TCN transmission losses cost Nigeria’s power sector N2.61bn in Q1 2026 as NERC reports worsening grid efficiency and stability

Nigeria’s electricity transmission network recorded an estimated N2.61 billion in losses during the first quarter of 2026 after the Transmission Company of Nigeria (TCN) failed to meet the transmission loss target set by the Nigerian Electricity Regulatory Commission (NERC), according to the regulator’s latest quarterly performance report.

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The report showed that TCN transmission losses exceeded the benchmark prescribed under the Multi-Year Tariff Order (MYTO), resulting in billions of naira in unrecoverable costs and highlighting continuing operational challenges within the national grid.

NERC disclosed that the Transmission Loss Factor (TLF) averaged 7.96 per cent between January and March 2026, surpassing the regulatory target of 7.00 per cent.

The TLF measures the proportion of electricity generated by power plants that is either lost while being transmitted across the national grid or consumed at transmission substations before reaching electricity distribution companies (DisCos) or international customers.

According to the commission, a higher TLF reflects lower transmission efficiency because more electricity is lost before it reaches paying customers.

“The average TLF in 2026/Q1 was 7.96 per cent. A TLF of 7.96 per cent indicates that for every 100 megawatt-hours of energy injected into the grid, 7.96MWh of energy is undelivered to DisCos and international customers due to losses in the transmission network or consumption at the transmission substations,” NERC stated.

The regulator noted that the first-quarter performance represented a deterioration compared with the previous quarter, 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,” the commission said.

NERC further explained that TCN underperformed the tariff benchmark by 0.96 percentage points, preventing the company from recovering the financial impact of the excess transmission losses through electricity tariffs.

“The 7.96 per cent TLF recorded in 2026/Q1 represents an underperformance of 0.96 percentage points relative to the MYTO target for 2026 (7.00 per cent),” the report added.

The financial implications were substantial. NERC estimated that the underperformance cost the sector N2.61 billion, comprising N257.91 million directly attributable to excess transmission losses and N2.35 billion in penalties payable to electricity generation companies (GenCos).

The regulator clarified that the estimate excluded additional service-level agreement penalties that TCN could incur for failing to deliver contracted electricity to 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 (inefficient) losses from customers,” NERC stated.

It added that the transmission company must still compensate generation companies for electricity that was generated but never billed because it failed to reach distribution companies or other off-takers.

Beyond transmission losses, the report highlighted a decline in the stability of the national electricity grid during the quarter.

NERC reported that fluctuations in system frequency widened, signalling weaker grid performance and raising concerns for industries that depend on stable electricity supplies.

The Grid Code prescribes a standard operating frequency of 50Hz, with an acceptable operating range of 49.75Hz to 50.25Hz.

However, the commission said the average lower daily frequency dropped to 49.11Hz, while the average upper frequency rose to 50.72Hz, producing a quarterly frequency range of 1.61Hz, compared with 1.27Hz in the previous quarter.

“The 0.34Hz (26.77 per cent) increase in the average quarterly frequency range recorded in 2026/Q1 relative to 2025/Q4 indicates a slight decline in the stability of the National Grid’s frequency profile during 2026/Q1,” the report stated.

The regulator also raised concerns over persistent voltage instability across the transmission network.

Under the Grid Code, the nominal transmission voltage is 330kV, with an allowable operating range of 313.50kV to 346.50kV.

During the review period, however, the average lower transmission voltage fell to 304.21kV, while the average upper voltage climbed to 349.88kV, indicating that the grid repeatedly operated outside prescribed limits.

NERC warned that such fluctuations, including voltage spikes, dips, flickers and brownouts, could damage household appliances and industrial equipment while increasing production costs for manufacturers.

“Fluctuations in grid voltage, including spikes, dips, flickers and brownouts, can cause significant harm to consumers and result in substantial commercial losses,” the commission said.

“Extreme cases of voltage fluctuations, particularly at the distribution network level, can cause severe damage to industrial machines, thereby compelling industrial customers to seek alternative sources of power outside the national grid.”

The latest findings underscore the persistent operational weaknesses affecting Nigeria’s electricity transmission system despite continued investment in grid infrastructure.

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Transmission losses, unstable frequency and voltage fluctuations have remained major obstacles to improving electricity reliability, increasing operational costs across the power value chain and limiting the efficiency of electricity delivery to homes, businesses and industrial users.