Aligning DISREP Investments with Service Outcomes in Nigeria’s Power Sector

The power sector remains one of Nigeria’s most visible policy failures, a system where supply is unreliable, infrastructure is decaying, and financial losses are embedded at every level. Despite repeated reforms and private sector participation, the national grid struggles to deliver consistent electricity to homes and businesses, while distribution companies (DisCos) continue to operate with limited efficiency and accountability. In this context, two initiatives stand out: the Distribution Sector Recovery Program (DISREP) and the Presidential Metering Initiative. Both are designed to address the less visible but most consequential bottlenecks in the sector: distribution inefficiencies and the absence of accurate, universal metering. These programs could be central to Nigeria’s power sector reform, not because they promise transformation overnight, but because they target the foundations on which any lasting reform must be built. Yet, their potential will depend on how well they are implemented, funded, and integrated into broader sectoral policy. Equally important is whether they catalyze a shift from policy pronouncements to performance-driven service delivery. Understanding their role and the risks that threaten their success is essential to charting a viable path forward for Nigeria’s electricity reform agenda.

Structural Weakness in Distribution and Metering

The power sector’s failure is often attributed to generation deficits or pricing disputes, but the more foundational issues lie in distribution inefficiencies, inadequate metering, and widespread revenue leakage. These challenges are deeply interconnected, and until they are resolved, grid reliability, consumer trust, and long-term reform will remain out of reach. Nigeria’s aging and overloaded transmission and distribution infrastructure forms the operational fault line of the system. Much of the network remains poorly maintained, with outdated lines and transformers that cannot handle the load required to distribute generated power. The Transmission Company of Nigeria (TCN) has repeatedly pointed to critical bottlenecks that leave significant generation capacity stranded. In 2024 alone, the national grid experienced 12 collapses and disturbances. These breakdowns, often triggered at the distribution level, have disrupted industrial zones, healthcare facilities, and residential areas, reinforcing public doubt in the sector’s stability. Since privatization in 2013, Distribution Companies (DisCos) have emerged as the weakest link in the electricity value chain. Burdened by operational inefficiencies, outdated infrastructure, and limited financial resources, most DisCos struggle to evacuate and deliver power effectively. This has led to idle generation capacity, frequent outages, and compounding financial losses across the system. The metering crisis illustrates this breakdown vividly. The lack of accurate metering fuels electricity theft, meter bypass, and consumer resistance. DisCos lose as much as 40% of their distributed electricity, with monthly losses running into tens of billions of naira, a drain that weakens liquidity and stifles investment. Critically, the absence of universal metering has eroded consumer trust. Arbitrary billing, frequent blackouts, and poor complaint resolution have left many Nigerians unwilling to pay for electricity. Without accurate metering, cost-reflective tariffs become politically untenable, forcing the government to maintain heavy subsidies that weaken the sector’s financial sustainability.

Understanding DISREP: Why Distribution Reform Needed a New Approach

These overlapping failures, technical, financial, and reputational, are deeply rooted in the distribution and metering segments of the power chain. Until these core problems are addressed, any broader reforms will remain constrained by weak delivery systems and political resistance. The Distribution Sector Recovery Program (DISREP) was introduced in response to this reality, a targeted intervention aimed at restoring commercial and operational performance within Nigeria’s weakest energy segment. Backed by a $500 million World Bank facility, the program represents a shift in strategy: away from top-down restructuring and toward practical, measurable reform at the point of delivery. DISREP focuses on outcomes that previous reforms often neglected, reducing energy losses, improving network reliability, and strengthening customer data systems. Its design reflects a move toward performance-based financing, where funding is contingent on demonstrated improvements, not just policy promises. This orientation toward deliverables over declarations marks a necessary evolution in sector reform. But the strength of DISREP lies not only in its design, it lies in how well it is implemented. Its success depends on the operational capacity of DisCos to deliver technical upgrades, manage customers transparently, and recover revenue without relying on arbitrary billing. It also demands stronger regulatory enforcement, tighter project oversight, and active coordination between the government, DisCos, and regulators. These institutional linkages must be actively managed to prevent slippage, not merely outlined on paper. In essence, DISREP creates the structure for reform. But without accurate metering, the tool that anchors trust, billing, and efficiency, even the best-designed distribution program will struggle to gain traction. That is where the metering agenda becomes central.

