According to the Federal Government of Nigeria, power distribution companies (Discos) failed to remit a total of N208.8 billion to the Nigeria Electricity Supply Industry in 2022. The Nigerian Electricity Regulatory Commission (NERC) provided figures from the Fourth Quarter 2022 Report, as well as the First, Second, and Third quarters, which revealed that the Discos did not make complete remittances throughout the period.
There are 11 power distribution companies in Nigeria, responsible for distributing electricity to consumers in their respective franchise areas. These companies include Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt, and Yola Discos. They were established in 2013 as part of Nigeria’s power sector reforms aimed at improving the efficiency and reliability of electricity supply across the country.
The Discos collect electricity bills from consumers on behalf of the power market and are expected to make remittances to the power market through the Nigerian Bulk Electricity Trading Plc and the Market Operator, which is an arm of the Federal Government-owned Transmission Company of Nigeria. However, the figures obtained from the power sector regulator indicate that the Discos did not remit N49.23 billion, N31.3 billion, N58.3 billion, and N69.94 billion in the fourth, third, second, and first quarters of 2022, respectively, resulting in a total of N208.8 billion.
The NERC’s fourth quarter report highlighted that the poor remittance by the Discos was a direct consequence of the power firms recording higher than allowed Average Technical Commercial and Collection losses. The report also provided details of the combined invoices issued to the Discos, the amounts remitted, and the outstanding balances for each quarter.
Marketnews Thoughts: The power sector in Nigeria is facing a liquidity crisis, and one of the reasons for this is the poor remittances by power distribution companies to the electricity market since the privatization of the industry in November 2013. There have been calls for a review of the privatization of the successor distribution and generation companies of the defunct Power Holding Company of Nigeria, particularly due to the dysfunctional outputs of the power distributors since privatization. Some experts have suggested breaking the franchises of the 11 distribution companies into smaller units to promote competition in the electricity market.