*As international customers own Nigeria over N10b
Lagos — Newly released statistics by the Nigerian Electricity Regulatory Commission, NERC has shown that electricity distribution companies, DisCos recorded an approximately 3 percent increase in remittance performances to the Nigerian Bulk Electricity Trading, NBET in the second quarter of the year.
The Q2 2019 report stated that out of the total invoice of ₦180.08billion issued to the eleven DisCos for energy received from NBET and for service charge by market operators, the sum of ₦55.10billion of the total invoice was settled, representing 30.60% remittance performance, and 2.83 percentage points increase from the first quarter of 2019.
The average total remittance performance to the market for all DisCos was 30.60% and ranges from 13.12% (Jos) to 43.27% (Eko).
Notwithstanding, NERC said the slight progress recorded in the second quarter of 2019, the financial viability of the Nigerian Electricity Supply Industry, NESI is still a major challenge threatening its sustainability.
“As highlighted in the preceding quarterly reports, the liquidity challenge is partly due to the non-implementation of cost-reflective tariffs, high technical and commercial losses exacerbated by energy theft and consumers’ apathy to payments under the widely prevailing practise of estimated billing”.
“The severity of the liquidity challenge in NESI was reflected in the less than 50% settlement rate of the energy invoice issued by NBET and MO to each of the DisCos highlighted above, as well as the non-payment by the special and international customers”, the market regulator stated.
During the quarter under review, the special and international customers made no payment to NBET and market operators. The invoices issued to Ajaokuta Steel Co. Ltd (designated as special customer) and international customers (i.e., Societe Nigerienne d’electricite – NIGELEC and Communaute Electrique du Benin–CEB) stood at ₦0.32billion and ₦10.85billion respectively.
“The Nigerian government has continued to engage governments of neighbouring countries benefitting from the export supply to ensure timely payments for the electricity purchased from Nigeria”, NERC said.
Noting that tariff shortfall may have partly accounted for the noted low remittance by DisCos, NERC said it adjusted the remittance performances of the utilities for tariff shortfall , and still found that DisCos’ total average remittance to the market (NBET & MO) during 2019/Q2 was 69.68% and ranged from 43.68% (for Kano DisCo) to 80.80% (for Eko DisCo).
“This clearly indicates that regardless of the prevailing tariff shortfall, DisCos’ remittance is still significantly below the expected threshold”.
“Thus, to ensure business continuity and improve sector liquidity DisCos must improve on efforts towards reducing their ATC&C losses to levels commensurate with their Performance Agreements”, it said.
In pursuit of addressing low remittance to the market and a review of DisCos’ viability as a going concern, the Commission said it met with the management of some of the utilities to review their performance and related strategy towards addressing their operational and commercial challenges.
“The Commission has extracted minimum performance obligations from the DisCos and the compliance unit charged with responsibility for tracking and further actions as necessary. The Commission has also finalised a framework for minimum market remittance threshold that would ensure a fair and equitable distribution of market revenues and an intervention towards managing the liquidity and financial challenges of the electricity industry”, the report said.
As noted in the preceding quarterly reports, NERC said another major initiative towards improving revenue collection and remittance in the Nigerian electricity supply industry is the provision of meters to all registered end-use consumers of electricity.
“To this end, the DisCos’ process of procuring Meter Asset Providers (MAP) monitored by the Commission was completed during the quarter under review. The Commission is now monitoring the deployments of meters in compliance with the provisions of the MAP Regulations. The MAP Regulations issued by the Commission in March 2018 aim to fast-track the roll-out of end-use meters through the engagement of third-party investors for the financing, procurement, supply, installation and maintenance of electricity meters”.