DisCos Revenue Dips, Unable To Sustain Operations

The Electricity Distribution Companies(DisCos), in Nigeria have suffered revenue collection inefficiencies resulting in their abilities to sustain investment in infrastructure and returns to investors.

The Nigerian Electricity Regulatory Commission(NERC), has just released its Q3, 2023 reports which showed that the DisCos failed to achieve the efficient loss targets allowed in their tariff in 2023/Q4.
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.

In the report a total revenue collected by all DisCos in 2023/Q4 was N294.95 billion out of N399.69 billion billed to customers.

The NERC’s, 2024 third quarter report, shows further that the figure translates to a collection efficiency of 73.79 per cent which represents a decrease of -2.77pp when compared to 2023/Q3, (76.56 per cent).

“Over previous quarters, it has been observed that when there is an
increase in energy offtake, there is usually a decrease in distribution companies’ (DisCos’) billing and collection efficiencies for the same period. This is probably
because DisCos send more energy to areas where they increase
commercial losses. The inverse relationship between energy offtake by DisCos and billing as well as collection efficiency may pose
challenges to the long-term growth of the Nigerian Electricity Supply Industry (NESI)” the report said.

The document also disclosed that the total energy received by all DisCos in 2023/Q4 was 8,198.65GWh while the energy billed to end-use customers was 6,432.22GWh, translating into an overall billing efficiency of 78.45 per cent. This represents a decrease of -0.64pp relative to the 79.09 per cent recorded in 2023/Q3.

On market remittance, the commission said that in 2023/Q4, the cumulative upstream invoice payable by DisCos was N270.05 billion, consisting of N223.32 billion for generation costs from Nigeria Bulk Electricity Traders (NBET) and N46.73 billion for transmission and administrative services by the Market Operator (MO).

“Out of this amount, the DisCos collectively remitted a total sum of N188.70 billion (N156.15 billion for NBET and N32.55 billion for MO) with an outstanding balance of N81.35 billion.

This translates to a remittance performance of 69.88 per cent in 2023/Q4 compared to the 75.91 per cent (remittance of N158.43 billion out of the total invoice of N208.70 billion recorded in 2023/Q3.

Also, in 2023/Q4, none of the four international customers serviced by the MO made any payment against the $12.02 million invoice issued to them by the MO for services rendered in 2023/Q4.

“It is noteworthy that some international customers made payments during 2023/Q4 for outstanding MO invoices from previous quarters” it said.

The regulator said that one incident of grid collapse was recorded in 2023/Q4.

“The incident occurred on December 11, 2023, and the immediate cause was
the simultaneous tripping of four 330kV circuits and the separation
of four power plants: Egbin, Olorunsogo PH I, & II and Paras power plants, along the western axis of the grid.