…As Discos meter only 161,640 Customers in 10 months
30 November 2016, Sweetcrude, Abuja – The Nigerian Electricity Regulatory Commission has warned that the shortfall in the power sector will hit N3 trillion by the end of this year.
The Acting Chairman and Chief Executive Officer of NERC, Dr. Anthony Akah revealed this in a statement obtained by our correspondent in Abuja.
“This is like a doom’s day scenario because if care is not taken, the shortfall in power sector will hit N3 trillion by end of 2016. The reason is a lack of revenue attributed to the services provided but doesn’t get paid for,” he said.
In October, Nigeria Electricity Hub, an initiative of Nextier Power, said that the Nigerian electricity supply market will record an estimated N1 trillion shortfall by December 2016, which could lead to systemic bankruptcy and a risk of nationwide blackout if left unresolved.
The CEO of Niger Delta Power Holding (NDPHC), Chiedu Ugbo, also stated that since the establishment of the company’s first power plant in 2011, estimated energy invoiced by the eight power plants currently amounted to N235.4 billion. Of this estimate, about 55.3 percent, he explained, has been paid while the remaining 44.7 percent is still outstanding and owed by the Discos, and as of August 2016, debts owed the company by the market stood at N105 billion.
“The implication is far reaching: capacity utilisation, low productivity, inability to meet obligations, asset replacement issues and finally it challenges them as a going concern,” the NDPHC boss said.
While speaking, Akah described the huge shortfall as a “doom’s day scenario”, saying it came about as a result of services rendered by the different strata of the sector yet-to-be-paid for by consumers.
He mentioned power theft, metre by-pass, unpaid bills as some of the causes for the shortfall. He then explained that power losses are usually estimated and added to the bills/tariffs of those customers with metres.
The Chief Executive Officer, Association of Nigerian Electricity Distributors (ANED), Azu Obiaya, had earlier assessed the liquidity challenge from the perspective of the Discos. Discos are experiencing a revenue shortfall of N38 billion monthly and that the government alone, through its ministries, departments and agencies (MDAs), currently owes the Discos about N58 billion, he said.
This, the ANED CEO said, could amount to N309 billion by the end of the year, and that the Discos’ books no longer reflect cash flows that were necessary for lenders to accept funding their ongoing projects.
He also noted that as of December 2015, the Discos were experiencing a revenue shortfall of N298 billion due to the non-cost reflectivity of MYTO.0, a tariff plan then in force in the power sector in Nigeria. As a result of this, the NERC approved electricity tariff increases to raise liquidity for the sector but its implementation was suspended for about six months, resulting in losses of about N13 billion for the Discos.
Apart from these, other losses are coming through inflation of the naira and its weakness against major international currencies as well as from pipeline vandalism.
Meanwhile, an updated metering report in the power sector has said only 161,640 customers got meters between January and October 2016.
Most of the 11 electricity Distribution Companies (Discos) may not attain their annual target of installing 100,000 meters this year due to foreign exchange crisis among others with a month to the end of 2016, our reporter learnt.
However, another report from the Nigerian Bulk Electricity Trading (NBET) Plc revealed that the Discos’ monthly energy payment dipped significantly with an average of 26.84 percent payment for August.
Monthly metering statistics provided by the Nigerian Electricity Regulatory Commission (NERC) at the 10th sectorial meeting in Akwa Ibom State showed that 3.329 million customers had meters by October.
The reported 161,640 meters installed so far, projects a huge shortfall of meter installation by year end.
Ibadan Disco, which has the largest customers in its network, attained 50 percent of its target by metering 50,730 customers between January and October 2016. It had promised to instal 100,000 units annually.
Ibadan Disco installed 23,610 meters, Eko Disco provided 21,131 meters; and Benin Disco installed 20,244 meters.
While Port Harcourt Disco installed 11,695 meters, the others had less than 4,000 installed meters this year.
Meanwhile, the NBET data published for August 2016 rated the Discos’ payment performance below average on their remittances. The 11 Discos consumed 91.69 percent of the total energy (2.30-gigawatt hour-GWh) sent out in August but paid only 26.84 percent of the bill. Rather than pay the N34.93 billion raised for them, they paid only N9.37 billion, the record showed.
The N28.32 billion market shortfall in August caused dropped payment to 24.61 percent for the 20 Generation Companies’ (Gencos) bills. NBET said Gencos got only N9.37 billion instead of N38.09 billion for the month.