DISCOs Billing Drops 5.4% To N213 Billion In October 2024

The electricity sector in Nigeria experienced a notable decline in October 2024 as the total amount billed by Distribution Companies (DISCOs) to electricity customers fell by 5.4%, dropping to N213.62 billion from N225.80 billion in September 2024.

Similarly, the total revenue collected by DISCOs decreased by 5.0%, reaching N163.07 billion in October compared to N171.58 billion in September. Despite these declines, DISCOs managed to achieve a 76.33% total revenue collection efficiency for the month.

Billing and Collection Insights

The latest data from the Nigerian Electricity Regulatory Commission (NERC) revealed an increase in billing efficiency, which rose to 84% in October 2024, compared to 82.36% in the preceding month. However, challenges in revenue recovery remain, as the average allowed tariff for October stood at N115.74k/kWh, while actual collection per kilowatt-hour was N86.62k/kWh, resulting in an overall recovery efficiency of 74.84%.

In terms of energy distribution, DISCOs received a total of 2,361.43 GWh in October, out of which 1,988.52 GWh was billed, representing a billing efficiency of 84.21%. These figures underscore the ongoing difficulties in translating energy delivery into revenue.

Industry Challenges

Operators in the power sector attribute the sector’s liquidity issues to persistent shortfalls in billing collections, coupled with insufficient investments. On the other hand, electricity consumers often argue that they are over-billed, citing unreliable power supply as a key concern. This sentiment is particularly prevalent among those on the estimated billing system, who feel they are paying for “darkness.”

NERC’s Intervention

To address these issues, NERC released a statement titled “NERC Reviews Order on Performance Monitoring Framework for DISCOs,” aimed at enhancing the performance of DISCOs. The regulatory body highlighted updates to its Key Performance Indicators (KPIs) to drive accountability and improve customer satisfaction. These changes include:

Energy Offtake Penalty: DISCOs failing to offtake at least 95% of available energy in two out of three months per quarter will face a 5% reduction in their administrative operational expenditure for the following quarter.
Reporting Compliance: Failure to meet the two-month compliance targets for reporting under the Uniform System of Accounts will lead to enforcement actions, including the withdrawal of the “Fit and Proper” status of the DISCO’s Chief Finance Officer.
Complaint Resolution Timelines: DISCOs must now resolve 75% of customer complaints within a quarter, monitored through the NERC Contact Centre and headquarters.

To ensure adherence to these revised guidelines, Rectification Directives for Q3 and Q4 2024 will be issued, and the updated enforcement framework will take effect from Q1 2025.

The Way Forward

While NERC’s measures aim to promote better accountability and performance, the Nigerian power sector’s challenges require a multifaceted approach. Investments in infrastructure, fair billing practices, and enhanced consumer trust will be essential in creating a more sustainable and reliable electricity supply system.