Power Firms’ Quarterly Revenue Hits N181bn On Tariff Hike

Buoyed by the hike in electricity tariff, the revenue collected by power distribution companies in Nigeria rose by 42.3 per cent in the first quarter of this year, compared to the same period of 2020.

The revenue collection increased to N181bn in the first three months of this year from N127bn in Q1 2020, according to data from the Association of Nigerian Electricity Distributors.

The umbrella body for the Discos, however, said the collection efficiency dropped by three per cent to 65 per cent in Q1 2021.

It said the overall aggregate technical, commercial and collection loss had continued to deteriorate as it rose to 50.3 per cent in March this year from 48.5 per cent at the end of last year.

“Due to the implementation of the service-reflective tariff, the total billing and total collection in Q1 2021 reached a new record,” ANED said in its latest quarterly report.

The Discos had in September 2020 announced what they called ‘new service-reflective tariff’, with the tariffs being charged residential consumers receiving a minimum of 12 hours of power supply rising by over 70 per cent.

But following opposition by labour unions, the Federal Government agreed to suspend the tariff hike for two weeks, effective September 28, to examine the justifications for the new policy “in view of the need for the validation of the basis for the new cost-reflective tariff”.

In November 2020, the Discos commenced the implementation of the revised electricity tariff that was jointly agreed upon by the organised labour and the Federal Government.

ANED noted in the report that the implementation of the service-reflective tariff aligned the end-user needs with the electricity supply industry’s capabilities, adding that the energy delivered to the market in the Q1 2021 grew by 14 per cent, compared to the same period of last year.

It said, “After several years with minor increments in the energy wheeled by the Transmission Company of Nigeria, since the implementation of the new service-reflective tariff, the energy delivered to the market has grown by 14 per cent.

“As a result of the service-reflective tariff, the Discos distribute more electricity to the tariff band A, B and C areas.”

The service-reflective tariff is based on the hours of electricity supply available to the customers, according to the Nigerian Electricity Regulatory Commission.

Customers are categorised into maximum demand and non-maximum demand customers, with different bands (A to E), depending on the level of supply.

According to ANED, the 14 per cent increase in the energy the Discos received in Q1 resulted in an increase in energy billed by five per cent, which in turn brought about the 42.3 per cent jump in revenue collection.

It said, “The naira equivalent of the energy billed increased as a result of the removal of the subsidy for the Tariff Band A to C. ATC losses increased from 17 per cent to 23 per cent and collection efficiency decreased from 68 per cent to 65 per cent due to the change in tariff crisis in October 2020.

“As a result of the pandemic and the turmoil of the tariff increase in September 2020, the moving average of the ATC&C losses deteriorated from 43.3 per cent in February 2020 up to 48.5 per cent by the end of 2020. It has since increased again and currently stands at 50.3 per cent.”