Nigeria: NERC, CBN Move to End Revenue Leakages in Power Market

14 January 2020

Abuja — The Nigerian Electricity Regulatory Commission (NERC) and the Central Bank of Nigeria (CBN) would begin to track payments made by certain categories of electricity consumers in Nigeria to the 11 electricity distribution companies (Discos), a document from the regulator has disclosed.

NERC in the document said it would with the cooperation of the CBN seek for more visibility of the revenue generated by the Discos for the country's power market, and has in this regard enunciated an order that would make residential, industrial and commercial consumers pay their bills through cashless payment channels.

It noted that the initiative was decided to shore up the revenue generated by the Discos.

Nigeria's privatised power market has remained challenged by chronic financial illiquidity with the Discos reportedly engaged in discriminatory remittance practices.

However, NERC in the order explained that mandatory transition of certain classes of end-use customers of Discos from direct cash settlement of bills to cashless settlement platforms was done to reduce collection leakages and revenue losses.

It noted that the move would improve the overall revenue assurance in the power sector, adding that, "this policy directive complies with EPSRA and the laws of the Federal Republic of Nigeria and furthers the objective of improving transparency in NESI by introducing greater clarity on collections from end-use customers and prudence in the utilisation of market funds."

On how the order would be implemented, the regulator said, "Without prejudice to the provisions of section 10 of the Meter Reading, Billing, Cash Collections and Credit Management for Electricity Supplies Regulations, 2007 (the Cash Collection Regulation); all Discos shall transit to cashless settlement platforms for the billing/collection of industrial and commercial customers by 31 January 2020.

"Without prejudice to the provisions of section 10 of the Cash Collection Regulation; all Discos shall transit to cashless settlement platforms for the billing/collection of R3 class of residential customers by 31 March 2020."

The NERC further explained that all the Discos would have to leverage on available banking channels approved by the CBN in complying with the directives, and that all the collection agents, super agents, sub-agents, payment solution service providers (PSSP) and payment terminal service providers (PTSP) engaged by them would be done in compliance with the order.

These third-party revenue collection agents, it noted would have to be duly registered with it and the CBN in addition to operating dedicated accounts strictly for the purpose of billing and collection of revenues from customers of the Discos.

It insisted that the Discos shall equally promote the transition to cashless payments amongst their customers and provide appropriate bank account details and other approved channels for receiving and processing payments to them.

According to it, they must: "Provide details of all CBN authorised payment channels including but not limited to automated teller machines (ATMs), quick response (QR) code, vending platforms, point of sale (POS) terminals, unstructured supplementary service data (USSD)."

"The commission and CBN or its delegate shall monitor all third-party dedicated accounts for the billing/collections of funds from industrial, commercial and R3 residential class of customers of Discos.

"The CBN or its delegate i.e. the Nigerian Inter-Bank Settlement System (NIBSS) shall be responsible for monitoring and evaluation of all customer payment transactions. All switch operators shall provide required information and access to NIBSS.

"The commission notes that Discos are the designated revenue collection agents for NESI and failure to comply with this order shall be treated as a breach of the terms and conditions of the distribution licence," it added.

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