Ten of the 11 electricity distribution companies (Discos) in Nigeria’s power sector have disclosed that a total of 2,250,000 megawatts (MW) of electricity do not get to Nigerians every year from the national grid.
The Discos stated this in a second quarter (Q2) 2020 report on their operations which was obtained from the website of the Association of Nigerian Electricity Distributors (ANEDS).
They explained that the volume of electricity was planned in the Multi Year Tariff Order (MYTO) framework of the market to be delivered to them for distribution to homes and offices, but they never got it.
The MYTO is managed by the Nigerian Electricity Regulatory Commission (NERC); the document guides the entire operations of the power market.
In the report, the Discos noted that 27 terra watt hour (TWh) of electricity was constrained from getting to them annually. When converted, this resulted to 27,000,000 megawatts hour (MWH) or 2,250,000MW of electricity shut in annually. Further calculations suggest that approximately 6,164.38MW of electricity is unavailable daily to Nigerians from the grid.
“On a yearly basis, still Discos improved the revenue collection by NGN19 billion, reaching a total of NGN472 billion with a +4.1 per cent increment. Although the collection efficiency is still below 70 per cent, it has increased +3 points in the last year reaching a 69 per cent.
“Importantly, the energy received by the Discos is constrained around 27TWh per year and is far from any MYTO scenario provided by NERC,” the Discos’ report explained.
It noted that since 2015, “there has been no significant improvement in the energy generated and wheeled by TCN (Transmission Company of Nigeria), that is finally received by Discos. It continues (to remain) low and flat, only affected by a seasonal effect between the dry and rainy seasons.”
The Discos equally stated that historical projections of the MYTO model have clearly remained inconsistent with the energy assumptions of the tariff model; the alleged misalignment, they added, ends up increasing the tariff shortfall and market’s liquidity crisis.
According to them, the NERC in the last minor tariff reviews it did for the TCN, stated that the TCN has failed to meet up with the evacuation projections for which it approved capital expenditure budget for it.
“The Discos’ uncertainty on the energy to be received from TCN has become a major threat and it will hurt the core of their Performance Improvement Plans as many of the plans are based on the basis of the projections done by NERC at June ́s Minor Review,” the report further stated.
Notwithstanding the supply challenges, the Discos reported regular growth in their customer bases. According to the report, in Q2-2020, the number of registered customers among the 10 private Discos passed 9.8 million. But a good number of these are without meter.
They said that: “NESI is growing at an average rate of 62,339 new customers every month (since 2016), however, many are connected without meters. Consequently, the metering penetration has decreased from 45.5 per cent in January 2017 down to 40.3 per cent in March 2020.”
The metering gap, they noted was supposed to be closed through the Meter Assets Provider (MAP) regulation of the NERC, but this from their claims has remained unsuccessful.
“Paradoxically, in their PIPs, all Discos committed to meter 100 per cent of the end-users before 2024 through the MAP regulation, although they did not include any CAPEX allowance for metering, in case MAP regulation fails.
“The number of registered end-users in NESI keeps increasing, currently, at a rate of about 75,000 new customers per month (+10 per cent in 2019, resulting in more than 9.5 million customers in total).
“Delays/barriers in the implementation of the Meter Asset Providers (MAP) regulation is making the metering gap to grow, with almost a 59.7 per cent of the end-users unmetered. MAP regulation is not working as NERC expected,” the report added.