DisCos paid only N60.20bn out of N185bn invoice issued to them in Q1 2020 – NERC
By Ikenna Omeje
The eleven (11) electricity Distribution Companies in the country (DisCos) paid only a sum of N60.20 billion out of a total invoice of N185.08 billion issued to them for energy received from the Nigerian Bulk Electricity Trading PLC (NBET) and service charge by the Market Operator (MO) in the first quarter of 2020, the Nigerian Electricity Regulatory Commission (NERC) has said.
According to the NERC in its first quarter 2020 report, released recently, this represents 32.53 percent remittance performance and a 5.79 percentage point decline from the final settlement rate recorded in the fourth quarter of 2019.
“During the first quarter of 2020, a total invoice of N185.08billion was issued to the eleven (11) DisCos for energy received from the Nigerian Bulk Electricity Trading PLC (NBET) and for service charge by MO, but only a sum of N60.20billion of the total invoice was settled, representing 32.53 percent remittance performance. This represents a 5.79 percentage point decline from the final settlement rate recorded in the fourth quarter of 2019, “ the report stated.
It noted: “Whereas three (3) DisCos fully met the expected minimum remittance thresholds (MRTs) to MO, none of the eleven (11) DisCos fully met the MRTs to NBET. The average aggregate remittance performances to MO and NBET were 93.09 percent and 27.96 percent respectively, with performance level ranging from 68.44 percent (Yola) to 100 percent (Eko) for MO and 3.58 percent (Kaduna) to 35.05 percent (Ikeja) for NBET. Only Jos, Enugu and Eko DisCos met the remittance obligation for MO during the quarter under review.”
The electricity regulator informed that the sustainability of the financial viability of the Nigerian Electricity Supply Industry (NESI) is facing challenges, partly due to the non-implementation of cost reflective tariffs.
It said: “The financial viability of NESI has remained a major challenge threatening its sustainability. As highlighted in the preceding quarterly reports, the liquidity challenge is partly due to the non-implementation of cost-reflective tariffs, high technical and commercial losses exacerbated by energy theft and consumers’ apathy to payments under the widely prevailing practice of estimated billing.”
Commenting on the commercial performance of the industry, the report explained: “During the quarter under review, the total billing to and collection from electricity consumers by all the 11 DisCos stood at N186.82billion and N114.29billion respectively. …these denote 78.38 percent and 61.18 percent billing and collection efficiency respectively, indicating 4.21 percent and 8.26 percent points decreases respectively, when compared with the fourth quarter of 2019. The level of collection efficiency during the quarter under review indicates that as much as N3.88 out of every N10 worth of energy sold during the first quarter of 2020 remained uncollected from consumers”
On operational performance during the period under review, the report said: “During the first quarter of 2020, the total electric energy generated was 8,613,998MWh – 6.33 percent more than the energy generated during the preceding quarter. Within the same quarter, the industry recorded a peak daily generation of 5,268MW. The available plant generation units on bar decreased to 66 from the daily average of 70 units recorded in the preceding quarter. However, despite the decrease in available generation units in the first quarter of 2020, the total electric energy generated increased by 6.33 percent with 12.17 percentage points increase in generation capacity utilisation.
“The improved capacity utilisation is attributed to reductions in constraints such as gas supply shortage, and transmission and distribution networks bottlenecks. Notwithstanding the progress recorded during the quarter under review, the aforementioned industry constraints still pose major technical and operational challenges to the industry. The resolution of technical and operational constraints in NESI remains one of the top priorities of the Commission. To this end, the Commission has continued to work on addressing the DisCo-TCN interface bottlenecks to free up part of the stranded generation capacity by addressing the technical constraints inhibiting the flow of energy. “
It added, ”The Commission is also finalising the review of the Performance Improvement Plans (PIPs) filed by DisCos. The PIPs, which were prepared based on the guidelines issued by the Commission, cover the period 2020-2025 with an overall objective of ensuring that utilities invest in projects critical to addressing technical and other challenges affecting their operational efficiency. The review of the PIPs is expected to among others appraise, 1) DisCos’ proposed utilisation of capital and operating expenditure allowances for relevance and cost efficiency, 2) the investments required by DisCos towards addressing distribution networks bottlenecks to free up part of the stranded generation capacities and address to other related constraints inhibiting the flow of energy to end-use consumers.”