11 DISCOs’ debts to NBET, Others hit N112bn in Q1 2018

Nigerian Electricity Regulatory Commission, NERC, has disclosed that the nation’s 11 Electricity Distribution Companies, DISCOs’debts to Nigerian Bulk Electricity Trader(NBET), and Market Operator(MO), are still below 30 percent as they paid only N51.2 billion of the N163.1 billion issued to them in the first quarter of 2018(Q1’18).

NERC, which confirmed this in its Q1’18 report, also stated that only two of the 11 DISCOs in the country have metered up to 50 per cent of electricity customers under their coverage areas. It disclosed that despite several intervention funds made available to the DISCOs as well as over-estimated billing of consumers, the DISCOs have not yet been able to settle huge debt and metered their customers because of problem of cash. The report stated: “This serious liquidity challenge is partly attributed to non-cost-reflective tariffs, and high technical and commercial losses aggravated by consumers’ apathy to payment arising from estimated billing and poor quality of supply in most load centres. “Of the N171.1 billion billed to customers in the first quarter of 2018, only N106.6 billion was recovered, representing 62.3 percent collection efficiency. ‘’Therefore, of every N10 worth of electricity sold during the quarter under review, N3.8 is uncollected. “The liquidity challenge in Nigerian Electricity Supply Industry, NESI, was further reflected in the DISCOs’ remittances relative to NBET’s and MO’s invoices. “In the first quarter of 2018, whereas DISCOs were issued a total invoice of N163.1 billion for energy received from NBET and for the service charge by MOs, only N51.2billion (31.4 percent) was settled by DISCOs, creating a huge shortfall of N112.0 billion. “Similar to 2017Q4, none of the DISCOs settled up to half of its market invoices in Q1’18. Only Eko and Ikeja DISCOs settled up to 45 percent of their market invoices, all other DISCOs settled below 40 percent of their invoices.” Although the overall market remittance improved from 24% in 2 Q4’17 to 31 percent in the first quarter of 2018, the remittance performance is still significantly low. “The overall remittance to NBET for the first quarter of 2018 was just 27% of the total energy invoice, an increase of 6% from the remittance performance in Q4’17. Similar to the Q4’17, Market Operator received 40 percent remittance of the invoice issued for service charge during the Q1’18. “In the period under review, the total invoice issued to international customers, Beninois Electricity Community and Nigerien Electricity Society (CEB/SAKETE and NIGELEC) and special customer (Ajaokuta) stood at ¦ 12.2billion. However no payment was received from these customers. “The Commission notes that the Nigerian government has continued to engage governments of the neighbouring countries to ensure payments for the electricity purchased. Although the low remittance by DISCOs to NBET and MOs is partly due to low collection and existing tariff shortfall, the Commission has observed that on their part, the DISCOs seem to have capped their monthly remittance thereby keeping more than their fair share from the market funds.” Metering gaps On metering, the report stated: “Metering still remains a key challenge facing the industry. Of the 8,135,730 registered electricity customers, only 3,434,003 (about 42 percent) have been metered as at the end of the first quarter of 2018. “In comparison with the last quarter of 2017, the registered customers (RC) increased by 2.37 percent while the metered customers (MC) declined by 3.9 percent. The increase in the number of registered customers is attributed to the on-going enumeration exercise by DISCOs, which has helped them (DisCos) to discover illegal connection and aptly register some individuals who had previously consumed electricity through illegal connection to their networks “Only two DISCOs, Benin and Port Harcourt had metered up to 50 percent of their customers as at the end of the first quarter of 2018. Overall, three in every five registered electricity consumers are unmetered. Yola DisCo had the lowest metering rate at 21 percent. During the quarter under review, the Commission finalised and launched MAP Regulation to fast-track meter roll-out in order to close the metering gap in NESI as soon as possible,” the report added. Mr. Sunday Olurotimi Oduntan, Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors, ANED, could not be reached for comment yesterday. But in a recent interview with Vanguard, Oduntan had stated, “There are some challenges that need to be tackled by many stakeholders, especially the Federal Government, the DISCOs and gas suppliers. These include: lack of liquidity that hampers our operations. Another challenge is energy theft which culminates in leakages and losses. The vandalism of facilities that occur too often is also a serious problem that leads to huge deficit. “No bank would lend you money unless your business is bankable. Let me re-state for emphasis that this liquidity crisis is a major threat to the power sector. The revenue shortfalls adversely affect the ability of the Discos to make capital investments in metering, network expansion, equipment rehabilitation and replacement that are critical for service delivery.” Vanguard