Due to default in payments by customers, the total revenue collected by all distribution companies (DisCos) in 2021/Q4 was N210.17 billion out of N303.11 billion billed to customers.
This was disclosed by the Nigerian Electricity Regulatory Commission (NERC) in its 2021/Q4 report, released on September 22, showing that the quarter had a collection efficiency of 69.34%.
Total billing by DisCos to customers in 2021/Q4 increased by N30.12 billion (+11.03%) from N273.00 billion recorded in 2021/Q3. Revenue collected by DisCos in 2020/Q4 rose by N16.64 billion (+8.60%) from N193.53 billion recorded in 2021/Q3 – this indicates a further reduction in collection efficiency in 2021/Q4 relative to 2021/Q3.
According to the NERC report, collection efficiency is an indicator of the proportion of the amount that has been collected from customers relative to the amount billed to them by the DisCos. Collection efficiency of 70% for instance implies that for every N10.00 worth of energy billed to customers by DisCos, approximately N3.00 remained unrecovered from the billed customers.
The country’s total generation in 2021/Q4 was 9,480.21GWh, which is a 9.05% increase from 8,693.77GWh in 2021/Q3, says Nigerian Electricity Regulatory Commission (NERC). The increase in capacity was due to increased generation from Kainji, Jebba, Okpai, and Geregu plants.
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NERC says that the performance was due to improved availability of the hydro plants as a result of increased water levels after the rainy season, fewer incidents of pipeline vandalism, and payment assurance to GenCos during the period highlighted.
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However, low offtake by distribution companies as a result of weak infrastructure and commercial issues resulted in low-capacity utilization, which made it impossible for generating companies to be dispatched to their maximum capacity.
The national grid did not experience any grid collapses in 2021/Q4. NERC says the grid network recorded improved stability at this time. The regulator explains that when supply exceeds demand, the electrical frequency increases.
In extreme cases, some power plants that are unable to tolerate excessive frequency variation may shut down thereby causing a sudden drop in the available generation on the grid. This exacerbates the frequency imbalance potentially leading to a full or partial system collapse.
According to NERC, the total energy received by all distribution companies (DisCos) in 2021/Q4 was 7,912.05GWh, while the total energy billed was 6,057.78GWh. Billing efficiency was 76.56%.
The total energy billed to end-users increased by 471.76GWh, an 8.45% increase from 5,586.02GWh billed in 2021/Q3.
The NERC report says that in 2021/Q4, Port Harcourt had an improved billing efficiency of 81.11% (+5.16 percentage points), while Yola recorded 51.14% (+4.03pp) and Jos recorded a billing efficiency of 75.25% (+3.47pp).
On the other hand, Abuja DisCo recorded a decrease in billing efficiency of 64.62% (-4.13pp) and Enugu DisCo showed a decrease as well of 68.64% (-4.71pp).
Why are DisCos unable to record 100% billing efficiency?
The NERC report explains that DisCos are unable to identify who consumes all their energy due to poor customer enumeration and low metering. The report says that billing efficiency combines technical and commercial efficiencies.
For instance, a 70% billing efficiency means that for every N10.00 worth of electricity delivered to consumers by a DisCo over a given period, the DisCo is only able to issue bills to cover N7.00 worth of energy, with N3.00 worth of energy remaining unbilled due to reasons ranging from energy theft, poor distribution infrastructure and inadequate customer enumeration.
Customer enumeration in this regard means that all potential power users in Nigeria, are contacted by their respective DisCos and asked about their future plans of purchasing power. Then, the quantities indicated by the customers are added together to obtain the probable demand for power. In 2019, NERC ordered all DisCos to carry out customer enumeration, however, the exercise failed to meet its objectives.
What you should know
In addition to the Meter Asset Providers (MAPs) and the National Mass Metering (NMMP) programs, NERC has also approved and is monitoring the implementation of three further frameworks for meter financing.
Vendor Finance: A mutual agreement between a DisCo and a Local Meter Manufacturer/Assembler (LMMA) or Meter Asset Provider (MAP) on a deferred payment arrangement where the base cost of meters shall not exceed the regulated price approved by the Commission. Where the cost of financing exceeds the rate approved by CBN, the approval of the Commission will be obtained before the execution of the agreement.
Self-funded by DisCo: This involves procurement of meters from other sources outside the MAP and NMMP framework. The allowable costs of meters, accessories, installation and warranties should not exceed the regulated pricing approval by NERC and the terms of supply should not conflict with the terms of existing MAP and NMMP contracts.
Other External Efficient Meter financings: ERC has also approved other external meter financing that is efficient, cost-effective, and in tune with the terms of existing MAP and NMMP contracts.