DisCos push for first-line budget charge as MDAs’ power debts mount

Nigeria’s electricity distribution companies (DisCos) have called on the Federal Government to treat unpaid electricity bills owed by Ministries, Departments and Agencies (MDAs) as a first-line charge on approved government budgets.

The Association of Nigerian Electricity Distributors (ANED) made the call as it raised concerns over the financial strain caused by delayed or non-payment of electricity bills by government institutions.

ANED Managing Director and Chief Executive Officer, Mr Sunday Oduntan, made the comments in an interview with the News Agency of Nigeria (NAN) on Wednesday in Abuja.

What they are saying

Oduntan said government agencies should settle their electricity obligations promptly to reduce the financial pressure on DisCos and strengthen the distribution sector.

• “DisCos need to be empowered to disconnect government agencies that fail to settle their electricity bills and pursue lawful recovery of outstanding debts.”
• “Access to affordable and long-term financing is critical to the survival, expansion and modernisation of Nigeria’s electricity distribution network.”

Oduntan said making electricity obligations a first-line charge would help ensure that government institutions pay their bills on time.

He also called for improved customer service, greater transparency in electricity billing and stronger accountability mechanisms that would allow consumers and Civil Society Organisations (CSOs) to hold DisCos accountable for service delivery.

Oduntan said resolving government arrears should form part of broader measures to improve the financial sustainability of the electricity distribution industry.

• He called for improved metering and stronger revenue collection across the sector.
• He called for expansion of mini-grid and off-grid electricity solutions, particularly in rural and underserved communities.
• He said stronger accountability on both service delivery and payment obligations would help improve electricity supply.

The comments come amid continuing financial difficulties in the electricity market, including major obligations owed by DisCos to other participants in the power sector.

Get up to speed

The issue of unpaid government electricity bills has previously generated disputes between public institutions and DisCos.

• In 2025, ANED accused the Nigerian Air Force (NAF) of refusing to settle an outstanding electricity debt of N4.34 billion despite having the financial capacity to do so.
• The dispute followed the disconnection of a NAF facility over unpaid bills, after which personnel of the Air Force attacked and vandalised the headquarters and a business unit of Ikeja Electric in Lagos, according to an earlier Nairametrics report.
• The recurring disputes have highlighted the difficulty DisCos face in recovering revenue while remaining responsible for maintaining and expanding electricity distribution infrastructure.

The Nigerian Electricity Regulatory Commission (NERC) recently took control of Kaduna Electricity Distribution Company (KAEDC) and dissolved its board over a debt crisis involving about N456.5 billion in cumulative market obligations.

• In July 2024, NERC approved the acquisition of a 60% equity stake in Kaduna Electricity Company Plc by ASI Engineering Limited, paving the way for the investor to take operational control.
• In the first quarter of 2026, DisCos recovered N597.56 billion from electricity bills issued to customers.

The collection was the second-highest quarterly revenue recorded in the previous five quarters despite a 0.41% decline in collection efficiency.

What you should know

Nairametrics previously reported that electricity distribution companies recorded an aggregate billing efficiency of 82.03% in the fourth quarter of 2025, despite posting N174.12 billion in billing shortfalls.

Collection efficiency measures the proportion of electricity bills successfully recovered by DisCos from customers.

Lower collection efficiency affects cash flows across the electricity value chain, reducing payments to generation companies (GenCos), the Transmission Company of Nigeria (TCN) and gas suppliers.