Joseph Bakare
The Nigeria Electricity Regulatory Commission (NERC) has observed that the unsettled billing and collection inefficiencies in the electricity sector is still undermining overall performance of most electricity distribution companies (DisCos).
In its 2023 report just published the Commission maintained that the low collection efficiency combined with billing inefficiency has continued to adversely impact the financial liquidity of the industry, ultimately limiting the electricity supply industry’s ability to grow and attract investment.
During the period under review, only the Ikeja Electricity Distribution Company had a collection efficiency above 90 per cent, which the regulator said can be partly attributable to the fact that it leads the DisCos in terms of overall metering rate (72.54 per cent) as of the end of 2023.
The IKEDC was followed by Eko and Abuja Discos with collection efficiencies of 84.31 per cent and 80.19 per cent respectively.
However, Yola Disco had the lowest collection efficiency of 43.56 per cent, according to the report.
In the year, the Federal Government paid N610bn as electricity subsidy.
The NERC stated the cumulative Minimum Remittance Obligation for DisCos was 52.92 per cent, being N685.69bn out of N1.29tn invoices issued by the Nigeria Bulk Electricity Trading Plc, meaning that “the government incurred a subsidy obligation of N610.06bn (47.08 per cent of total NBET invoices).”
The report added that an MRO-adjusted invoice of N858bn was issued by NBET and Market Operator for energy costs and administrative services to DisCos in 2023.
“The DisCos remitted a total of N706.73bn resulting in a deficit of N151.30bn during the year – this underpayment is known as “market shortfall”. Based on the above, the gross DisCo remittance rate to the upstream segment for 2023 was 82.37 per cent,” the report disclosed.
The NERC maintained that the total revenue collected by the DisCos from customers in 2023 was N1.07tn out of the total bill of N1.46tn to customers.
This, it was said, left an outstanding balance of N385.73bn, translating to a collection efficiency of 73.64 per cent.
According to the NERC, this implies that for every N100 worth of energy billed to customers by DisCos in 2023, approximately N26.36 was not recovered from customers.
The NERC’s performance chart shows that the top performing DisCos were Eko (105.76%), Yola (105.24%), Ikeja (96.20%), Benin (95.15%) and Ibadan (93.11%).
“Conversely, Kaduna DisCo recorded the lowest remittance performance to NBET in 2023 (17.59%).
“The MO invoice in 2023 was ₦172.33 billion, and the DisCos remitted ₦128.40 billion, translating to a 74.51% remittance performance rate. The top-performing DisCos were Yola (90.91%), Eko (90.85%) and Ikeja (90.38%) with remittances above 90% to the MO in 2023.”
The NERC said Kaduna DisCo recorded the lowest remittance of 10.75 percent to MO in 2023.
On January 9, the NERC dissolved the board of directors of the Kaduna Electricity Distribution Company (KAEDC).
The dissolution followed the DisCo’s inability to pay its N110 billion debt owed to the Nigerian Electricity Supply Industry (NESI), according to a statement jointly signed by Sanusi Garba, NERC’s chairman, and his vice Musiliu Oseni.