Discos Target N2.3trn Revenue, FG Blames Poor Investments for Shortfall
Electricity distribution companies are on course to record N2.3tn in revenue by the end of 2025, but the Federal Government says the companies were only earning money without making the investment required to stabilise the power sector.
The Minister of Power, Adebayo Adelabu, stated this on Thursday in Lagos at PwC’s annual power sector roundtable themed ‘Nigeria’s multi-tier electricity market: Imperatives for successful evolution’. Adelabu said the government’s market reforms had doubled DisCos’ revenue within two years, yet the companies.
However, Adelabu added that the DisCos had failed to reinvest adequately in infrastructure, technical manpower, and customer metering.
He stressed the balance sheets of the distributors are not attractive to banks, saying that “their capital is negative.”
He noted that there was an attraction of over $2bn in fresh investment to the sector to further extend electricity access in the country. “Since we came in, over $2bn has been injected into this industry, and you can see the impact. There is also the commencement of the process to transition the industry towards full commercialisation, which increased the sector’s revenue by 70 per cent in the year 2024 and reduced government subsidy liability by N700bn.
“In 2023, N1tn was made in this power sector. The DisCos’ revenue was N1tn, and in one year, we grew this from N1tn to N1.7tn. That was 70 per cent growth in one year. And with the trajectory of the last three quarters this year, by the end of December this year, we are looking at about N2.3tn. That is doubling sector revenue because of our intentional policy reforms.”
Despite this, Adelabu criticised the distribution companies for what he described as chronic underinvestment and weak technical capacity. He said the DisCos had abandoned manpower development, leaving critical functions such as installation and metering in crisis.
According to him, “The last set of engineers trained in this sector was trained by NEPA and PHCN. The DisCos, I’m not impressed with your training trajectory. I keep saying it: you’re not training, you’re just making profits, you’re just making money. We must train people for this sector.”
The minister said the manpower shortage had significantly slowed down the metering programme, despite the government’s recent importation of hundreds of thousands of meters.
“Talking about the technical skills, we brought in almost 600,000 meters about three or four months ago. Today, we have yet to install 200,000 of these 600,000 meters. Where are the installers? We don’t even have installers,” he stated.
Adelabu said the National Power Training Institute of Nigeria and the Nigerian Electricity Management Services Agency will be mandated to accelerate training and certification of installers to fill the gap by training about 1,000 electrical engineers in 10 years.
He also faulted the sector’s heavy reliance on expatriates, warning that the practice was unsustainable. “We keep relying on experts. For how long are we going to do this? Today, installing a solar gadget is a problem. To maintain it is a problem. How long are we going to do this?” he said.
Adelabu noted that the lack of investment by the DisCos was evident in the wide metering gap, which had left nearly seven million customers on estimated billing.
“One of the major issues in this industry is the meter gap that we have. Almost half of consumers today are on estimated billing. Of the 13 million customers we have in the sector, about 6 million are metered. Almost 7 million customers are not metered. And estimated billing is unfair. It’s unjust. It’s not transparent. People are not satisfied with it,” he stressed.
He explained that the Federal Government had set aside N700m under a presidential initiative to procure 10 million meters over the next five years, while the World Bank’s $500m DISREP programme would complement the effort with additional meters and remote monitoring systems.
Adelabu stated that the reforms initiated by the government, including the Band A tariff plan, had boosted liquidity without imposing extra financial pressure on customers.
Speaking further about the N2.3tn 2025 revenue, he said, “This is not an additional burden on the pocket of our people. It’s just a reallocation of funds. In 2023, when they made N1tn for the sector, the study we carried out showed that N15tn was spent on diesel, on petrol, on generators, and on maintenance. So all we did was just reallocate a little from those diesel expenses into the formal sector.”
He added that the government’s goal was to grow sector revenue to N5tn, a level he said would deliver about 70 to 80 per cent reliability in power supply, similar to what is obtainable in advanced economies.
“I believe that if we can raise the revenue in this sector to N5tn, sincerely, we are going to achieve almost 70 to 80 per cent reliability of services in this power sector. That’s what happens in the UK, in the US, and elsewhere in Europe,” he maintained.
Adelabu insisted that the DisCos must now complement government reforms with serious investment, improved technical competence, and a stronger commitment to service delivery if the power market is to evolve successfully. The minister urged collaboration between the state regulators and the DisCos.
“We must collaborate, we must cooperate, and we must partner to take this sector to the next level. The Federal Ministry of Power is encouraging a coordinated engagement between the national and sub-national regulators. They must be handheld, they must be nurtured, and we must ensure that they get to the level where they can stand on their own. We should not compete; we must collaborate. We should not strive for superiority; we must cooperate to achieve a common goal, strengthening national and sub-national infrastructure,” he advised.
Commenting, Partner and Leader for Energy, Utilities and Resources at PwC Nigeria, Pedro Omontuemhen, said, “With the ongoing implementation of the Electricity Act 2023 and recent policy developments, including states exercising their new powers, the sector has entered a phase where the success of the multi-tier market will be determined by how effectively reforms are applied in practice.”
According to him, the reforms recognise that decentralisation is vital to achieving Nigeria’s electrification and sustainability goals, enabling localised solutions that support national objectives.
“Our engagement with industry leaders shows that clarity of stakeholder roles and collaborative action will be essential to navigate teething challenges. Additionally, supporting emerging state-level structures and exploring opportunities for regional coordination across neighbouring states will be key to strengthening oversight and overall sector performance.
“Market players must also reinvent their business models in line with global energy trends, particularly as climate change, AI, and geopolitics continue to reshape ‘how we fuel and power’. This is the transformation Nigeria’s power sector must prepare for to remain competitive and sustainable in the future,” Omontuemhen added.
Bimbola Banjo, who is also Partner, Energy and Resources at PwC Nigeria, explained that in a liberalised and increasingly sub-nationally regulated power market, the basis of competition across the value chain is being fundamentally rewritten.
He opined that state-level licensing, sub-franchise models, and the separation of distribution and supply are reshaping market structure in the Nigeria Electricity Supply Industry, challenging the idea of exclusive territories and shifting success factors from regulatory protection to operational excellence.
“For DisCos, GenCos, and other market players alike, succeeding under this new architecture requires a clear understanding of evolving market dynamics, commercial agility, customer satisfaction, and purposeful execution supported by artificial intelligence and business. model reinvention. Approaches that worked in a centrally regulated system will not deliver results in a market where customers have alternatives and regulators operate closer to local realities,” Banjo submitted.
The roundtable brought together stakeholders and other industry leaders, including the Managing Director/Chief Executive Officer of the Rural Electrification Agency, Abba Aliyu; the Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye; the Chief Executive Officer of the Eko Electricity Distribution Company, Mrs Rekhiat Momoh; the Director of Client Relations, Anglophone West Africa, African Export-Import Bank, Peter Olowononi; and others.