Electricity firms remit N55.1bn market invoice

Nigerian Electricity Regulatory Commission (NERC), says that the 11 Electricity Distribution Companies (DisCos) remitted N55.1 billion of electricity invoice out of the total N162.5 billion they received in the third quarter of 2018.
NERC in its 2018 third quarter report published on its website indicated that liquidity challenge in the Nigerian Electricity Supply Industry (NESI) had continued to manifest during the third quarter of 2018 .
This, NERC said was evidenced in the DisCos remittance to Nigerian Bulk Electricity Trader (NBET) and Market Operator (MO) for electricity supplied and administrative services respectively.
“ During the third quarter of 2018, DisCos were issued a total invoice of N162.5 billion for energy received from NBET and for the administrative services by MO.
“But only a total of N55.1 billion of the invoice was settled, creating a total deficit of N108.4 billion.”
The commission said an analysis of market invoice performance by DisCos in the quarter indicated an average settlement rate per DisCo of only 29 per cent of the market invoice.
“As previously reported in first and second quarter of 2018 reports, none of the DisCos exceeded a settlement of 50 per cent of its market invoices in 2018 third quarter .’’
It listed the market remittance performance of the DisCos during the period to include: Ikeja 34 per cent, Eko 42 per cent, Abuja 34 per cent, Benin 32 per cent.
Others are Ibadan 29 per cent, Enugu 25 per cent, Port Harcourt 21 per cent, Yola 18 per cent, Kano 17 per cent, Jos 11 per cent, Kaduna 10 per cent.
It said although collection efficiency of DisCos increased from 64.2 per cent in the preceding quarter to 65.5 per cent in the quarter under review.
It, however, said the remittance to NBET declined to 27.5 per cent from 31.5 per cent.
“Similarly, the market operator received just 36.4 per cent of the invoice payable to service providers during the same period.”
It said total market invoices issued to Ajaokuta Steel Company Ltd and international customers like Communaute Electrique du Benin (CEB) and Societe Nigerienne d’electricite during the quarter were N316 million and N12.11 billion respectively.
It said while N1 million was received from Ajaokuta Steel Company, no payment was received from the international customers.
NERC said the challenge of poor remittance had remained a serious concern to the commission as it is one of the main causes of the liquidity crisis facing the Nigerian electricity supply industry.
“Low remittance adversely affects the ability of NBET to honour its obligations to GenCos while service providers like Transmission Service Provider (TSP), MO and NERC struggle with paucity of funds impacting their capacity to perform their statutory obligations.’’
NERC said individual performance indicates that only two of the 11 DisCos recorded an increase in remittance performance in the third quarter of 2018 .
“Ikeja DisCo recorded the highest remittance efficiency of 43 per cent in the third quarter of 2018, followed by Eko DisCo with 42 per cent.
“Kaduna and Jos DisCos had the lowest performance of 10 per cent and 11 per cent respectively in the third quarter of 2018.
“Of particular concern is the significant drop in Kaduna DisCo’s remittance rate from 21 per cent in the second quarter to just 10 per cent in the third quarter.’’
On revenue collection efficiency, NERC said the total revenue collected by the 11 DisCos from customers in the third quarter of 2018 stood at N107 billion out of the total billing of N162.5 billion.
This, the commission said represents 3.9 per cent decrease in total collection when compared to N115.5 billion collected in the second quarter of 2018.
“The slight decrease in revenue collection in the quarter under review is jointly attributed to a decrease in the amount of energy received by DisCos and lower billing efficiency relative to the second quarter.
According to NERC, the overall collection efficiency for all DisCos increased to 65.6 per cent in the third quarter of 2018 representing a 2.2 per cent rise in collection efficiency compared to the second quarter.
“In other words, the collection efficiency implies that for every N10 worth of energy billed to customers by DisCos, N3.45 remains unrecovered from customers as and when due.
“ In this regard, the DisCos’ collection efficiency remains below par as only approximately 66 per cent of the revenue billed was recovered during the quarter under review.
“The poor collection efficiency by the DisCos has adversely impacted on the financial liquidity of the industry, which in turn, has led to reduced investment in the Nigerian electricity supply industry.
“In appraising individual performances, Ikeja DisCo had the highest collection efficiency of 83.4 per cent followed by Abuja DisCo with 78.2 per cent .
“On the contrary, Kaduna DisCo recorded the lowest collection efficiency of 44.6 per cent .
“On a quarter-on-quarter basis, Jos DisCo recorded the highest improvement in collection efficiency moving from 39.8 per cent to 55.7 per cent .
“ Other DisCos that recorded improvement in their collection efficiency between the two quarters are Abuja, Port Harcourt and Yola.’’
It said a major factor contributing to low collection efficiency was customers’ dissatisfaction with estimated billing which often resulted in an unwillingness to pay.
On health and safety, the commission said it received a total of 79 accident reports from operators during the third quarter of 2018.
It said the accidents resulted in 31 deaths and three injuries of various degrees involving both employees of the companies and the third parties.
“In comparison to the second quarter where 30 deaths were recorded, there was a decline in the health and safety performance of the operators in the third quarter of 2018.”
It said the commission had intensified implementation of various safety programmes aimed at reducing accidents in the electricity industry.