12 March 2019

Nigeria: How 11 DISCOs Piled N348 Billion Electricity Debt in 10 Months

The 11 electricity Distribution Companies (DisCos) owe Generation Companies (GenCos) N348.503 billion as outstanding debt for energy delivered to their networks in the first 10 months of 2018, Daily Trust reports.

The level by the companies to promptly pay for energy delivered to them by the GenCos also dipped by about N3.5bn compared to their payment level in the first 10 months of 2017.

Data obtained from the Nigerian Bulk Electricity Trading Plc (NBET), yesterday, showed that the DisCos consumed 29,681 megawatts hour (MWH) electricity between January and October 2018, amounting to N459.705bn.

From the amount, they paid N111.201bn only as at October 2018 leaving a huge outstanding N348.503bn debt, analysis of the records showed.

Following a trend analysis, Daily Trust reports that the quantum of energy generated and delivered to the DisCos stood at 1,531MWH, higher than 28,149MWH delivered to them in 2017.

From January to October 2017, the 11 DisCos got energy worth N398.359bn, about N61.346bn less than the N459.705bn bill they got for the 2018 period. They however, paid only N113.725bn.

The accumulated debt of the DisCos in 2018 which is N348.504bn, is 63.9bn higher than the N284.633bn they had in 2017, apparently due to the higher energy delivered to the DisCos' network in 2018.

Records show that the rising debt profile of the DisCos could only be traced to higher energy receipt differences as the increase in prevailing tariff cost was ruled out by the Nigerian Electricity Regulatory Commission (NERC) since February 2016 when the Multi Year Tariff Order 2015 came into effect.

A comparative analysis of the payment level of the DisCos for the 10 month period of 2018 and 2017, showed a decline in payment for energy bills, five years after the power sector was handed over to them.

The figure shows that while the DisCos paid N111.2bn for the 10 months of 2018, they paid N113.7bn for about same period in 2017. The significant difference of about N3.5bn meant that the electricity market had dipped in revenue collection rather than grow.

The DisCos late in 2018 had called for immediate tariff review saying they were under recovering their cost of doing business. The Association of Nigerian Electricity Distributors (ANED) also said its members buy electricity for an average N41 or more per kilowatt hour (KWH) but cannot sell above N27 to N30 due to the stiff regulation of the MYTO tariff by NERC which was yet to be reviewed.

Countering the call for tariff increase, the Managing Director of the Transmission Company of Nigeria (TCN), Mr Usman Gur Mohammed, during an interview said it will make no meaning to increase tariff that the DisCos do not have the capacity to collect.

Mr Mohammed said, "To have a higher tariff is good but for the DisCos, the current tariff, how much of it have they collected? I don't believe in the argument that only tariff is the problem because capacity is a problem."

He enjoined operators of the DisCos to build capacity saying, "Even with the current tariff, if they can collect 100 per cent, I don't think we should be where we are because the tariff includes cost of production, investment and inefficiencies.

"The lack of investment in the networks increases the tariff because of high distribution loss. When we don't have the capacity to collect N10, how can we collect N20?" Mohammed queried.

Earlier in February when the Abuja Electricity Distribution Company (AEDC) launched its integrated platform, INCMS, its Managing Director, Engr. Ernest Mupwaya, said the company was looking inwards to blocking all leakages in revenue collection.

He said with the deployment of the Information Technology (IT) platform, AEDC will meet up with customers' satisfaction and loyalty, which he said will increase their willingness to pay their bills.

He also noted that the system can check power theft which occurs from meter installation loopholes. But with the system, the firm will now be able to view what is happening at every stage.

He submitted that the system will protect revenue losses by showing whether customers bypassed the meters. "It is an intelligent system, which you can use to do energy balance. You would have known at a transformer level how much energy came out and how much was sold to the customers and where the gap is coming from," Mupwaya said.

Part of the initiative, he said, was on meter deployment. He said AEDC was installing N10 billion worth of meters it procured in 2018. Customers only need to register with the company to get their meters, he added.

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