All electricity distribution companies in the country are currently indebted to the National Bulk Electricity Trading Board  ( NBET) the tune of N120 billion. The NBET purchases power from the Generating Companies (GENCOs) and then in return sells the electricity to the Distribution Companies (DISCOs). The DISCOs then supply the power to retail consumers. Abuja DISCO was the most indebted with a N17. 3 billion debt as at June 2017, while Yola DISCO had the least debt at  N1.7 billion.

What led to the debt?

Several factors have led to the debts accumulated by the DISCOs.  Many customers bypass meters, yet consume electricity while some outrightly refuse to pay. Estimated billing which is applied in many areas many the full cost of distributing power is not recovered. As the problems worsen, the debts accumulate. Tariffs charged by the DISCOs are currently below the cost at which they get power from the NBET, another reason for the debt. The National Electricity Regulatory Commission (NERC) which sets the tariff, had proposed an increase, but the move has been suspended following the intervention of the National Assembly as well as a case pending in court.

Implications of the debt

The DISCOs debt means Generating Companies GENCOs do not get full payment for power they generate. The GENCOs in turn end up owing gas suppliers. As the debts increase, maintenance and expansion programmes will be put on hold. Ultimately, less power is produced and even less is paid for.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.