In a recent article, I attempted to clarify how subsidy works in the Nigeria Electricity Supply Industry (NESI). However, reactions from readers across different channels opened a door I didn’t anticipate. If government is still investing heavily in subsidies and other support mechanisms, they argued, why does the quality of service from those providing electricity, especially the Distribution Companies (DisCos), still so epileptic?
The simple truth is that Nigeria’s electricity sector has rules governing how electricity flows through our homes and businesses, performance contracts with clear penalties for failures, and a regulator in the Nigerian Electricity Regulatory Commission. What has been lacking is the will to enforce these rules firmly and fairly to ensure improved power supply. This is why the Electricity Act 2023, which decentralized power and created State Electricity Regulatory Commissions, should be a genuine game-changer if allowed to function as intended.
In our homes when we pay for electricity, we expect lights, refrigeration, our children ability to study at night. When the power fails repeatedly, our water system collapses. Small businesses lose income, hospital wouldn’t be able to save a life. These aren’t abstract frustrations but survival. And they’re happening because of failures at multiple levels. For this article, the focus is on the DisCos and how SERC can address a system where accountability has become optional.
The sector is governed by a network of performance contracts that few Nigerians know exist. The Service Level Agreement (SLA) sets clear performance standards and fault accountability. The Grid and Supply SLA define exactly how much power each DisCo must accept and when load rejections are permitted. The Service-Based Tariffs (SBT) promise customers in different bands a minimum number of electricity supply hours daily. Band A should get twenty hours or more. Those guarantees are written. Customers pay for them because they’re binding. But they’re hardly kept by the DisCos.
The Transmission Company of Nigeria operates under the Transmission Loss Factor guidelines which caps allowable losses at 7% with tighter regional caps at 6.5%. Miss these targets and TCN faces immediate financial penalties. But when DisCos breach their own SLAs by rejecting allocated power without proper advance constraint declarations, little or nothing happens.
NERC 139 (2015), titled “Order on the Imbalance Application Mechanism during the Transitional Electricity Market,” imposed financial penalties on DisCos for load rejection. But when TCN complained in 2017, NERC convened a stakeholder meeting and issued threats instead of sanctions. During a 2020 tariff hearing, the then TCN’s Managing Director, Mr. Usman Mohammed challenged NERC to enforce the order. Rather than enforcement, the Commission, in 2021, six years later issued new guidelines on the matter.
When DisCos fail to meet their ninety-five percent energy offtake targets over evaluation periods, penalties remain theoretical rather than enforced. Similarly, when they fail to deliver the minimum supply hours that customers are already paying for, they face little or no meaningful consequences. This regulatory pampering stands in contrast to the swift penalties imposed on TCN and or participants.
The Power Evacuation Agreements between TCN and power generation companies establish accountability for both players. These and other contracts were designed by people who understood that electricity is an integrated system where unfairness at one point destroys efficiency everywhere. Accountability for DisCos is always treated as an option. They have learned they can nominate loads, receive power, then arbitrarily reject it without meaningful consequences. The records are documented. NERC reviews them. Life goes on.
Meanwhile, in your neighborhourhood, when a transformer fails, the DisCo tells you and your neighbours to buy the replacement parts and do the repair work. When you finally scrape together money to reconnect after paying arrears, they demand you purchase new wires because the old ones belong to them. You’re essentially financing the business infrastructure these companies use to charge you for services. All these are against the rules and contracts imposed by the regulator. But DisCos ignore them and continue to behave as if they exist beyond the law they agreed to.
The most unfortunate aspect is the complaint system itself. When you escalate some of these issues to NERC, they send you back to the very DisCo you’re complaining about and tell you to give them a chance to resolve it before escalating further. Most customers have already begged, negotiated, documented, and failed before reaching the regulator. The system doesn’t protect consumers. It protects the companies by delaying justice until exhausted citizens give up.
Perhaps NERC is overwhelmed trying to regulate the entire sector from Abuja. Perhaps the political will to enforce rules against powerful utility companies like DisCos that basically fund them simply doesn’t exist. This is why every state must take setting up and empowering SERC to function properly very seriously. SERC brings oversight closer to reality and the people. Local regulators can domesticate and enforce contracts in the same areas as the companies they oversee and licence competing distributors that introduces the competition that drives improved service delivery
Similarly, SERC represents both a revolutionary and exciting opportunity. It is the most consequential reform that should bring needed accountability to the sector. Nigerians need to understand the rules that govern the sector so they recognize when their rights are violated or when they are violating the sector laws that may contribute to poor power supply. With local regulators, this education can happen seamlessly.
However, while we fault the DisCos for lack of accountability, some consumers bear equal or greater responsibility. Many Nigerians steal electricity through illegal connections. Many others disconnect themselves to avoid payment, then demand reconnection without settling bills. Poor collection rates cripple DisCos ability to invest in infrastructure and reduce technical losses. Consumer responsibility and corporate accountability cannot exist in opposition. Both must rise together. You cannot excuse poor service, but neither can you excuse theft. Both destroy the system.
For NERC’s current leadership, I acknowledge what they’ve done recently. Forcing DisCos to issue unit token refunds to prepaid customers affected by improper billings and past Metre Asset Provider charges was enforcement with teeth. I got about 10k unit last month and will get more later. That’s what accountability looks like. It proves the regulator can act decisively when it chooses. This is the standard we need to apply consistently across all market participants.
Clearly, the TLF mechanism and the unit refund order prove the rules work. The real question is whether SERC would have the courage to domesticate and enforce them when political actors and electricity stakeholders who have made enforcement uneven still wield influence. Ultimately, we have the performance contracts and the Electricity Act 2023 has give state permission to operate. What Nigerians may still be waiting for however, is for the will to act, decisively and fairly across the value chain.
-Inyali Peter, Ph.D.
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