A Punch newspaper report says Nigeria lost an estimated N20.5bn in 22 days (January 1 and 22, 2021) due to continued rejection of electric power by the electricity distribution companies (Discos) who in turn argue that it makes no business sense to wheel power to locations where consumers show an unwillingness to pay for the electricity they receive.
Some stakeholders have defended the discos’ actions by arguing that some of the power generated are allocated to areas with little or no revenue prospects, particularly areas where power theft is more common.
This leaves the discos with no option but to reject some of the load to avoid running into further liquidity issues. The news report further stated that a total of 1,941 megawatt-hour of electricity was restricted during the review period due to insufficient gas supply, as well as lack of distribution and transmission infrastructure.
The Nigerian power sector continues to grapple with the age-long problems that have plagued the sector even before the privatisation exercise in 2013. Insufficient gas supply, weak transmission infrastrusture, absence of cost-reflective tariffs and poor metering system have remained largely unresolved. On the demand side, the final consumers have continued illegal actions of meter bypass and in many cases have accumulated unpaid bills.
Granted, among the uncaptured consumers, there are those without access to the national power grid, particularly in rural areas, however, the wide disparity between registered consumers and estimated number of households today suggests that power theft in Nigeria is not on a small scale, and this could be contributing meaningfully to the liquidity issues gripping the power sector value chain.
Tackling the liquidity constraints of the power sector remains at the forefront. Among suggestions to achieve this is structuring the activities in power sector as financial products for capital market transactions in a bid to facilitate the required liquidity, deepen private participation in the sector and enhance transparency in the entire value chain of electricity generation.
