Discos’ Revenue Soars 40% to N433bn in Q2 Buoyed by 230% Tariff Hike for Premium Customers

Emmanuel Addeh in Abuja

Revenues earned by electricity Distribution Companies (Discos) in Nigeria in the second quarter of 2024, spanning April to June, rose almost 40 per cent to N433 billion during the period, on the back of the recent tariff increase for Band ‘A’ customers in the country.

This is coming amid rising complaints by electricity consumers, especially in Abuja, that they were being arbitrarily migrated to Band ‘A’ without the 20 hours power supply they are entitled to under the band.

But data sourced from the Nigerian Electricity Regulatory Commission (NERC) indicated that while for the whole of Q1, 2024, the 12 power distributors raked in N291.6 billion, the revenues continued to rise after the tariff hike on April 3, hitting N433 billion three months later.

After about two years of tariff freeze in the power sector, the federal government had in April increased the rate paid per kilowatt hour (kwh) of electricity from about N68 to N225 for Band ‘A’ customers, who it said consistently enjoyed 20 hours of supply daily.

Announcing the increment in Abuja, the power sector regulator stated that only about 15 per cent of the over 12 million registered power customers would be affected by the new decision.

According to NERC, the decision to raise tariff was meant to relieve the federal government of the burden of paying N240 billion per month and N2.9 trillion per year as electricity subsidy.

The latest THISDAY assessment of commercial performance by the Discos showed that in April, the power distributors raked in N142.92 billion, N139.23 billion in May and N150.86 billion in June.

This meant that Discos in Nigeria made an additional revenue of N42.4 billion in April after NERC’s decision on Band ‘A’ customers, that is, about 42.29 per cent increase compared to the previous month of March before the tariff increase was effected. 

The increment had seen a rise in tariff from less than N70 to N225 for kilowatt hour for the premium customers. That amount has now fallen to N209, after a further calculation of the dynamics in the cost of producing a kilowatt.

In April, NERC listed the top three revenue collectors as Ikeja Electric with N29.4 billion, Eko Disco with N24.93 billion and Abuja Disco with N22.92 billion.

The least performing Discos in terms of revenue aside the new Aba Disco, which had a collection efficiency of 73.12 per cent at (N1.41 billion), were Yola Disco (N1.10 billion), Kaduna (N5.01 billion) and Jos ( N6.05 billion).

In May, the NERC data indicated that N191.65 billion was billed, while N139.23 billion was collected, with collection efficiency at 72.65 and dipping by 7.32 per cent compared to the previous month.

During the month, the highest earner was Ikeja Disco with N26.92 billion, followed by Eko Disco with a revenue of 23.92 billion and Abuja Disco which raked in N22.97 billion in May.

In the same vein, in June, the last month of the quarter under consideration, while a total of N176.57 billion was billed, N150.86 billion was collected, with collection efficiency of 85.44 per cent during the month, rising by 12.80 per cent.

As usual, Ikeja Disco took the lead in terms of revenue collection with N30.06 billion, followed by Eko, which made N26.37 billion and Abuja distribution company which collected N24.29 billion.

This collection was out of the total N29.34 billion billed by Ikeja, raising its collection efficiency to 102.44 per cent; Eko Disco billed N27.16 billion, obtaining a collection efficiency of 97.07 per cent, while Abuja had a total billing of N27.94 billion, with a collection efficiency of 86.97 per cent.

Historical data from the National Bureau of Statistics (NBS), recently showed that in 2020, the total revenue made by the Discos was N526.77 billion, while in 2021, it rose to N761.17 billion.

Similarly, in 2022, the power distributors raked in about N828 billion, more than rounding the figure off in the 12 months of 2023, with N1.1 trillion as revenue.

With the current revenue collection pattern in the first half of 2024 which has hit N724.6, the Discos have already exceeded their revenue for the whole 2020 and are underway to breaking the records for 2021,2022 and 2023 by the end of 2024.

With this considerable rise in revenue, the Discos are expected to plough back part into building the much-needed investment in infrastructure.

The electricity distributors have in the past been accused of under-investing in infrastructure to boost power supply to over 200 million Nigerians, who currently depend more on self-generated power for their homes and businesses, instead of the national grid.

Some experts have opined that the Discos remain the weakest link in the electricity distribution value chain, with just a peak capacity to distribute 5,500mw at a time.

In the same vein, the Generation Companies (Gencos) can generate 13,000mw and the Transmission Company of Nigeria (TCN) has said it has the capacity to wheel 8,000mw at any point.

But the Discos have also complained that they are not allowed by the government to collect cost-reflective tariffs, a development that has strangled their ability to markedly raise investment in the sector.