Nigeria electricity market faces investment hurdles and revenue losses

Nigeria’s efforts to decentralize its electricity market are facing significant hurdles as investors hesitate due to a lack of bankability. Despite the Electricity Act 2023, only 16 states have secured legal autonomy to regulate local power markets, with only seven having fully assumed regulatory control. Analysts suggest that the transition has multiplied regulatory risks rather than removing them, citing a lack of creditworthy buyers, secure payment structures, and predictable tariffs at the state level.

Compounding these structural issues, the Nigerian Electricity Regulatory Commission (NERC) reported massive financial losses in 2025. Of the N3.68 trillion worth of electricity generated, only N2.31 trillion was collected by electricity distribution companies (DisCos). The report highlighted N694.8 billion in losses from generation plants to the network and N669.49 billion in unpaid bills from customers.

These inefficiencies, including energy theft and poor accounting, have resulted in a collection efficiency of 77.60%. The combination of billing and collection inefficiencies continues to impact the financial liquidity of the Nigerian Electricity Supply Industry (NESI), limiting its capacity to attract the necessary investment for sector growth.