NERC issues new guidelines on regional electricity transmission losses

The Nigerian Electricity Regulatory Commission (NERC) has issued updated guidelines on the reporting of regional electricity Transmission Loss Factors (TLF), as part of ongoing reforms to enhance transparency and efficiency in Nigeria’s power grid.

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In a statement issued Monday, the commission said data from the Nigerian Independent System Operator (NISO) showed that the national average TLF declined from 8.71 per cent in 2024 to 7.24 per cent in 2025.

However, it noted that the figure still exceeds the 7 per cent benchmark approved under the Multi-Year Tariff Order (MYTO).

NERC said the directive, contained in Order No. NERC/2026/026 dated 8 April 2026, establishes a formal framework for reporting transmission losses across regions operated by the Transmission Company of Nigeria (TCN).

The commission said the order, which takes effect from 13 April 2026, is backed by provisions of the Electricity Act 2023, empowering it to regulate and monitor efficiency in the electricity market.

Key provisions

Under the new guidelines, NISO is required to install smart meters at all regional boundary interconnection points by December 2026 to ensure accurate measurement of energy flows.

The system operator is also mandated to measure and document energy flows through power transformers at transmission substations and submit quarterly regional TLF reports to the regulator.

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In addition, NERC directed TCN to submit, by July 2026, a detailed action plan outlining measures to reduce transmission losses to within the approved 7 per cent benchmark.

The commission further set a stricter target, requiring that transmission losses across regions must not exceed 6.5 per cent by December 2026.

According to NERC, the order is designed to strengthen accountability in transmission operations and improve overall grid performance through structured and transparent loss reporting.

Sector challenges persist

The new directive comes amid longstanding challenges in Nigeria’s electricity sector, including weak infrastructure, frequent grid collapses, and persistent supply shortages.

Over the years, inadequate power supply has forced households and businesses to rely heavily on petrol and diesel generators, as well as solar alternatives, significantly increasing operating costs.

These costs are often passed on to consumers through higher prices of goods and services.

In a bid to address some of the sector’s financial constraints, President Bola Tinubu recently approved a N3.3 trillion payment plan to settle longstanding debts under the Presidential Power Sector Financial Reforms Programme.

The presidency said the liabilities, accumulated between February 2015 and March 2025, were reviewed and verified before arriving at the final settlement figure.

READ ALSO: Electricity firm apologises for blackout in Abia community on Easter Day

Revenue losses deepen

Despite regulatory efforts, inefficiencies in revenue collection continue to weigh on the performance of the sector.

In its January fact sheet released last week, NERC reported a decline in the revenue recovery performance of Electricity Distribution Companies (DisCos).

According to the data, average revenue recovery efficiency dropped to 69.16 per cent in January 2026, from 72.31 per cent in 2025, representing a 3.15 percentage point decline.

Billing efficiency stood at 79.72 per cent, indicating that nearly one-fifth of electricity received was not billed, while collection efficiency was 76.34 per cent, showing that a significant portion of billed revenue remained unpaid.

In monetary terms, DisCos received electricity valued at N336.43 billion, billed N268.20 billion, and collected only N204.74 billion—highlighting a widening revenue gap and deepening liquidity challenges in the power sector.