Discos Project N170bn Loss over Gencos’ Poor Capacity


By Emmanuel Addeh

Electricity distribution companies (Discos) in Nigeria have predicted a N170 billion tariff shortfall in 2020 due to the deteriorating capacity of generation companies (Gencos) to meet projected generation obligations.

The Discos maintained that the energy sent out by the generation companies continues to fall below expectations, noting that if the situation persists throughout the year, it will impact on its own (Discos) operations.

In the Nigerian Electricity Supply Industry (NESI), the Discos deliver electric power to consumers by mainly stepping down the high voltage electricity supplied by the Gencos.

However, the blame game appears to be intractable in the industry as each of the actors in the value chain continues to accuse the others of constituting a cog in the wheel of the plan to supply power efficiently to Nigerian homes.

In its latest report covering Q1, 2020 of its operations released by the Association of Nigerian Electricity Distributors (ANED), an umbrella body of the power distributors, the 11 Discos accused the power generation companies of creating uncertainty within the system.

The report also coincided with a curious rejection by the Gencos of a call by the Discos for an all-inclusive forensic audit of the power sector to be conducted by the federal government and the World Bank, describing it as laughable.

However, the power distributors in the quarterly report stated that whereas the Gencos’ approved daily projection was 107,420 megawatts, they had consistently defaulted by at least -13.4 per cent.

“The energy sent-out by Gencos, which ultimately is received by the Discos (minus exports and transmission losses), continues to be much lower than any MYTO projection.

“Indeed in the last minor review approved, the daily projection for 2020 is 107,420 MWh; although the average for the Q1 was just around 93,000 MWh/day (-13.4 percent).

“If this deviation at MYTO persists throughout the year, it would add an additional tariff shortfall of around N170 billion for 2020,” the Discos said.

The Discos contended that since 2015, there had been no significant improvement in the energy generated and wheeled, which is finally received by them.

Discos said: “It continues to be flat and is only mainly affected by a seasonal effect between the dry and rainy seasons. During the Q1 2020, the energy sent out has continued to be much less than projected at the last minor review for 2020.”

They lamented that the Discos’ uncertainty on the energy to be received had become a ‘major threat’, saying it will hurt their performance improvement plans.

However, despite the Gencos’ alleged lag in the generation of power, the distribution companies said the revenue collection between the beginning of the first quarter of 2019 and the first quarter of 2020 set a new revenue record of N485 billion which represents an increment of about N39 billion compared to the previous 12 months.

Explaining the increase, they said since the energy wheeled by the Transmission Company of Nigeria (TCN) remained constant and the allowed tariff or end-user tariff continues to froze at 32,5 N/KWh on average since 2016, the rise was mainly due to Discos’ performance improvement.

“Moreover, in February 2020, Discos’ collection reached a new record of N42.6 billion, however, the negative note of this quarter is that the collection efficiency has fallen compared to the two previous quarters down to 68 per cent,” the report said.

It added that the aggregate Technical, Commercial and Collection (ATC and C) losses (moving average) kept consistently improving and has now hit 43.3 per cent; although, beating a new record of only 20,6 per cent and with Kano reducing almost 20 points of ATC and C losses in just two years.