Discos’ Revenues Hit N562.5bn in Nine Months Amid Marginal Rise in Collection Efficiency

Discos’ Revenues Hit N562.5bn in Nine Months Amid Marginal Rise in Collection Efficiency

Emmanuel Addeh

The electricity Distribution Companies (Discos) recorded a total of N562.55 billion in revenues in the first nine months of 2021, with a marginal increase in collection efficiency in the Nigerian Electricity Supply Industry (NESI), THISDAY has learnt.

The latest report from the Nigerian Electricity Regulatory Commission (NERC), covering its activities for the period indicated that while the power distributors collected about N183.73 billion in Q1, they raked in N185.29 billion in Q2 and N193.53 billion in Q3.

Collection efficiency is an indicator of the proportion of an amount that has been collected from customers relative to the amount billed to them by the Discos.

The report is coming in the midst of continuing complaints of illiquidity by the operators and alleged inability of some of the Discos to carry out their obligations to their creditors and eventual takeover by the banks.

Earlier this month the banks in consultation with the Nigerian authorities took over the Benin, Kaduna and Kano Discos and appointed new boards to run the Port Harcourt and Ibadan Discos. Abuja Discos had earlier been taken over by the United Bank for Africa (UBA).

The N562.5 billion collection notwithstanding, power shortages and grid collapses persist across the nation, customers can’t get meters and the electricity market shortfall, it was learnt, has climbed to over N1.7 trillion.

Although there has been an improvement in collection efficiency, Aggregate Technical, Commercial and Collection (ATC&C) losses across the Discos remain on the high side as monthly energy remittance from the Discos to the Generation Companies (Gencos) still hovers around 40 to 50 per cent.

The NERC in its latest report stated that for various reasons, many customers continue to default in payment of their billed amounts resulting in commercial losses.

“The total revenue collected by all Discos in 2021/Q3 was N193.53 billion out of a total of N273.00 billion billed to customers and the collection efficiency stood at 70.89 per cent.  

“The total revenue collected in 2021/Q3 rose by N8.24 billion representing a 4.44 per cent increase in total revenue collected as compared to 2021/Q2 of N185.29 billion,” the NERC report stated.

In addition, it hinted that the average collection efficiency across all Discos increased from 68.89 per cent in 2021/Q2 to 70.89 per cent in 2021/Q3.

“The increase was largely driven by Ibadan Disco with a N3.83 billion (+18 per cent) increase from N20.81 billion revenue collected in 2021/Q2.

“Port Harcourt and Benin Discos also had increases in collection efficiencies from 60.04 per cent and 55.23 per cent to 66.06 per cent and 57.41 per cent respectively, amounting to an increase of +N0.69 billion and +N2.18 billion respectively between 2021/Q2 and 2021/Q3,” NERC added.

Although the amount collected by Kano Disco was lower in 2021/Q3 compared to 2021/Q2, the report noted that it recorded a higher collection efficiency in 2021/Q3 because it had a lower billed amount in 2021/Q3 compared to 2021 Q2.

It ascribed the improvement to the roll-out of meters under both the National Mass Metering Program (NMMP) funded through the Central Bank of Nigeria and the continuation of the Meter Asset Provider (MAP) scheme.

During the same period, it noted that Yola, Enugu, and Jos Discos reported the greatest decrease in collection efficiencies from 52 per cent, 67.2 per cent, and 54.3 per cent to 50 per cent, 64.5 per cent, and 50 per cent respectively, amounting to N0.10 billion, N0.36 billion and N0.40 billion respectively.

The ATC&C losses in 2021/Q3, it said, was 44.1 per cent, broken up into 22.87 per cent technical and commercial losses and 27.52 per cent in collection loss.

“The implication of this level of the ATC&C losses is that, on average, as much as N4.10 in every N10.00 worth of energy received by a Disco was unrecovered due to a combination of inefficient distribution networks, energy theft, low revenue collection, and the unwillingness of customers to pay their bills.

“The overall ATC&C losses of 44.10 per cent in 2021/Q3 are significantly higher than the expected allowable ATC&C losses (21.58 per cent) provided in the Multi-year Tariff Order (MYTO) for 2021,” NERC stressed.

On market remittances, it recalled that as part of the conditions for the several interventions, the Central Bank of Nigeria had extended to the Discos an escrow agreement.

Under this arrangement, NERC said all the revenues of the Discos are escrowed with Discos, who only have access to the funds after necessary deductions have been made.

“This escrow mechanism provides visibility into the financial performance of the Discos with respect to collections,” it explained

“Compared to a remittance performance of 50.10 per cent reported in the second quarter of 2021, the total remittance performance improved by 17.84 percentage points in 2021/Q3, “the report said.

It indicated that Eko Disco had notably 103.29 per cent (N20.40 billion) overall remittance performance while Abuja, Ibadan, Kano, Ikeja, Kaduna and Yola Discos had remittance performances of 83.24 per cent (N23.05 billion), 58.14 per cent (N17.50 billion), 49.37 per cent (N8.17 billion), 13.35 per cent (N2.46 billion) and 21.19 per cent (N0.96 billion) respectively in 2021/Q3.

It added, “This remittance is consistent with relative stability in collection. The escrow mechanism has ensured that as much of the collections as possible is used to meet upstream market obligations.”

According to the report, during 2021/Q3, only Abuja had 100 per cent remittance performance (N6.12 billion) to the Market Operator (MO) although Benin, Eko, Ibadan, and Port Harcourt Discos also had high remittance performance of N83.40 per cent (N4.47 billion), 95.73 per cent (NN5.16 billion), 86.67 per cent (N6.37 billion) and 85.16 per cent (N2.64 billion) respectively.

“Yola and Kaduna Discos however had significantly low remittance performance of 25.20 per cent (N 0.31 billion), and 14.70 per cent (N0.66 billion) respectively to MO, ”it stated.

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