Underperforming DisCos, GenCos face penalties as Nigeria plans tariff reforms

THE Federal Ministry of Power says underperforming electricity distribution and generation companies (DisCos and GenCos) will face sanctions as the government moves to strengthen accountability and reform tariffs across the power sector.

Minister of Power, Joseph Olasunkanmi Tegbe, disclosed this in a policy brief delivered by his Special Adviser, Martins Olajide, at the NESG Industrialisation and Competitiveness Forum on Wednesday.

Tegbe said the ministry would introduce performance scorecards for power sector personnel, DisCos and GenCos, with operators that meet agreed targets rewarded while those that fail to perform would face penalties.

According to him, the scorecards are intended to improve accountability across the electricity value chain and ensure operators meet clearly defined performance standards.

The minister also announced plans for tariff reforms aimed at protecting vulnerable consumers while ensuring that electricity supply obligations are met across the value chain.

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He said the measures are part of an eight-point agenda to stabilise the power market, restore discipline and strengthen governance in the sector.

Tegbe said Nigeria has 13,625 megawatts (MW) of installed grid capacity, but average daily availability stands at only 4,854MW. This means about 62 percent of installed capacity remains idle, despite realistic peak demand of around 20,000MW.

“The power arithmetic does not add up,” Tegbe said. He said the persistent gap between electricity supply and demand has forced households and businesses to increasingly rely on self-generation.

According to the minister, Nigerians spent an estimated N16.5 trillion on self-generated electricity in 2023, compared with about N1 trillion in revenue generated by the national grid.

Citing World Bank estimates, Tegbe said inadequate electricity supply costs Nigeria about $25 billion annually, equivalent to between 5 percent and 7 percent of gross domestic product.

He said improving operator performance and reforming electricity tariffs are central to creating a more reliable power market that can support industrial productivity and economic growth.

The minister said the government would also strengthen the electricity value chain and improve utilisation of existing infrastructure.

He said the ministry plans to enhance the Lagos, Enugu-Port Harcourt and Abuja-Kaduna-Kano transmission corridors, with Lagos serving as a proof of concept for the wider grid stabilisation programme.

Tegbe added that the government would work to reduce technical and commercial losses while expanding electricity metering.

He said generation and transmission assets would also be optimised through targeted economic clusters and corridors to improve asset utilisation, support industrial activity and attract investment.