By Taiwo Adebowale
In a surprising turn of events, Nigeria’s electricity distribution companies (Discos) have reported a significant increase in monthly revenue, climbing by ₦5 billion from ₦95 billion in January to ₦100 billion in March 2024. This financial boost comes even as the country grapples with severe power outages, driven largely by gas shortages that have crippled electricity generation.
Revenue Growth Amidst Power Shortages
Data from the Nigerian Electricity Regulatory Commission (NERC) reveal that despite a significant drop in power supply, Discos managed to raise their revenues substantially. In February, the Discos generated ₦97 billion in revenue, a slight increase from January’s ₦95 billion, before reaching ₦100 billion in March.
This revenue growth coincides with a challenging period for Nigeria’s power sector. Gas shortages, stemming from unpaid debts to gas suppliers, have led to widespread blackouts, reducing power generation to below 2,500 megawatts (MW) at its lowest point. This is a stark contrast to the usual 4,000 MW, severely limiting the capacity of Discos to distribute electricity to their customers.
Billing and Collection Efficiency
The NERC data highlights the operational efficiency of the Discos in billing and revenue collection during this period:
- January 2024: Discos received 2,577 gigawatt-hours (GWh) of power and billed 2,072 GWh, achieving an 80% billing efficiency. The total billing amounted to ₦130.9 billion, with ₦95 billion collected, representing a 72% collection efficiency. The allowed average tariff rate was ₦59.89 per kilowatt-hour (kWh), while the actual average collection was ₦36.97/kWh.
- February 2024: The total energy received by the Discos dropped to 2,149 GWh, with 1,759 GWh billed. Despite this reduction, ₦97 billion was collected from ₦113 billion in billings.
- March 2024: Discos received 2,468 GWh and billed 1,975 GWh. The total billing reached ₦126.5 billion, with ₦100 billion collected. The allowed average tariff for March was ₦62.73/kWh, and the actual average collection was ₦40.69/kWh.
Leading Discos and Revenue Distribution
Among the Discos, Ikeja Disco led the revenue generation, amassing ₦20 billion in March. Following closely were Eko and Abuja Discos, each generating ₦16.7 billion. Other notable contributors included:
- Ibadan Disco: ₦10 billion
- Benin Disco: ₦7.5 billion
- Enugu Disco: ₦6.9 billion
Geometric Power, also known as Aba Power, generated ₦1.1 billion, while Yola Disco earned ₦1.5 billion during the same period. Overall, the Discos collectively generated ₦292 billion in the first quarter of 2024.
Impact of Gas Shortages and Tariff Increases
The revenue increase comes against a backdrop of significant challenges in the power sector. In January, the country experienced a nationwide blackout due to gas shortages. Gas suppliers, citing unpaid debts, halted supplies to power generation companies, causing power output to plummet.
In response to the power crisis, Discos issued apologies to their customers, emphasizing their inability to distribute electricity they did not have. This situation was further exacerbated by the removal of electricity subsidies by the NERC for areas categorized as Band A, which led to a substantial tariff hike to ₦206/kWh.
Controversy Over Tariff Hike and Government Response
The tariff hike sparked widespread protests, with labor unions taking to the streets to demand a reversal. However, the Minister of Power, Adebayo Adelabu, defended the increase, stating that the higher tariffs would bring much-needed liquidity to the power sector, attracting both local and foreign investors.
Adelabu emphasized that the revised tariff policy would ultimately transform Nigeria’s power sector, ensuring a more sustainable and reliable supply of electricity in the long term.
Conclusion: A Double-Edged Sword
The simultaneous increase in revenue and persistent power shortages present a complex picture for Nigeria’s power sector. While Discos have managed to boost their financial performance, the underlying issues of gas shortages, debt, and inadequate power generation remain critical challenges.
As the government and regulatory bodies work towards resolving these issues, the focus will likely remain on balancing financial sustainability with the urgent need to improve power supply reliability for millions of Nigerians.
Taiwo Adebowale is Atlantic Post Senior Business Correspondent
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