The Nigerian Electricity Regulatory Commission (NERC) has rolled out revised directives concerning the reporting of regional electricity Transmission Loss Factors (TLF). This initiative is part of the commission's ongoing efforts to foster greater transparency and efficiency within Nigeria's power transmission network.
According to data released by the Nigerian Independent System Operator (NISO), the national average TLF saw a reduction from 8.71 per cent in 2024 to 7.24 per cent in 2025. Despite this decrease, the figure remains above the 7 per cent benchmark established under the Multi-Year Tariff Order (MYTO).
The new directive, detailed in Order No. NERC/2026/026, dated April 8, 2026, establishes a formal structure for documenting transmission losses across the operational regions of the Transmission Company of Nigeria (TCN). This order is set to take effect on April 13, 2026, and is underpinned by the provisions of the Electricity Act 2023, which grants NERC the authority to regulate and monitor the efficiency of the electricity market.
Key provisions of the updated guidelines include the installation of smart meters at all regional boundary interconnection points by NISO by December 2026. This is intended to ensure precise measurement of energy flows. The system operator is also required to meticulously measure and record energy flows through power transformers at transmission substations and submit quarterly regional TLF reports to the regulatory body.
Furthermore, NERC has instructed the TCN to present a comprehensive action plan by July 2026. This plan must detail the strategies the company will employ to reduce transmission losses to meet the approved 7 per cent benchmark. NERC has also set a more stringent target, stipulating that regional transmission losses must not exceed 6.5 per cent by the end of December 2026. The commission stated that this order is crucial for enhancing accountability in transmission operations and improving the overall performance of the national grid through structured and transparent loss reporting.
The introduction of these new guidelines occurs against the backdrop of persistent challenges plaguing Nigeria's electricity sector. These challenges encompass outdated infrastructure, frequent grid failures, and ongoing power supply deficits. The inadequacy of power supply has historically compelled many households and businesses to depend on alternative energy sources, such as generators and solar power, which significantly raises operational expenses and the cost of goods and services.
In a related development aimed at alleviating financial strains within the sector, President Bola Tinubu recently sanctioned a N3.3 trillion payment plan to address substantial long-standing debts under the Presidential Power Sector Financial Reforms Programme. This settlement figure was determined after a thorough review and verification of liabilities accumulated between February 2015 and March 2025.
Meanwhile, revenue collection inefficiencies continue to negatively impact the sector's financial health. NERC's January fact sheet indicated a decline in the revenue recovery performance of Electricity Distribution Companies (DisCos). The average revenue recovery efficiency fell to 69.16 per cent in January 2026, down from 72.31 per cent in 2025, marking a decrease of 3.15 percentage points. Billing efficiency was recorded at 79.72 per cent, suggesting that a considerable portion of electricity supplied was not billed, while collection efficiency stood at 76.34 per cent, meaning a significant amount of billed revenue went unpaid. These figures translate to monetary losses for DisCos, with electricity valued at N336.43 billion being supplied, N268.20 billion billed, and only N204.74 billion collected, underscoring the widening revenue gap and escalating liquidity issues in the power industry.
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