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- Nigeria Electricity Regulatory Commission’s report shows that electricity distribution companies’ revenue collection efficiency declined in the third quarter of 2024
- Compared to Q2 2024, the revenue collection efficiency rate declined by 4.76 percentage points
- Eko and Ikeja DisCos are the top performers in revenue collection efficiency in the quarter
The Nigerian Electricity Regulatory Commission (NERC) 's third quarter (Q3) 2024 report disclosed that the revenue collection efficiency of electricity Distribution Companies (DisCos) declined in the quarter.
The report noted that the efficiency rate decreased by 4.76 percentage points, dropping from 79.31 per cent in the second quarter (Q2) to 74.55 per cent in Q3.
According to the NERC’s report released on Friday, December 20, DisCos collected N466.69 billion out of the N626.02 billion billed to customers in Q3, compared to N431.16 billion collected from N543.64 billion billed in the second quarter.
The decline highlights the persisting challenges in Nigeria’s power and electricity distribution sector, especially revenue collection.
The report stated, “The total revenue collected by all DisCos in 2024/Q3 was N466.69 billion out of the N626.02 billion that was billed to customers.
“This translates to a collection efficiency of 74.55 per cent. In comparison, the total revenue collected by all DisCos in 2024/Q2 was N431.16 billion out of the N543.64 billion billed to customers which translated to a 79.31 per cent collection efficiency.
“The 74.55 per cent collection efficiency recorded in 2024/Q3 is -4.76pp lower than the collection efficiency recorded in 2024/Q2 (79.31 per cent).”
Top versus low performers
The report disclosed that Eko DisCo was the most efficient performer in the quarter with a collection efficiency of 84.40 per cent. It is closely followed by Ikeja DisCo at 83.78 per cent.
On the other hand, Kaduna DisCo recorded the lowest collection efficiency at 46.42 per cent, followed by Jos DisCo.
The report also noted that Ibadan DisCo and Enugu DisCo showed improvements in Q3 compared to Q2, at +6.59 percentage points and +2.88 percentage points, respectively.
It stated that the remaining nine DisCos recorded drops in efficiency, with Kaduna (-14.20pp) and Jos (-12.09pp) experiencing the steepest declines.
Revenue increase follows electricity subsidy removal
Since the government halted electricity subsidy payments for electricity feeders, categorised as Band A, in April 2024, with the subsidy at N140.7 billion, DisCos’ revenue has also increased.
As of September 2024, the monthly electricity tariff subsidy paid by the Federal Government stood at N181.63 billion, increasing from N173.88 billion in August, N163.87 billion in July, and N102.30 billion in May 2024, raising concerns that another electricity tariff hike may be in the offing.
Following the subsidy removal, customers in the Band A category, who make up 15 per cent of the population of electricity customers in Nigeria and consume 40 per cent of electricity at a minimum of 20 hours of electricity daily, were made to pay N225 per kilowatt hour (kWh), a 300 per cent increase from the previous N68/kWh.
Musiliu Oseni, Vice Chairman of the Nigerian Electricity Regulatory Commission (NERC), said the decision was to ensure sustainable energy distribution and reduce subsidies for the 2024 fiscal year by N1.14 trillion in line with the Federal Government’s subsidy realignment.
The tariff was later reduced to N206.80/kWh when the subsidy figure declined to N102.30 billion in May, following public outcry from customers, labour unions, and manufacturers.
However, when the subsidy figure increased to N158 billion in June, the tariff for Band A customers also increased by N2.70/kWh to N209.50/kWh in July.
The DisCos said the adjustment was necessitated by several key economic indices, including fluctuations in the exchange rate, the current inflation rate, available generation capacity and the cost of gas.
Increased bill collection efficiency rate pushes DisCos’ revenue to N168.7bn in August
Meanwhile, TheRadar reported that the Nigeria Electricity Regulatory Commission (NERC) said electricity distribution companies (DisCos) in Nigeria received a combined revenue of N168.7 billion in August 2024.
According to a fact sheet released by the NERC for August 2024, DisCos billed customers a total of N208.5 billion, while N168.7 billion was received, which represents a collection efficiency rate of 80.91 per cent.
