According to the most recent report by the Nigerian Power Regulatory Commission (NERC), the 11 distribution firms have billed electricity users a total of N816 billion. The audit also reveals that only N370 billion of this sum has been recovered by the DIiscos, leaving N543 billion in unpaid debt. The NERC’s Annual Report provided the statistics. The latest report shows that the loss was recorded in 2020.
The results show that the efficiency of billing and collection was 74.33 per cent and 66.5 per cent, respectively, down 8.44 and 1.34 percentage points from 2019 levels. According to the level of collection efficiency, clients may not have paid for up to N3.35 of every N10 worth of energy sold in 2020 as of and when due.
The utility companies were also unable to pay in full for the quantity of energy delivered to them by the Nigerian Bulk Electricity Trading Plc due to the poor billing collection reported by the Discos.
According to further findings, the 11 Discos received a total of N883 billion in invoices from the Market Operator and NBET for electricity received during the review year, as well as service fees. Out of the N883bn charged to the utility firms, a sum of N370bn was settled, leaving a total deficit of N512bn in the market.
This payment represents a 42 per cent remittance performance, indicating six percentage points increase from the final settlement rate recorded in 2019 (36 per cent).
The individual performance indicates that Benin and Eko Discos met the expected Minimum Remittance Obligations to MO and NBET, Ibadan met its MRT to NBET while Enugu and Ikeja met its MRTs to MO.
The average remittance performances to MO and NBET increased respectively from 78 per cent and 29 per cent in 2019 to 93 per cent and 31 per cent in 2020.
Discos’ remittance performance levels ranged from 48 per cent (Yola) to 100 per cent (Benin) for MO and 10 per cent (Yola) to 45 per cent (Ikeja) for NBET. Tariff shortfall is the difference between cost-reflective tariffs and allowed end-user tariffs payable by consumers. NERC said the shortfall contributed to liquidity challenges being experienced in the Nigerian Electricity Supply Industry.
Despite the general shortfall recorded by the market, the NERC’s report indicates that the individual remittance for 2020 was an improvement from that of 2019.
It noted that the improvement in the Discos’ remittance performance was partly linked to the continuous enforcement of the MRO, and the OpEx loan facility offered by the Central Bank of Nigeria-NESI Stabilisation Strategy Limited to DisCos. The facility was meant to part-finance the Discos’ payment obligations to NBET and MO as well as their operations to support the transition to the Service-Based Tariff regime.
The Executive Secretary, Association of Nigerian Electricity Distributors, Sunday Oduntan, could not be reached for a response on how the low remittances and bill collections were affecting their performances. Electricity consumers have over the years complained about estimated billing, which according to them, results in apathy towards bill payments.
The spokesperson for Ikeja Electric, Felix Ofulue, had recently said electricity consumers under the billing methodology consume more energy than those already metered.
“Whenever consumers say they are paying excessively, the reason is that someone living in one bedroom sometimes pays more than the person in a three-bedroom flat. For instance, someone in a three-bedroom uses a gas cylinder. Someone in one bedroom uses an electric cooker bought from Lawanson.
“Those cookers are probably 10 years old and they consume more energy than the modern ones. But NERC introduced capping and we were asked to remove our billing methodology and were asked to bill according to certain parameters mostly on the availability of electricity. So, some people in certain areas are on capping but their bill is high because of the availability of power supply. Don’t forget that the guy using a prepaid meter is more careful in managing his light than those without prepaid meters.”
According to a metering expert, Sesan Okunola, the solution to the billing collection challenge is for all electricity consumers to be metered.
