The eleven(11) electricity distribution companies (DisCos) in Nigeria have struggled to remit 146.51bn (45.12%) of the N266.94bn worth of electricity invoice sent to them within the first- four (4) months of 2022 by the Nigerian Bulk Electricity Trading Company (NBET). This was contained in the latest data obtained by EnergyDay from the bulk trader.
The DisCos have as a result of their poor collection performance, failed to achieve NERC’s Minimum Remittance Orders which required them to pay 100% of Market Operator (MO) Invoice and minimum percentage of NBET bill.
The electricity distribution companies have thus widened their collection and remittance gaps, hence, compounding the liquidity issues facing the Nigerian Electricity Supply Industry (NESI).
EnergyDay gathered that within the period under review, the distributors of grid-connected electricity in the country, popularly called “DisCos” failed to remit a total of N120.43bn.
The NBET, it would be recalled, is an agency of the Federal Government responsible for the purchase of electricity in bulk from Power Generation Companies (GenCos) for the DisCos, through vesting contracts.
The agency’s latest report revealed that electricity consumers in Nigeria consumed an estimated N266.94bn worth of electricity between January and April, 2022, but DisCos only remitted 146.51bn (45.12%) to NBET, leaving about N120.43bn unsettled.
The data also revealed that debt for grid distributed electricity received by the DisCos fell by 2.38% from N123.37bn in April, 2021 to N120.43bn in April, 2022.
Our analysis of the remittances for each month revealed that, in January 2022, the shortfall (payment gap) between the required minimum remittance of the DisCos and the actual remittance made to NBET for the stated period stood at N35.65bn as only N36.65bn (50.69%) was paid to the agency, out of the total invoice of N72.3bn issued to them.
In February 2022, NBET sent a total invoice of N66.43bn to the DisCos, which were only able to remit about N39.81bn (60.02%) for the electricity they collected from the GenCos and sold to their customers. Debt figure for the month stood at N26.52bn.
N31.27bn (48.49%) was remitted by the DisCos to NBET in March 2022, out of the N64.49bn invoices while the debt figure stood at N33.22bn. The Yola Electricity Distribution Company did not make any remittance to NBET for the month.
The data further revealed that all the 11 DisCos, in April 2022, remitted a total of N38.78bn from the N63.82bn invoices sent to them for payment by NBET, representing payment of about 60.76% of all invoices.
Ikeja Electric recorded the highest remittance of N30.9 billion, while Yola DISCO recorded the lowest remittance of N808 million for the period under review.
EnergyDay gathered that none of the 11 DisCos achieved minimum remittance order, none declared profit for eight years, and none of them met the Key Performance Indicators (KPIs) set by NERC.
The liquidity issue in recent times became evident in the level of indebtedness of the DisCos, which led to the take-over of about five of the DisCos by the Bureau of Public Enterprise(BPE) and Nigerian Electricity Regulatory Commission(NERC) including – Abuja DisCo, Benin DisCo, Ibadan DisCo, Kaduna and Kano DisCos – for their failure to pay off loans they took from banks for the purchase of the distribution assets eight years ago.
In July 2022, the Government revealed plan to restructure the managements and Boards of five (5) DisCos, following Fidelity Bank’s activation of call on the collateralized shares of Kano Electricity Distribution Company (KEDCO), Benin Electricity Distribution Company(BDEC) and Kaduna Electric, over their inability to offset loans obtained to pay for assets they acquired in 2013, when privatisation of power assets took place.
EnergyDay gathered that the indebtedness of the DisCos has been a major concern for other players in the power supply value chain, particularly the GenCos which often blamed their current inefficiency on NBET’s inability to recover monies owed them from the DisCos.
The Federal Government has at many times intervened in taking care of the heavy indebtedness of the DisCos with huge stimuli packages and interventions from the Central Bank of Nigeria (CBN).
EnergyDay reported recently that NBET was owing twenty-five (25) GenCos a total sum of N120.15bn in the first quarter (Q1) of 2022, being debt for power wheeled from their respective generation plants into the national power grid, partly caused by the DisCos poor remittance.
This was part of the reasons the Central Bank of Nigeria (CBN) earlier issued warning that commercial banks providing payment guarantees for the DisCos would be held responsible for collections and remittances to NBET and the Transmission Company of Nigeria (TCN).