Liquidity in power sector: DisCos remit N51.6bn market invoice in Q1 2018- NERC

NAN

The Nigerian Electricity Regulatory Commission (NERC) has said that the eleven Electricity Distribution Companies (DisCos) remitted only N51.2billion of electricity invoice out of the total N163.1 billion they received in the first quarter of 2018.

NERC in its 2018 first quarter report published on its website indicated that liquidity challenges in Nigeria Electricity Supply Industry (NESI) had continued to manifest in the first quarter of 2018.

The commission said was due to level of remittance of market invoice.

NERC said DisCos remittances were invoices received for energy purchased from the Nigeria Bulk Electricity Trader (NBET) and those received for administrative services from the Market Operator (MO).

“ In the period under review, whereas DisCos were issued a total invoice of N163.1billion for energy, only N51.2billion of the invoice was settled, creating a total deficit of N112.0billion, “ it said.

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NERC said  similar to fourth quarter remittances in  2017 , none of the DisCos  remitted  up to  half  of  their  market invoices in  the first quarter of 2018.

According to NERC, only Eko and Ikeja DisCos settled up to 45 per cent of their market invoices, while all other DisCos settled below 40 per cent of their invoices in the quarter under review.

NERC, however, said overall market remittance improved from 24 per cent in fourth quarter of 2017 to 31 per cent in first quarter of 2018, but noted that the remittance performance remained significantly low.

“ Similar to the fourth quarter of 2017, MO received 40 per cent remittance of the invoice issued for service charge during the first quarter of 2018.

“Although there was no noticeable change in the overall revenue collection efficiency of the DisCos.

“There was 7.3 per cent increase in total combined remittance to NBET and MO in the first quarter of 2018 relative to the last quarter of 2017,“NERC said.

NERC said DisCos settled about 31.4 per cent of its first quarter’s market invoice as against 24.1 per cent settlement performance recorded in the last quarter of 2017.

According to NERC, Eko DisCo had the highest remittance of 45 per cent, indicating a 2 per cent drop from its remittance performance in the preceding quarter.

It said Jos and Kaduna had lowest performance of 11 per cent and 12 per cent respectively, indicating increases of 2 per cent and 1 per cent respectively from their performance in preceding quarter.

On revenue and collection efficiency, NERC also revealed that the total collection of revenue by DisCos from their customers in the first quarter of 2018 stood at N106.6billion, out of the total bill of N171.2billion.

This, NERC noted, represents 6 per cent increase when compared to N101billion collection in the last quarter of 2017.

It said the slight increase in revenue collection in the quarter under review was attributed to the increase in energy billed.

According to NERC, average collection efficiency in the first quarter of 2018 was 58 per cent, same as recorded in the fourth quarter of 2017.

It said on the average, the revenue collection efficiency indicated that for every N10 billed to customers, N4.20 remained unrecovered as at when due.

It noted that the overall, DisCos collection efficiency remained abysmally poor as just a little above the half of the revenue billed was recovered as at when due.

“The poor collection efficiency by the DisCos has negatively impacted on the financial liquidity of the industry, which in turn has led to reduced investment in the Nigerian Electricity Supply Industry. “NERC said.

NERC, however, said Ikeja DisCo had the highest collection efficiency of 82.6 per cent, followed by Eko DisCo with 82.2 per cent while Jos DisCo recorded the lowest collection efficiency of 37.8 per cent.

“It is noteworthy that these three companies maintained the same positions recorded in the preceding quarter. “

On quarter-on-quarter basis, Jos DisCo recorded the highest improvement in collection efficiency, moving from 33.1 per cent to 37.8 per cent.

Other DisCos that recorded improvement in their collection efficiency between the two quarters according to NERC are: Benin, Enugu, Kaduna, Kano and Port-Harcourt.

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It said a major contributing factor to low collection efficiency was customers’ dissatisfaction with estimated billing which often resulted in their unwillingness to pay.

NERC also noted that tariff deficit was partly responsible for the poor remittance in the industry.

It, however, emphasised that DisCos needed to improve on their remittances, adding that the remittance performance did not reflect the level of revenue collection.

The report said the commission would enforce actions to ensure equitable distribution of market revenue under a structured regime.

It further said that a framework to further ensure transparency in the utilisation of market funds to improve the liquidity in NESI was being developed by the commission.

Meanwhile, a report from a document, presented by the MO indicated that the DisCos had also received N8.840 billion electricity invoice for June, but only remitted N3.375billion.

The report presented recently at the 29thpower sector meeting in Minna revealed that the DisCos made a total remittance of 38 per cent to the MO for June.