…Gives Reasons for Power Sector Continued Cash Crunch

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The Nigerian Electricity Regulatory Commission (NERC) has highlighted the four major reasons why Nigeria’s power market has remained financially broke and unable to fully meet the settlement demands of its operators.

According to the regulatory agency, the financial viability of the Nigerian Electricity Supply Industry (NESI) has remained the most significant challenge threatening the sustainability of the electricity industry.

NERC said: “As reported in the preceding quarterly reports, the liquidity challenge is partly due to the non-implementation of cost- reflective tariffs, high technical and commercial losses exacerbated by energy theft, and consumers’ apathy to payments under the widely prevailing practice of estimated billing.”

It explained in its first quarter (Q1) 2019 report on the operations of the electricity industry that the total billing to electricity consumers by the 11 electricity distribution companies (Discos) rose to N182.8 billion in the period but only an aggregate collection of N116.9 billion, representing 64.1 per cent collection efficiency was achieved.

The commission equally noted that the figure represented a 4.1 percentage point decrease from the collection level in the last quarter of 2018.
It explained that: “The level of collection efficiency during the quarter under review indicates that a sum of N3.6 out of every N10 worth of energy sold during the first quarter of 2019 remains uncollected as and when due.”

It stated that the severity of the liquidity challenge in power market was further reflected in the settlement rate of energy invoices issued by the Nigerian Bulk Electricity Trading Plc (NBET) and Market Operator (MO) department of the Transmission Company of Nigeria (TCN) to Discos, as well as the payment by special and international customers.

“During the first quarter of 2019, the 11 Discos were issued a total invoice of N190.1 billion for energy received from NBET and for service charge by the MO, but only a sum of N52.8 billion (~28 per cent) of the total invoice was settled, indicating a significant deficit of N137.3 billion,” it added.

NERC said it was working on measures to improve the revenue collection and remittances of the Discos, adding that the provision of meters to all registered end-use consumers of electricity was one of such measures.

“To this end, the commission had continued to monitor Discos’ process of procuring Meter Asset Providers (MAP) in compliance with the provisions of the MAP regulations. The MAP regulations issued by the commission in March 2018 aims to fast-track the roll-out of end-use meters through the engagement of third-party investors for the financing, procurement, supply, installation and maintenance of electricity meters,” NERC stated.

Turning to the level and nature of service complaints lodged by power customer to the Discos within the period, the NERC explained that a total of 151,938 complaints from consumers was received and resolved by the Discos.
It noted that level of complaints in Q1 2019 were 11 per cent more than complaints received during the fourth quarter of 2018 and resolved.