclusion in federal appropriations to sustain transmission expansion.

Adelabu singled out DisCos as the sector’s biggest letdown, citing their failure to invest in infrastructure, remit revenues, and curb electricity theft.

“DisCos have disappointed us. Whatever we achieve in generation and transmission means nothing if distribution fails,” he said.

He said, “We need to get tough with the DisCos, as they can easily frustrate all the gains we have made. They have disappointed us in performance expectations. Whatever we do in generation does not mean anything to consumers if it is frustrated at the distribution points”.

He noted that in 2003, restructuring of the sector, the DisCos were supposed to have technical partners, but many of them showed partnership with foreign companies for that purpose, which lasted for about three months.

“So, we need utility companies that can invest in the sector to improve infrastructure, improve service. A lot of them went to the banks to take loans to buy the assets, after taking over, instead of providing infrastructure, they are taking out the money to pay the loans”, Adelabu said.

He disclosed that in Q4 2024, Northern DisCos remitted only 30 percent (N124.4 billion) of their N408.86 billion invoice, with Abuja DisCo contributing 85 percent of payments.

Southern DisCos performed slightly better at 67 (N254.6 billion), but 70 percent of that came from Lagos alone, exposing severe regional disparities due to neglected networks outside economic hubs.

“These discrepancies are due largely to crumbling infrastructure outside economic hubs, where underinvestment has left networks dilapidated”, the minister lamented.

Metering gap, Subsidy Burden Worsen Situation

The Minister acknowledged that the metering gap remains a major revenue drain, with only 75,000 meters deployed in April under the N700 billion Presidential Metering Initiative (PMI). An additional 200,000 are expected in May, but the backlog persists.

Worse still, the sector faces a N4 trillion subsidy debt to generation companies, including ₦1.94 trillion for 2024 alone. Monthly subsidy shortfalls now exceed ₦200 billion, making current tariffs unsustainable.

Adelabu announced plans to restructure underperforming DisCos, enforce stricter performance benchmarks, and attract private investment into distribution networks. He also revealed ongoing efforts to revive the 1,000MW Makurdi hydropower project, complete the abandoned 215MW Kaduna thermal plant, and concession the 10MW Katsina wind farm.