The 11 electricity distribution companies (DisCos) in Nigeria’s electricity supply industry earned N188.21 billion in revenue in Q2, 2022, the lowest in four quarters, data from the latest Nigerian Electricity Regulatory Commission (NERC) has shown.
According to NERC, the development was due to a combination of inefficient distribution networks, low revenue collection, energy theft, and the unwillingness of customers to pay their bills.
In monetary terms, both the billings and collections were reduced at almost the same rate when compared with the first quarter of 2022. The billing was reduced by N30.02 billion while collections were reduced by N21.88 billion.
The Commission said the 11 DisCos recorded Aggregate Technical, Commercial and Collection (ATC&C) loss stood at 44.60 percent in the second quarter of 2022. This is composed of 21.83 percent technical and commercial losses and 29.13 percent in collection losses.
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
The ATC&C loss is a summation of billing losses incurred by the DisCo due to its inability to bill 100 percent of delivered energy to consumers (technical and commercial losses) and the collection losses arising from the DisCo’s inability to collect against the invoice’s issues out to consumers.
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“Conversely, DisCos that underperform relative to their allowed ATC&C losses will be unable to earn the expected returns on their set tariffs and could risk long-term financial challenges,” NERC said.
A further breakdown from NERC showed the ATC&C loss was largely driven by Benin (50.22 percent), Enugu (47.87 percent), Abuja (39.89 percent), Jos (63.72 percent), and Eko (23.88 percent) DisCos respectively between Q1 2022 and Q2 2022.
The inability of most DisCos to meet their allowed loss targets means they are unable to meet revenue requirements thereby compromising their long-term financial position
NERC says there is an urgent need for all the DisCos to take emergency remedial actions through customer enumeration and increased revenue assurance to improve their ATC&C losses.
“Failure to resolve this will not only prevent the DisCos from being able to meet their upstream obligations, but it will also saddle them with too much debt and erode their equity,” NERC said.