Metering Initiatives in Power Sector Reform

To address this, Nigeria has launched two major initiatives: the National Mass Metering Programme (NMMP) and the Presidential Metering Initiative (PMI). Both aim to eliminate estimated billing, improve revenue assurance, and restore transparency. However, implementation has lagged behind ambition. According to NERC’s Q1 2025 report, only 46.98% of registered customers are metered, a marginal increase from the previous quarter. Just 187,194 meters were installed during that period, with the vast majority deployed through the Meter Asset Programme, while DisCo- and vendor-financed models remain limited. This slow rollout fuels what many describe as a credibility gap. Consumers are asked to accept tariff increases under a system where over half still receive estimated bills, often viewed as inflated and unfair. This mismatch between pricing reforms and service experience creates a policy deadlock. Although both NMMP and PMI include provisions for local manufacturing, supporting job creation and technology transfer, these gains have not yet translated into accelerated or equitable metering coverage. Challenges in financing, logistics, and DisCo commitment persist, especially in underserved areas.  Ultimately, metering is not a side reform; it is the diagnostic and accountability backbone of the entire distribution system. Until metering is scaled effectively and integrated with broader reforms like DISREP, Nigeria’s power sector will remain constrained by distrust, inefficiency, and public resistance.

Risks Undermining the Distribution Reform Program

Despite Nigeria’s bold attempt to reform its electricity distribution sector, the effort has struggled under the weight of entrenched structural and operational risks. One of the clearest signs of this tension is the persistent breakdown in coordination between key institutions, the Federal Government, the Nigerian Electricity Regulatory Commission (NERC), and the privately owned DisCos. Though the World Bank approved the Distribution Sector Recovery Program (DISREP) in 2021, disagreements over implementation strategies delayed execution for nearly two years. This stall, further strained by pandemic-related disruptions, meant critical interventions arrived too late for a sector already in distress. Implementation has also been slowed by procurement-related disputes. The government’s decision to use International Competitive Bidding (ICB) for meter acquisition was intended to reduce costs and increase scale. But this approach provoked backlash from the Association of Meter Manufacturers of Nigeria, which argued it disadvantaged local players. A legal challenge ensued, halting procurement for months and delaying a cornerstone of the recovery effort: large-scale metering. Beyond delays, there are deeper cracks in the system. Several DisCos continue to fall short of their performance obligations, failing to reduce losses or improve collections while enforcement remains sporadic. Where some companies have moved forward with metering and infrastructure upgrades, others remain locked in bureaucratic gridlock, making progress uneven and unreliable. This uneven reform landscape weakens investor confidence and fragments regulatory credibility. These setbacks raise a more uncomfortable truth: reform alone cannot compensate for institutional weakness. Unless coordination improves, enforcement sharpens, and local industry is treated as a partner rather than an obstacle, Nigeria’s power reforms risk becoming another well-funded plan that under-delivers. The stakes are no longer just technical; they are systemic. What is required now is not just alignment of goals but alignment of incentives. And without urgent course correction, the dysfunction these reforms aimed to solve may simply take a new form.

Aligning DISREP’s Infrastructure Investments with Reliability Outcomes

The evolving realities of Nigeria’s power sector demand a shift from infrastructure expansion as an end in itself to one that links capital outlays to measurable service outcomes. Under DISREP, distribution upgrades must serve more than a compliance function they should be calibrated to reduce technical losses, stabilize voltage levels, and restore consumer trust through visibly improved delivery. Overloaded feeders, aging substations, and transformer failures remain central to system unreliability. Targeted investments in these assets offer a direct pathway to alleviating localized grid stress, particularly in urban centers where demand frequently exceeds capacity. But expansion without modernization risks entrenching inefficiencies. New infrastructure must be equipped with digital systems that enable real-time monitoring, remote diagnostics, and prompt response to outages. Digitalization should no longer be seen as an add-on, but as a prerequisite for reliability. Grid extension into underserved communities also remains a pressing need. Large swaths of Nigeria still rely on self-generation, reflecting a systemic failure to deliver grid connectivity at scale. Ensuring that DISREP investments reach these areas will not only reduce dependence on diesel but also broaden the paying customer base required for financial sustainability. Recent developments such as the successful smart meter procurement under the International Competitive Bidding process and the establishment of the Presidential Metering Initiative signal a more outcomes-oriented approach. The introduction of Meter Data Management Systems and utility-wide MIS platforms, championed through DISREP and anchored by the Smart Grid Development Limited (SGDL), further illustrates this shift. Reliability is no longer a secondary outcome but a core metric against which sector reforms are being judged. As the program evolves, the focus must remain on execution quality. Infrastructure projects should not be viewed in isolation, but as interlocking components of a broader system designed to deliver consistent, accountable service. In doing so, DISREP can transition from a funding mechanism to a genuine lever of performance reform.

Conclusion

DISREP is more than a reform effort, it’s a chance to reset how power sector interventions are designed and delivered. The program’s success will hinge on whether its infrastructure investments translate into tangible reliability gains. Without that, tariff reform stalls, trust erodes, and the cycle of underperformance continues. Metering, network expansion, and DISCO support must be tied to clear service outcomes, not just disbursement milestones. Getting this right requires consistent oversight, transparent data, and a willingness to course-correct. If implemented with intention, DISREP could mark a shift toward reforms that reach the consumer and restore confidence in the system.