Between October and December last year, Nigeria’s eleven electricity distribution companies (DisCos) collected from consumers only 65 percent of the value of electricity sold but remitted back to other operators only 33percent of what they collected, a report by the regulator said.
In monetary terms, total billing to electricity consumers by the eleven (11) DisCos was N172.9billion but only a total collection of N106.7billion representing 65.5 percent of billing was recorded according to the third quarter report of the regulator, the Nigerian Electricity Regulatory Commission (NERC).
“The collection efficiency indices indicate that a sum of N3.45 out of every N10 worth of electricity sold during the third quarter remains uncollected as and when due,” NERC said. Thirty-three percent of the remittance indicates a value of N2.1 for every N7 worth of electricity sold.
NERC in the report said the DisCos were issued a total invoice of N162.5billion for energy received from the Nigerian Bulk Electricity Trading company (NBET), a clearing agency for the sector, and for service charge by the Market Operator, but only a sum of N54.1billion (33.3%) was settled, creating a significant deficit of N108.4billion in the market.
Meanwhile the Ajaokuta Steel Ltd, referred to as a special customer was issued electricity invoice worth N316 million but only managed to return N1million or 0.32 percent of the value of electricity supplied.
This pattern of payment was replicated throughout 2018 thereby increasing the liquidity gaps in the sector which has risen above N1trillion according to operators.
“While the low remittance by DisCos to NBET and MO is partly due to tariff shortfall, the DisCos must improve on their technical and commercial efficiencies for improvements on the payment obligation to the market thereby improving sector liquidity,” the regulator said in the report.
The electricity generation companies (GenCos) are feeling the squeeze over the low remittances by DisCos which have made it difficult to service turbines, pay workers and settle debt to gas suppliers. But the situation seems to be only getting worse.
With power distribution infrastructure in tatters and without sufficient investments to improve the network, DisCos routinely reject electricity capacity they are unable to distribute and do not pay for the stranded power.
This is has led to decline in power generation, squeezing the margins of GenCos.
Joy Ogaji, executive secretary of the Association of Power Generation Companies (APGC), a trade group GenCos, in a January 15 release said operators are reporting decline in available generation due to gas constraints, on-going maintenance of power plants and low demand by electricity distribution companies (DisCos).
GenCos have also protested the adoption of a new invoice procedure by NERC which recognises actual generation capacity against available generation saying it threatens their investments and could undermine the growth of the sector.
“This redefinition of capacity by NERC means that if a GenCo declares 500MW as available on any day and the grid or TCN only nominates to take 100MW, which, to a large extent, is based on what the DisCos want to take and distribute, that GenCo will only be paid energy and the capacity equivalent of 100MW
“The GenCo is left to bear the capacity cost of making available the remaining 400MW.” Ogaji said “no country can grow its power base on this flawed and lopsided regulation that penalises/punishes a generator for investing to increase its available capacity,” Ogaji told journalists in Abuja last week.
GenCos say this regulation inadvertently provides support for any DisCo to decide and take less and less power that is available and still lobby for a higher tariff.
But the regulator has provided the eligible customer regulation which allows GenCos sell power directly to consumers which could resolve the problem of stranded power. Ogaji is yet to respond to BusinessDay’s questions on why GenCos are not taking advantage of the regulation before publication.
ISAAC ANYAOGU
