Discos Revenue Rise by 61.4% After 230% Electricity Tariff Hike
Revenues earned by electricity Distribution Companies (Discos) in Nigeria have risen by over 61.4 per cent after the Nigerian Electricity Regulatory Commission (NERC) approved a 230 per cent tariff increase for Band ‘A’ customers nationwide in April.
Latest data from NERC indicated that in July 2024, Discos’ earnings soared to N162.1 billion from N100.4 billion in March just before the new tariff regime was introduced in Q2 this year.
This is coming amid rising complaints by electricity consumers, especially in Abuja and Lagos that they were being arbitrarily migrated to Band ‘A’ without the 20 hours power supply they are ordinarily entitled to under the band.
Residents of Abuja in September protested the Band ‘A’ tariff increase, complaining that they receive less than 10 hours of power daily, instead of the promised 20-hour daily power supply.
Also, they have lamented that these ‘migrations’ are done without prior notice. The tariff band is intended for customers who receive 20 hours to 24 hours of electricity daily and are charged N209.5 per kilowatt-hour (kWh).
In Lagos, several customers have similarly demonstrated against their ‘forceful migration’ to the Band A category by the Discos in the state. They recently carried placards with inscriptions like ‘re-migrate our communities away from Band A’, ‘scrap all bands’, ‘affordable tariff reduces cost of living’, among others.
Aside the Band ‘A’ category, Band ‘B’ category is at least 16 hours, Band ‘C’ is 12 hours, Band ‘D’ is eight hours, while Band E will have a minimum of four hours daily.
But the NERC commercial data for the month of July under consideration showed that Discos raked in N162.14 billion out of the N191.11 total billing for the month.
Collection efficiency was 82.26 per cent, the data showed, with recovery efficiency at 72.38 per cent. This meant that for subsidised customers, only N83.77 was collected from allowed average tariff of N115.74/kWh.
Analysis recently showed that in the whole of Q1, 2024, the 12 power distributors raked in N291.6 billion and N433 billion in Q2.
After about two years of tariff freeze in the power sector, the federal government had in April increased the rate paid per kilowatt hour (kwh) of electricity from about N68 to N225 for Band ‘A’ customers, who it said consistently enjoyed 20 hours of supply daily. That amount has fallen to N209/kWh.
Announcing the increment in Abuja, the power sector regulator stated that only about 15 per cent of the over 12 million registered power customers would be affected by the new decision.
According to NERC, the decision to raise tariff was to relieve the federal government of the burden of paying N240 billion per month and N2.9 trillion per year as electricity subsidy.
In April, the power distributors raked in N142.92 billion, N139.23 billion in May and N150.86 billion in June, Economic Confidential breakdown pointed out.
With the over N161 billion revenue in July, the highest so far this year, the Discos in Nigeria made an additional revenue of N61.4 billion since the month preceding the Band ‘A’ tariff approval by the industry regulator.
Historical data from the National Bureau of Statistics (NBS), recently showed that in the whole of 2020, the total revenue made by the Discos was just N526.77 billion, while in 2021, it rose to N761.17 billion.
Similarly, in 2022, the power distributors raked in about N828 billion, more than rounding the figure off in the 12 months of 2023, with N1.1 trillion as revenue.
With the current revenue collection pattern in the first seven months of 2024 which has hit N886.74 billion, the Discos have already exceeded their revenue for the whole 2020 and are have also broken the records for 2021 and 2022 and will most likely exceed the 2023 record by year-end.
With this considerable rise in revenue, the Discos are expected to plough back part into building the much-needed investment in infrastructure.
But the electricity distributors have in the past been accused of under-investing in infrastructure to boost power supply to over 200 million Nigerians, who currently depend more on self-generated power for their homes and businesses, instead of the national grid.
Some experts have opined that the Discos remain the weakest link in the electricity distribution value chain, with just a peak capacity to distribute 5,500mw at a time.
In contrast, the Discos have complained that they are not allowed by the government to collect cost-reflective tariffs, a development that has strangled their ability to markedly raise investment in the sector.
Going by the July data from NERC, Ikeja continued its brilliant performance in terms of revenue collection, coming tops with N33.98 billion. This was followed by Eko, which raked in N28.35 billion and Abuja Disco which collected the total amount of N25.15 billion as revenue for the month.
Nigeria’s plan to raise power generation and supply has been largely hobbled by lack of investment in the sector, due mainly to the regulation or capping of tariffs by the federal government.
There’s also the challenge of incessant vandalism of electricity assets by disgruntled persons in parts of the country as well as massive theft of electricity even by privileged persons.
The Minister of Power, Adebayo Adelabu, recently assured that Nigeria was going to generate and supply 6,000mw of electricity by the end of this year.
