Discos’ Collection Efficiency Improves as Billing Revenues Hit N842bn in One Year

Emmanuel Addeh in Abuja

The collection efficiency of the electricity Distribution Companies (Discos) operating in the country improved throughout last year, hitting a record N842 billion between January and December, latest data released by the Nigerian Electricity Regulatory Commission (NERC) has revealed.

Spread across the four quarters, between January and March, the Discos collected N199 billion as revenue; it was N188 billion between April and June; whereas, the revenues that came in for the Discos in Q3 and Q4 respectively were N210 billion and N243 billion.

Operators in the power industry have consistently blamed the illiquidity in the sector, mostly occasioned by shortfalls in billing collection for the thinning investment in the Nigerian power sector.

On the other hand, electricity consumers believe they are over-billed and that they actually pay for ‘darkness’ when they are billed for unreliable power supply, especially those on the estimated billing platform.

However, the N842 billion collection was out of the N1.18 trillion billed to customers during the period, shared among the quarters as N295.6 billion, N265.6 billion, N291.6 billion and N332.2 billion respectively, the document showed.

A THISDAY analysis of the NERC report from Q1 to Q4 indicated that the sector therefore recorded a revenue shortfall of about N338 billion during the period under consideration.

“The total revenue collected by all Discos in 2022/Q4 was N243.65 billion out of N332.28 billion billed to customers —this corresponds to a collection efficiency of 73.33 per cent which represents a +1.10 pp increase compared to 2022/Q3 (72.23 per cent),” NERC stated.

It added: “The total revenue collected by all Discos in 2022/Q3 was N210.67 billion out of N291.66 billion billed to customers —this corresponds to a collection efficiency of 72.23 per cent which represents a 1.36 pp increase compared to 2022/Q2 (70.87 per cent).

“The total revenue collected by all Discos in 2022/Q2 was N188.29 billion out of N265.68 billion billed to customers —this corresponds to a collection efficiency of 70.87 per cent which represents a 1.53 pp increase compared to 2022/Q) where the average collection efficiency was 69.34 per cent.

“The total revenue collected by all Discos in 2022/Q1 was N199.90 billion out of N295.69 billion billed to customers —this corresponds to a collection efficiency of 67.36 per cent which represents a 1.9 pp reduction compared to 2021/Q4 where the average collection out efficiency was 69.34 per cent,” excerpts from the data showed.

Besides, the total energy received by all Discos in 2022/Q4 was 7,661.97GWh while the energy billed to end use customers was 5,835.62GWh, translating into an average billing efficiency of 76.16 per cent.

“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 advised.

Furthermore, concerning the Aggregate Technical, Commercial and Collection (ATC&C) loss, which provides a comparative report of how much revenue a Disco is able to collect relative to how much it should have collected based on the volume of energy it received (and sold to customers), in 2022/Q4 it was 44.15 per cent comprising – technical and commercial loss (23.84 per cent) and collection loss (26.67 per cent).

This means that ATC&C loss decreased by -1.24 pp compared to 2022/Q3 (45.39 per cent).  “This is as expected based on the improvements in billing and collection efficiencies,” the report highlighted.

Nigeria’s estimated 210 million people depend on roughly 3,500mw to 5,000mw on a daily basis, with majority of businesses and homes now deploying personal generating sets as a source of electricity supply.

Across 2022/Q3 and 2022/Q4, the report stressed that no Disco 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, ”it added.

NERC explained that poor remittance was a direct consequence of the Discos recording higher than allowed ATC&C performance.

As for remittance by Special/Cross-border customers, NERC stated that in 2022/Q4, Transcorp-SBEE and Mainstream NIGELEC received invoices of $3.44 million and $5.50 million respectively from the Market Operator (MO) and made remittances of $0.93 million (27.04 per cent) and $5.44 million (98.90 per cent) respectively.

 “However, no remittance was made to the Market Operator (MO) by Paras-SBEE and Odukpani-CEET against invoices of $3.03 million and $2.02 million respectively.

“The non-settlement of market obligations by this category of market participants should be a call to action for MO to activate relevant safeguards for remittance shortfalls,” it added.

Furthermore, in 2022/Q4, the commission noted that it approved the issuance of two new generation licenses with a combined capacity of 56.50mw and authorised the amendment of two on-grid embedded generation license.

“The commission also approved 13 mini-grid permits, 14 registration certificates for mini-grids with individual capacities below 1mw. It also granted approval for the amendment/renewal of seven captive power generation permits with an aggregate capacity of 65.36mw.”

 Applications from seven meter installers, three meter manufacturers and two meter importers were also approved by the commission in 2022/Q4,”it added.