Nigeria: Licences - Discos' Revenue Hits N43bn As Nerc Begins Review

11 December 2019

Ten electricity Distribution Companies (DisCos) said they have raised their revenue collection by N43 billion in the last one year, while reducing their Aggregate Technical, Commercial and Collection (ATC&C) losses to 45 percent.

However, the Nigerian Electricity Regulatory Commission (NERC) has begun the review process for all submissions requested from eight of the DisCos that have been pegged for a licence cancellation sanction since October.

The 11 DisCos are also mandated to remit their energy bills by 79 percent from January 2020, and 100% from July 2020.

Daily Trust reports that the deadline for the affected DisCos to defend their operations and avoid the sanction ended on December 7, 2019 (Saturday).

NERC in an October notice directed Abuja, Benin, Enugu, Ikeja, Kano, Kaduna, P/Harcourt, and Yola DisCos to defend their default of a Minimum Remittance Order (MRO) of about N30.1 billion energy invoice for July 2019.

The MRO for the 11 DisCos obtained by Daily Trust requires the DisCos to perform at 34% remittance level from July to December 2019. They must also raise their remittances to 79% from January to June 2020 when a new tariff is expected to be implemented by NERC.

However, all DisCos must remit their energy collection by 100% from July to December 2020, the MRO indicated.

The top DisCos are Ikeja, Abuja and Eko which are to be remitting 49%, and 45% respectively. In the first six months of 2020, Enugu which should remit 42% now, must begin to remit 100%. Abuja will start remitting 92%, Ikeja (89%), Benin (89%) and Eko (86%).

A statement by the Association of Nigerian Electricity Distributors (ANED) on Tuesday further confirmed that the DisCos made submissions to NERC.

A section of the DisCos' reports showed that from October 2018 to June 2019, the 10 DisCos raised their energy revenue collection to N466bn. They also raised their collection efficiency, which is their capacity to collect money for energy supplied to customers, by 67 percent.

This was higher than the N423bn they collected from their customers between October 2017 and September 2018 when the collection efficiency was 65 percent.

ANED's Director of Research and Advocacy, Barr. Sunday Oduntan, in his remarks said, "This is a reflection of DisCos' commitment to reduce losses, even within the context of the financial crisis of the power sector."

Oduntan noted that the DisCos, while increasing their collections by N43bn in a year, by a rate that represents over 10 percent of improvement, also raised billing efficiency by 5 percent during the period under review.

An analysis of the Key Performance Indicators (KPI) Report the DisCos submitted to NERC also shows that they reduced their Aggregate Technical, Commercial and Collection (ATC&C) losses by 3.6% within one year. It was 49% in 2018 but dropped to 45% in 2019. However, it was 54% when they took over the assets in 2013.

ANED, which represents 10 DisCos, leaving out Yola DisCo which is government-operated, said customers were billed for 20,600 gigawatts hours (GWH) energy from 2017 to 2018, amounting to N650bn, of which N423bn was collected.

However, from 2018 through 2019, the DisCos recorded huge improvement in the billing of 21,650GWH energy of N693bn, and collected N466bn, higher than in 2018.

When contacted on Tuesday, the General Manager, Public Affairs of NERC, Dr. Usman Abba-Arabi, confirmed that the commission was reviewing the DisCos' submissions.

He had earlier said the commission would not preempt the outcome which, he said, would be unfair to the DisCos.

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