Cap Grid Transmission Loss at 6.5% By December, NERC Orders TCN

The Nigerian Electricity Regulatory Commission (NERC) has directed the Transmission Company of Nigeria (TCN) to reduce Transmission Loss Factors (TLF) to a 6.5 per cent cap across all regions by December 2026, under a new order aimed at slashing grid inefficiencies.
Order No. NERC/2026/026, dated April 8, and effective from today, Monday April 13, 2026; establishes mandatory regional reporting to boost transparency in Nigeria’s power grid.

Backed by the Electricity Act 2023, it addresses TLF levels that averaged 8.71 per cent nationally in 2024 and 7.24 per cent in 2025—still exceeding NERC’s seven per cent Multi-Year Tariff Order (MYTO) benchmark.
The directive tasks TCN and the Nigerian Independent System Operator (NISO) with specific actions and timelines:TCN must submit an action plan by July 2026 to reduce regional TLF below seven per cent, culminating in the 6.5 per cent cap by year-end.
NISO will install smart meters at all regional boundary points by December 2026 for accurate energy flow measurement.
NISO must track and document energy flows at transmission substation power transformers.
NISO will file quarterly regional TLF reports with NERC.
These measures target technical losses that drive up costs for distribution companies and consumers. By enforcing accountability, NERC aims to enhance grid performance and reliability in a market strained by supply gaps.

Power sector experts view the order as a pivotal push for modernization, though execution hinges on funding for infrastructure like smart meters. Non-compliance could trigger regulatory penalties, underscoring NERC’s resolve to optimise electricity operations.
Transmission losses occur when energy dissipates during transfer across the grid, contributing to Nigeria’s persistent power supply shortfalls.
Data from the Nigerian Independent System Operator (NISO) shows the national average TLF stood at 8.71 per cent in 2024, dropping to 7.24 per cent in 2025—yet remaining above NERC’s seven per benchmark set in the Multi-Year Tariff Order (MYTO).

The new order, dated April 8 and effective today, creates a structured framework for tracking these losses in regions managed by the Transmission Company of Nigeria (TCN).
Grounded in the Electricity Act 2023, it empowers NERC to oversee and optimise the electricity market.
Key directives target NISO and TCN with clear deadlines:
NISO must install smart meters at all regional boundary interconnection points by December 2026 to precisely measure energy flows.

NISO will document energy flows at power transformers in transmission substations.
Quarterly TLF reports must be submitted to NERC on a regional basis.
TCN is required to submit an action plan by July 2026 outlining steps to bring TLF below the seven per cent benchmark across regions.
TCN must achieve a maximum TLF of 6.5 per cent in all regions by December 2026.

This initiative addresses longstanding concerns over grid losses, which inflate costs for distribution companies and ultimately burden consumers through higher tariffs. Industry analysts note that reducing TLF could free up more power for end-users, supporting economic growth amid Nigeria’s energy demands.
NERC emphasized that the order promotes accountability, enabling data-driven interventions to minimise technical losses and improve overall grid reliability. TCN and NISO have been directed to comply fully, with potential penalties for non-adherence under regulatory guidelines.

Stakeholders in the power sector welcome the move as a step toward modernisation, though challenges like funding for smart meter deployment and infrastructure upgrades remain. As Nigeria pushes for a more stable electricity market, this order signals NERC’s commitment to enforceable standards.