Amid Demand for Tariffs Hike, Discos Raked in N247bn in Q1

Emmanuel Addeh in Abuja

Numbers released by the Nigerian Electricity Regulatory Commission (NERC) has revealed that Electricity Distribution Companies (Discos) in Nigeria earned N247.09 billion in the first three months of 2023, representing a collection efficiency of 68.75 per cent.

Analysis of the latest NERC report covering the period indicated, however, that the N247 billion collected by the power distributors was from the total billing of N359.38 billion for Q1, 2023.

This represents a deficit revenue collection of N112.29 billion for the period under consideration.

The report is coming as the operators’ call for an upward tariff review is continuing, although the federal government has temporarily put the move on hold.

The planned electricity tariff hike had been accompanied by a groundswell of opposition from Nigerians, who insisted that the hike was unjustifiable, following the persistent poor service from the Discos.

The NERC report also showed that total energy received by all Discos in 2023/Q1 was 7,495.49GWh while the energy billed to end-use customers was 5,844.21GWh, translating into an average billing efficiency of 77.97 per cent and representing an increase of 1.81 per cent, relative to the 76.16 per cent recorded in 2022/Q4.

“The total revenue collected by all Discos in 2023/Q1 was N247.09 billion out of N359.38 billion billed to customers. This corresponds to a collection efficiency of 68.75 per cent which represents a decline of 4.58 per cent when compared to 2022/Q4 of 73.33 per cent,” NERC said.

According to the industry regulator, this would mark the first time in the last five quarters where Discos cumulatively recorded a reduction in their quarter-on-quarter collection efficiency.

Relative to 2022/Q4, the improvement recorded in the total billing by N27.10 billion (8.15 per cent), it said, did not correspond with the improvement recorded in total collections.

Noting that this resulted in the decline in collection efficiency recorded in the quarter, NERC urged the Discos to employ technologies and operational procedures that will increase both billing and collection performances to forestall long-term financial challenges.

Nigeria, a country of over 200 million people still relies on just about 4,000mw supply on a daily basis, even though installed capacity is about 12,000mw.

 The inability to successfully take the 8,000mw to Nigerian homes and businesses has been blamed on bottlenecks associated with transmission and distribution.

Although there’s a deal with Siemens of Germany to debottleneck the sector, progress has been extremely slow while timelines have been missed by the parties involved.

Besides, NERC in the report , stated that the Aggregate Technical, Commercial and Collection (ATC&C) loss was 46.39 per cent.

The ATC&C loss provides a consolidated report of how much revenue a Disco is able to collect relative to how much it should have collected based on the volume of energy it received and sold to customers. 

With technical and commercial loss at 22.03 per cent and collection loss at 31.25 per cent, NERC noted that it was evident that the cause of the increased ATC&C loss was the collection loss component.

“The trend of all Discos failing to achieve the efficient loss targets allowed in their tariffs continued in 2023/Q1. This translates into an inability to collect the revenues that are required to finance the sustainable long-term operations of the business, while also providing reasonable returns for investors,” NERC added.

In Q1, 26 grid-connected and operational power stations had an average available capacity of 4,605.72mw, which was a 2.27 per cent, that is, an increase of 102.14mw.

 The averages of daily maximum and minimum system frequency were 50.86Hz and 49.08Hz, during the period, outside the higher and lower bounds of the normal operational limit of 50Hz+0.25Hz approved in the grid code, NERC said.

“The continual operation of the grid outside the normal operational limits contained in the grid code remains a major problem for the System Operator (SO) who has an obligation to operate the system as close as possible to the set targets for the respective parameters.

“Operating the system with deviations from these set targets reduces the quality of electricity being supplied to consumers, this is particularly important to industrial customers that operate highly sensitive equipment.

“Such operations also compromise the long-term health of power system infrastructure at both the transmission and distribution levels. The SO must invest in infrastructure and incorporate operational procedures that will improve its real-time grid visibility,” NERC stated.

On market remittance, the regulator said that in 2023/Q1, the cumulative upstream invoice payable by Discos was N252.92 billion, consisting of N209.26 billion for generation costs from the Nigerian Bulk Electricity Trading plc (NBET) and N43.66 billion for transmission and administrative services by the Market Operator (MO).

“Out of this amount, the Discos collectively remitted a total sum of N170.59 billion (N141.51 billion for NBET and N29.04 billion for MO) with an outstanding balance of N82.33 billion. This translates to a remittance performance of 67.43 per cent in 2023/Q1 compared to the 78.69 per cent recorded in 2022/Q4,” it added.

At the weekend, during the ground-breaking ceremony of the new 350MW Gwagwalada power plant, President Bola Ahmed Tinubu vowed to fulfil his campaign promise of ensuring uninterrupted power supply across the country, expressing readiness to tackle all obstacles militating against stable electricity supply in Nigeria.

“The Nigeria Electricity Supply Industry (NESI) is currently characterised by huge supply-gap deficits owing to dilapidated power infrastructure and poor distributions networks, amongst others.

“This administration is poised to address every power value chain challenge that will significantly relieve the suppressed demand, enhance generation, and improve national peak growth and sustainability far above the hitherto abysmal and unacceptable 5,300MW for over 200 million Nigerians,” the president declared.