Nigeria’s electricity transmission system recorded an estimated ₦2.61 billion financial loss in the first quarter of 2026 after missing its regulatory efficiency target.
The Nigerian Electricity Regulatory Commission said the average Transmission Loss Factor reached 7.96% during the quarter. This exceeded the 7% benchmark established under the Multi-Year Tariff Order framework.
The result means nearly eight units of every 100 units of electricity supplied to the transmission network failed to reach distribution companies and international customers.
The latest performance also raises fresh concerns about the strength, reliability and financial sustainability of Nigeria’s national grid.
How transmission losses cost TCN ₦2.61bn
A Transmission Loss Factor measures the amount of electricity lost while moving power from generating plants to electricity distributors and other customers.
These losses may occur through technical inefficiencies or electricity consumed within transmission substations.
According to NERC, the ₦2.61 billion financial impact included ₦257.91 million linked directly to transmission losses. It also included about ₦2.35 billion in payments owed to power-generating companies.
The calculation did not cover possible penalties arising from service-level agreement breaches involving electricity under-delivery to distribution companies.
TCN cannot transfer the cost of losses above the approved target to electricity consumers. Therefore, the company must absorb the financial consequences of its underperformance.
It must also compensate generation companies for electricity they produced but could not bill to distribution companies because of transmission inefficiencies.
Transmission efficiency deteriorated in early 2026
The transmission network performed worse in the first quarter than during the final three months of 2025.
The average loss factor increased from 7.27% in the fourth quarter of 2025 to 7.96% in the first quarter of 2026. This represented a deterioration of 0.69 percentage points.
It also placed the system 0.96 percentage points above the regulatory target.
In practical terms, 7.96 megawatt-hours out of every 100 megawatt-hours injected into the national grid did not reach the intended customers.
The first-quarter financial cost remained below the ₦3.13 billion recorded in the previous quarter. However, the lower cost did not reflect an improvement in the underlying loss rate.
Instead, the higher Transmission Loss Factor shows that the network became less efficient.
Why grid losses matter to businesses
Electricity lost during transmission reduces the amount of power available to homes, offices, factories and other commercial users.
It also weakens the power sector’s revenue chain. Generation companies produce electricity, but distribution companies cannot pay for power that never reaches their networks.
As a result, transmission losses create financial pressure across the electricity value chain.
Manufacturers may face unstable supply, equipment risks and greater dependence on diesel generators, gas systems or renewable energy solutions.
These alternatives increase production costs. Businesses may eventually transfer part of those expenses to consumers through higher prices.
Therefore, transmission inefficiency affects more than TCN’s finances. It can also affect productivity, competitiveness, inflation and investment decisions.
National grid frequency moved outside approved limits
NERC also reported weaker frequency stability during the quarter.
Nigeria’s Grid Code requires the national grid to operate at a standard frequency of 50 hertz. The accepted operating range is between 49.75Hz and 50.25Hz.
However, the average lower daily frequency fell to 49.11Hz in the first quarter. Meanwhile, the average upper frequency rose to 50.72Hz.
This created a frequency range of 1.61Hz, compared with 1.27Hz in the fourth quarter of 2025.
NERC calculated that the widening range represented a 26.77% deterioration in the grid’s frequency profile.
Frequency fluctuations can affect sensitive machinery and industrial equipment. Many production systems require electricity within narrow technical limits.
Consequently, unstable frequency can interrupt operations, lower equipment efficiency and increase maintenance costs.
Voltage instability creates another risk
The transmission network also operated outside the approved voltage range at different times during the quarter.
Nigeria’s Grid Code sets the nominal transmission voltage at 330 kilovolts. The permitted range is between 313.50kV and 346.50kV.
However, the average lower voltage fell to 304.21kV. The average upper voltage reached 349.88kV.
Both figures moved outside the approved limits.
Voltage instability may produce spikes, dips, flickering and brownouts. These disruptions can damage electrical appliances, industrial equipment and production systems.
Severe fluctuations may also push large businesses away from the national grid. Some companies may invest more heavily in captive power, gas generators and renewable energy systems.
Although these options improve energy security, they also require substantial capital.
NERC increases scrutiny of transmission performance
NERC has taken steps to improve the monitoring of electricity losses across different parts of the transmission network.
In April 2026, the commission issued an order requiring regional Transmission Loss Factor reporting. The measure aims to improve transparency and identify areas responsible for excessive losses.
Regional reporting could help regulators distinguish between efficient and underperforming transmission corridors.
It may also support targeted investments in transformers, transmission lines, substations and monitoring systems.
Additionally, NERC has introduced a Performance Improvement Plan framework for TCN and the Nigerian Independent System Operator. The framework targets stronger grid operations, improved accountability and better service delivery.
However, effective implementation will determine whether these regulatory measures produce measurable improvements.
What TCN must address
TCN needs to reduce technical losses by upgrading ageing transmission infrastructure and improving network maintenance.
The company also needs stronger real-time monitoring. Better data can help operators detect overloaded lines, faulty equipment and abnormal energy losses more quickly.
Investment in substations, protection systems and transmission capacity will remain important as Nigeria adds more electricity generation.
However, new infrastructure alone may not solve the problem.
TCN, distribution companies, generation companies and system operators must improve coordination. Weak communication between market participants can worsen energy imbalances and grid instability.
Clear performance targets and transparent reporting should also accompany every major transmission investment.
What this means for Nigeria’s power sector
The ₦2.61 billion cost shows how technical problems can quickly become financial problems.
Every unit of electricity lost on the network reduces available supply and weakens sector revenue. It also limits the value consumers receive from power-sector investments.
Nigeria needs a more efficient transmission system to support industrial growth, attract investment and reduce dependence on self-generated electricity.
The first-quarter figures show that the current system remains under pressure.
Regulators and operators must now convert performance reports into targeted infrastructure upgrades, stricter accountability and faster operational improvements.
Without those changes, grid losses will continue to drain power-sector revenue and increase the cost of doing business.
