Efficiency Benchmarking of Nigerian Electricity Distribution Companies Using an Integrated DEA–Shannon Entropy
Keywords:
Data envelopment analysis, Shannon entropy, Nigerian electricity distribution companies (DisCos), Efficiency benchmarking, Technical efficiencyAbstract
This study evaluates the relative operational efficiency of the eleven legacy Nigerian electricity distribution companies (DisCos) over 2018--2025 using an integrated Data Envelopment Analysis (DEA)--Shannon entropy framework. The DEA production specification treats customers under estimated billing as the input-side operating burden, with metered customers, revenue collected, and energy billed in gigawatt-hours (GWh) as desirable outputs. Three DEA specifications are estimated annually: constant returns to scale (CRS), input-oriented variable returns to scale (IVRS), and output-oriented variable returns to scale (OVRS). Their efficiency scores are combined using year-specific Shannon entropy weights to obtain a composite Shannon Efficiency Score (SES) for each DisCo. Results reveal substantial heterogeneity in technical, scale, and output-oriented efficiency across DisCos and over time, with IKEDC and EKEDC generally among the stronger performers. Shannon entropy does not modify the underlying DEA frontiers or individual efficiency scores; it derives information-based weights from the annual score distributions and combines them at the aggregation and ranking stage. Because metered customers and customers under estimated billing enter the DEA production specification directly, the resulting scores inherently reflect metering status and should not be interpreted as an independent statistical test of the relationship between metering performance and operational efficiency. The integrated DEA--Shannon entropy framework provides a reproducible approach for combining complementary DEA efficiency perspectives and benchmarking the relative performance of Nigerian electricity distribution companies.
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Copyright (c) 2026 Sabo Nelson Pandi, R. K. Pavan Kumar Pannala, Amit Kumar Attri, Alvary Kefas Kwala (Author)
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