Nigeria’s electricity industry recorded an estimated N2.61 billion loss in the first quarter of 2026 after the Transmission Company of Nigeria (TCN) failed to meet transmission efficiency targets set by the Nigerian Electricity Regulatory Commission (NERC).
Details contained in NERC’s latest quarterly report revealed that transmission losses on the national grid rose above the benchmark approved under the Multi-Year Tariff Order (MYTO), resulting in financial penalties and unrecoverable costs for the sector.
The report showed that the average Transmission Loss Factor (TLF) for the quarter stood at 7.96 per cent, exceeding the regulatory target of 7.00 per cent by 0.96 percentage points.
Transmission Loss Factor measures the proportion of electricity generated by power plants that is lost within the transmission network or consumed at transmission facilities before reaching electricity distribution companies (DisCos) and other customers.
According to NERC, the higher the TLF, the less efficient the transmission system.
“The average TLF in 2026/Q1 was 7.96 per cent,” the commission stated. “This means that for every 100 megawatt-hours of electricity injected into the national grid, about 7.96 megawatt-hours were not delivered to DisCos and international customers due to transmission losses or consumption at transmission substations.”
The regulator noted that transmission performance worsened compared to the final quarter of 2025 when the TLF stood at 7.27 per cent.
“The TLF recorded in 2026/Q1 represents a 0.69 percentage point increase relative to the 7.27 per cent recorded in 2025/Q4,” NERC said.
The commission explained that excess transmission losses create direct financial consequences because the additional costs cannot be passed on to electricity consumers under existing tariff regulations.
As a result, TCN bears the financial burden of paying generation companies for electricity that was produced but never delivered to off-takers.
According to the report, the N2.61 billion loss comprised N257.91 million linked directly to excess transmission losses and N2.35 billion in penalties payable to power generation companies (GenCos).
The regulator clarified that the estimate does not include penalties that may arise from service-level agreements between the transmission company and electricity distribution companies.
“Exceeding the TLF target means the TSP will not be able to meet its full revenue requirement, as there is no provision to recover the revenue needed to cover the excess losses from customers,” NERC stated.
It added: “TLF underperformance has additional costs for the TSP because it has to pay GenCos for the energy that is not billable to DisCos and other off-takers. The estimated cost of the 0.96 percentage point TLF underperformance during the quarter is N2.61bn.”
Although significant, the loss was lower than the N3.13 billion recorded in the fourth quarter of 2025.
Beyond transmission losses, the report pointed to a decline in overall grid stability during the period, with wider fluctuations recorded in system frequency.
NERC explained that frequency stability is critical to maintaining power quality, especially for industrial facilities that rely on equipment designed to operate within narrow frequency margins.
The grid code prescribes a standard operating frequency of 50Hz and an acceptable range of between 49.75Hz and 50.25Hz.
However, data from the quarter showed that the average lower daily frequency dropped to 49.11Hz, while the average upper daily frequency rose to 50.72Hz, producing a frequency variation of 1.61Hz.
This compared with a variation of 1.27Hz recorded in the preceding quarter.
“The 0.34Hz increase in the average quarterly frequency range represents a decline in the stability of the national grid’s frequency profile during the period under review,” the commission said.
The regulator also flagged persistent voltage instability across the transmission network.
While the national grid is expected to operate around a nominal voltage of 330kV, with permissible limits ranging from 313.50kV to 346.50kV, the report showed that actual operating levels frequently breached those thresholds.
Average lower voltage during the quarter was recorded at 304.21kV, while the average upper voltage reached 349.88kV.
NERC warned that such fluctuations expose consumers and businesses to equipment damage, reduced operational efficiency and higher operating costs.
“Fluctuations in grid voltage, including spikes, dips, flickers and brownouts, can cause significant harm to consumers and result in substantial commercial losses,” the commission stated.
It added that severe voltage instability could damage industrial machinery and force manufacturers and other large consumers to depend on self-generation and alternative power sources.
The findings highlight continuing weaknesses within Nigeria’s electricity transmission infrastructure despite ongoing investments aimed at improving grid performance and reliability.
Industry analysts say reducing transmission losses and improving grid stability remain essential to achieving a more efficient electricity market, boosting investor confidence and ensuring that power generated reaches consumers across the country.
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