Report from Nigerian Electricity Regulatory Corporation (NERC) has revealed that out of a total invoice of N190.1 billion for energy received from Nigerian Bulk Electricity Trading Plc (NBET) for services provided by Market Operator’s only 28 percent (N52.8 billion) of the invoice was paid by Discos creating a total deficit of N137.3 billion in the first quarter of 2019.
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“This clearly indicates that regardless of the prevailing tariff shortfall DisCos’ remittance is still significantly below the expected threshold. To ensure business continuity and improve sector liquidity, therefore, DisCos must improve on efforts towards reducing their ATC&C losses,” NERC said.
NERC admitted that the financial viability of the Nigeria Electricity Supply Industry (NESI) is still the most significant challenge threatening the sustainability of the electricity industry.
“The liquidity challenge is partly due to the non-implementation of cost-reflective tariffs, high technical and commercial losses exacerbated by energy theft, and consumers’ apathy to payments under the widely prevailing practice of estimated billing,” NERC said.
According to NERC, in Q1 2019 invoices issued to Ajaokuta Steel Co. Ltd, international customers and special customers like Communaute Electrique du Benin–CEB were N0.3billion and N12.8billion respectively; however, neither NBET nor MO received payments from the special and international customers during the period under review.
“While the low remittance by DisCos to NBET and MO is partly attributable to the prevailing tariff shortfall, the DisCos must improve on efforts towards reducing the technical, commercial and collection losses to consequently improve sector liquidity,” NERC said.
Regarding individual performances, Ikeja DisCo had the highest collection efficiency of 84 percent followed by Eko DisCo with 80 percent while Jos DisCo recorded the lowest collection efficiency of 10 percent.
NERC said to address the remittance issue and as part of the review of DisCos’ viability as a going concern, the Commission is discussing with some DisCos to review their performance and respective comprehensive strategy towards addressing their operational challenges.
“The Commission has extracted obligations undertaken by the DisCos in previous meetings for compliance tracking and further actions. The Commission is also finalising a framework for minimum remittance that would ensure a fair and equitable distribution of market revenues as a further initiative towards addressing the fragile financial standing of the electricity market,” NERC said in its Quarterly report.
NERC noted that the commission has continued to monitor DisCos’ process of procuring Meter Asset Providers (MAP) in compliance with the provisions of the MAP Regulations.
Further analysis of the NERC report showed only three DisCos have metered more than 50 per cent of its registered electricity customers as at the end of the first quarter of 2019.
In first Quarter 2019 out of a total of eleven Discos, Port Harcourt Disco recorded the highest metering among its customers of 68 per cent, following by Benin Discos who recorded 57 per cent while Abuja recorded 52 per cent. Yola Disco, Kano Disco and Kaduna Disco recorded the lowest metering among its customer of 21 per cent, 24 per cent and 28 per cent respectively.
“The Commission, continued to monitor the conclusion of the MAP procurement process by the DisCos’ to ensure that successful MAPs commence the roll-out of meters in order to meet the target date of closing the metering gap in the NESI within three years,” NERC said.
The Commission received a total of 72 accident reports from the operators during the first quarter of 2019 which resulted in 10 deaths and 7 injuries of various degrees involving both employees of the companies and the third parties.
“The Commission has resolved to develop a more comprehensive penalties and compensation structure for health and safety breaches in NESI for the purpose of stopping the utilities’ discretionary payment of compensations to electrical accident victims or their families,” NERC said.
