Discos Remit Only N265.03bn of N519.77bn Invoices To NBET In Six Months
Electricity Distribution Companies (Discos) only managed to remit N265.03 billion of the expected N519.77 billion to the Nigerian Bulk Electricity Trading Company (NBET) in the first six months of 2021.
Data from the Nigerian Electricity Regulatory Commission (NERC), the latest in the series, revealed that despite intermittent government intervention, liquidity in the sector has remained a major challenge.
In the first two quarters, spanning January to June, the data showed that only about half of the total expected payments to NBET were made by the 11 Discos to NBET and the Market Operator (MO).
From January to March, the Discos received N260.07 billion invoices for energy they got from the bulk trader and for service charges by the MO, out of which only a sum of N134.92 billion was settled.
In the same vein, for the second quarter, between April and June, while the power distributors were billed N259.70 billion, only N130.11 was remitted.
Basically, NBET purchases electricity from the Generating Companies (Gencos) through Power Purchase Agreements (PPAs) and sells to the distribution companies through vesting contracts.
It also manages and administers the financial flows for the physical supplies on the network, encourages operation of a competitive market and promotes a contracts-based market that allocates risks efficiently to parties responsible for them.
The Nigerian power supply ecosystem is bedevilled by severe illiquidity, which the Discos blame on their inability to fully recover costs as the market is still largely controlled by the government despite its partial privatisation.
“During the first quarter of 2021, a total invoice of N260.07 billion was issued to the 11 Discos for energy received from the NBET and for service charge by the MO, out of which a sum of N134.92 billion was settled, representing a remittance performance of 51.88 per cent. This represents a 4.03 percentage points decrease from the final settlement rate recorded in the fourth quarter of 2020,” NERC noted.
According to the regulator, although none of Discos met the expected minimum remittance thresholds (MRTs) to NBET in the quarter under review, Abuja and Port Harcourt met 90 per cent of their expected remittance.
“Overall, the total Discos remittance to NBET was 76 per cent of expected total for the quarter. The average aggregate remittance performances to MO and NBET decreased from 55.91 per cent in 2020/Q4 to 51.88 per cent in 2021/Q1,” it added.
It continued: “During the second quarter of 2021, a total invoice of N259.70 billion was issued to the Discos for energy received from NBET and for service charge to MO, out of which a sum of N130.11 billion was settled, representing remittance performance of 50.1 per cent. This represents a 1.78 percentage point decrease from the final settlement rate recorded in the first quarter of 2021.”
For that quarter, it explained that apart from Eko Disco, none of the other Discos met the expected MRI to NBET, stressing that overall, the total Disco remittance to NBET was 76 per cent of expected total for the quarter.
“The average aggregate remittance performances to MO and NBET decreased by 1.78 percentage points from 51.88 per cent,” it noted.
Still on the commercial performance of the industry, NERC pointed out that there was a marginal improvement in Q1 as the total billing by all Discos to registered customers during the quarter under review was N271 .85 billion, an increase of 4.6 per cent from the N259.90 billion recorded in the preceding quarter.
However, it noted that only N186.34 billion (or 68.55 per cent) was collected. But in comparison with the preceding quarter which recorded a total billing of N269.90 billion and collection of N169.81 billion (65.34 per cent), there was 3.21 per cent points increase in collection efficiency, the regulator said.
It stressed that the level of collection efficiency indicated that as much as N3.15 out of every N10 worth of energy sold during the first quarter of 2021 remained uncollected from consumers as and when due. “Thus, only a marginal improvement in the collection efficiency is noticeable during the first quarter 2021,” NERC revealed.
Total billing and collection from electricity consumers by the Discos for the second quarter NERC explained, stood at N268.97 billion and N185.29 billion respectively during the quarter under review, implying a collection efficiency of 68.89 per cent
“The level of collection efficiency indicates that as much as N3.11 out al every N10 worth of energy sold during the second quarter of 2021 remained uncollected from consumers.
“Thus, only a marginal improvement in the collection efficiency is noticeable over the 68.55 per cent recorded in first quarter 2020,” it added.