OpeOluwani Akintayo
09 September 2018, Sweetcrude, Lagos — Despite attempts to exonerate themselves as the cause of liquidity shortfall in the power sector, regulator, the Nigerian Electricity Regulatory Commission, NERC, has impressed that electricity distribution companies, DisCos, are indeed culprits.
As evident in its newly released report for the third quarter 2017, NERC said the DisCos’ remittances relative to the invoice received for energy purchased from the Nigerian Bulk Electricity Trader, NBET and the invoice received for administrative services from the Market Operator, MO, is nothing to write home about.
In the third quarter of 2017, DisCos were issued a total invoice of ₦147 billion for energy received from NBET and for the services provided by the market administrators, but only ₦44 billion of the invoice was settled, creating a total shortfall of ₦103 billion.
In a breakdown, Abuja DisCo got an invoice of N19.3 billion from NBET, but remitted N5.9b, Benin DisCo got N13.8b but paid N5.9b, Eko DisCo had N17b but remitted N6.8b, and Enugu DisCo was given an invoice of N13.2b however, could pay just N4.1b.
Other DisCos such as Ibadan which got an invoice of N19.8b paid N6.3b, Ikeja had N17.2b but remitted N7.4b, Jos paid only N1.2b out of N8.3b, Kaduna paid N1.6b out of N10.3b, Kano paid N2b out of N10.8b, while Port Harcourt remitted N1.9b out of N12.5b.
Lastly, Yola Disco, the only government-run utility company, also paid N1.4b out of N5.2b.
By estimation, it means none of the DisCos settled up to half of its market invoice, a phenomenon that NERC said is of “greater concern” to it.
The overall remittance to NBET for the third quarter was just 26.2% of the total energy invoice while the Market Operator received only 38.4% remittance of the invoice for service charge.
| NBET: Capacity & Energy – N’Billion Market Operator – N’Billion | ||||||||
| DisCo | Invoice | Remittance | Shortfall | Performance | Remittance | Shortfall | Performance | Invoice |
| Abuja | 16.20 | 5.00 | 11.20 | 30.9% | 0.90 | 2.18 | 29.2% | 3.08 |
| Benin | 11.58 | 4.50 | 7.08 | 38.9% | 1.43 | 0.77 | 65.0% | 2.21 |
| Eko | 14.29 | 5.48 | 8.82 | 38.3% | 1.33 | 1.39 | 48.8% | 2.72 |
| Enugu | 11.06 | 3.50 | 7.56 | 31.6% | 0.60 | 1.50 | 28.5% | 2.10 |
| Ibadan | 16.65 | 5.38 | 11.27 | 32.3% | 0.90 | 2.28 | 28.4% | 3.18 |
| Ikeja | 14.47 | 5.79 | 8.68 | 40.0% | 1.60 | 1.15 | 58.2% | 2.75 |
| Jos | 6.99 | 0.99 | 6.00 | 14.2% | 0.20 | 1.13 | 15.2% | 1.33 |
| Kaduna | 8.63 | 1.30 | 7.33 | 15.1% | 0.27 | 1.38 | 16.4% | 1.65 |
| Kano | 9.09 | 1.80 | 7.29 | 19.8% | 0.20 | 1.53 | 11.6% | 1.73 |
| P/Harcourt | 10.49 | 1.43 | 9.06 | 13.7% | 0.42 | 1.58 | 21.0% | 2.00 |
| Yola | 4.36 | 0.58 | 3.78 | 13.4% | 0.83 | 0.00 | 100.0% | 0.83 |
| Total /Average | 123.81 | 35.75 | 88.07 | 26.2% | 8.68 | 14.89 | 38.4% | 23.58 |
“This shows a serious liquidity challenge in the industry as it impacts on the ability of NBET to honour its obligations to generation companies, while service providers also struggle to meet their statutory obligations due to financial constraints resulting from low upstream remittance by DisCos”, NERC said in an additional note to SweetcrudeReports.
Furthermore, the total NBET’s and MO’s invoices to international and special (Ajaokuta) customers during the third quarter stood at N21 billion.
However, no payment was received from the international and special customers for the period.
“On account of the bilateral nature of the export of energy to the Republics of Niger and Benin, efforts are being made at the appropriate levels to ensure that the utilities pay for the energy supplied from Nigeria”, NERC said.
Although there was 5% rise in total (combined) remittance to NBET and MO in the third quarter relative to the preceding period, only 30% of the third quarter’s market invoice was settled by DisCos.
Market invoice settled by DisCo for the quarter under review showed that Benin DisCo had the highest remittance at 43%, followed by Ikeja DisCo which remitted 42% of its market invoice.
On the other hand, Jos had the lowest payment performance at 14%.
Other DisCos- Kaduna had 15.3%, Kano 18.5%, Yola 27.2%, Abuja 30.6%, Enugu 31.2%, Ibadan 31.7%, and Eko 40%.
Although NERC said part of the outstanding invoiced amount not paid to the upstream by DisCos is due to tariff deficit, the Commission noted that “some (if not all) DisCos are not incentified to improve on their revenue collection because they are currently opportune to appropriate market funds and sometimes keep more than their fair share”.
To address the poor remittance by DisCos, the Commission said it is currently developing a framework to ensure fair and equitable distribution of market revenue under a structured regime.
“This framework aims at ensuring fairness and transparency in the utilisation of market funds, thereby improves the liquidity in the industry”.
In December, NBET said it recorded a 92% payment shortfall to power generation companies, GenCos.
According to an electricity payment schedule published, the 92 percent payment shortfall revealed that just an 8.25 percent payment was made by NBET to the GenCos.
A breakdown showed that as at December 2017, 25 Genco submitted their invoices for same month worth N54,242,749,563.22 (N54 billion), However, NBET made payment of N4,476,404,925.21 (N4.5 billion), representing 8.25 percent of total bill.
Explaining the reason for its shortfall in payments to the GenCos, NBET said attributed it to what was remitted by the electricity distribution companies.
The electricity trading company said that it received late payment for December 2017 from some Discos.
The Discos that made late payment were Abuja, Benin, Enugu, and Port Harcourt Discos which paid NBET N4.47 billion for the December invoices of N50.21 billion representing 8.91 percent.
While the GenCos have continuously lamented huge debts owed it by NBET, the DisCos have equally blamed it on either non-payment or partial payment of electricity bills by customers.
