The 11 electricity distribution companies (DisCos) in Nigeria’s electricity supply industry earned N243 billion in revenue in Q4, 2022, the highest in four quarters, according to a report by the Nigerian Electricity Regulatory Commission (NERC).
Data sourced from the report shows that the total revenue collected by all DisCos increased by 24.9 percent from N188.2 billion in Q2 2022.
According to NERC, collection efficiency and billings improved in the third and fourth quarters of last year.
“The overall rise in collection efficiency in Q3 2022 was attributed to the increased metering and efficient implementation of the capping order,” NERC said.
“While the increase in collection efficiency in Q4 2022 could be attributed to the increased metering by the DisCos and the implementation of various collection campaigns to improve remittance for post-paid customers.”
In Q3 2022, total DisCos revenue was N210.67 billion out of N291.66 billion billed to customers—this corresponds to a collection efficiency of 72.23 percent which represents a 1.36 percentage points increase compared to Q2 2022 (70.87 percent).
“Relative to Q2 2022, both the billings and collections increased — billing increased by N25.98 billion (+9.78 percent) and collections increased by N22.28 billion (+11.89 percent),” the report said.
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The total revenue collected by all DisCos in Q4 2022 was N243.65 billion out of N332.28 billion billed to customers —this corresponds to a collection efficiency of 73.33 percent which represents a +1.10 percentage point increase compared to 2022/Q3 (72.23 percent).
“Relative to Q3 2022, the total billing and total collections increased: billing increased by N40.62 billion (+13.93 percent) and collections increased by N32.98 billion (+15.65 percent),” NERC said.
During the two last quarters of last year, improvement in collection efficiency was largely driven by Ibadan, Kaduna and Benin whose collection efficiencies increased by +10.48, +5.66 and +5.24 percentage points respectively.
The Commission further said the 11 DisCos Aggregate Technical, Commercial and Collection (ATC&C) loss stood at 44.15 percent in the fourth quarter of last year.
This is composed of technical and commercial loss (23.84 percent) and collection loss (26.67 percent).
ATC&C is a critical performance-setting parameter in the Multi-Year-Tariff Order (MYTO) that is used to determine the tariffs that DisCos are allowed to charge customers.
ATC&C loss is the sum of billing losses caused by DisCo’s inability to bill 100 percent of delivered energy (technical and commercial losses) and collection losses due to DisCo’s inability to collect payments from consumers.
“The ATC&C loss in the fourth quarter of last year decreased by -1.24 percentage points compared to Q3 2022 (45.39 percent) — this is as expected based on the improvements in billing and collection efficiencies,” the regulator said.
However, across Q3 2022 and Q4 2022, no DisCos met the efficient loss reduction targets specified in the approved tariff order.
This means that all DisCos under-recovered their required revenues to varying degrees over the period; the DisCos with the highest differential did not recover sufficient revenues to meet their upstream market obligations
NERC says DisCos have an imperative to employ technologies and operational procedures that will increase both billing and collection performances so as to forestall long-term financial challenges.
“These could include holistic energy accounting procedures, customer and infrastructure metering, among others,” the regulator said.
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