N60bn revenue shortfall affects power distribution - Discos

The over N60bn revenue shortfall in the books of power distributors is slowing down the distribution of electricity across the country.

According to the Nigerian Electricity Regulatory Commission in its most recent quarterly report released in Abuja, power distributors recorded a revenue shortfall of N64.5bn in the first quarter of this year.

Power distribution companies confirmed to our correspondent in Abuja that the revenue shortfall had persisted, as they also noted that the non-reflective tariff approved by NERC was impacting negatively on their ability to improve the country’s distribution network.

NERC stated that financial illiquidity remained the most significant challenge affecting the industry’s sustainability.

It also admitted that “this serious liquidity challenge is partly attributed to non-cost-reflective tariffs, and high technical and commercial losses aggravated by consumers’ apathy to payment, arising from estimated billing and poor quality of supply in most load centres.”

The commission added, “Out of the N171.1bn billed to customers in the first quarter of 2018, only N106.6bn was recovered, representing 62.3 per cent collection efficiency. Therefore, out of every N10 worth of electricity sold during the quarter under review, N3.8 is uncollected.”

The Chief Executive Officer, Association of Nigerian Electricity Distributors, the umbrella body of the Discos, Azu Obiaya, told our correspondent that the revenue shortfall in the books of the Discos had negatively impacted not just on remittances to the sector, but also on the distribution of electricity.

He, however, stated that the Discos were working with the available funds at their disposal to meet the demands of customers, but urged power users to encourage the distributors by paying their bills. Obiaya said, “Of course, the drop in revenue will impact negatively or slow down the distribution of electricity because we need money to get equipment that we use in distributing electricity. N60bn is not a small amount of money and you can only imagine what can be achieved with such.”

He also called for a reflective tariff from NERC, stressing that the distributors would improve on a their remittances to the sector if this was implemented.

NERC, in its report, had stated that “the liquidity challenge in Nigeria Electricity Supply Industry was further reflected in the Discos’ remittances relative to the Nigerian Bulk Electricity Trading company and the Market Operator’s invoices.”-The