Despite a gradual increase in efficiency in bill collection, the debt profile of Nigerian electricity users stands at N385.7 billion as of 2023. This was revealed in the annual report and accounts by the Nigerian Electricity Regulatory Commission (NERC), as seen by Nairametrics.
According to the report, bill collection efficiency stood at 73.65%, with distribution companies (DisCos) receiving N1.07 trillion during the same period. The report also highlights that the distribution companies, which had an offtake performance capacity of around 94% from the national grid, issued N1.4 trillion in electricity bills but collected only N1.07 trillion.
This indicates a significant shortfall in payments despite improvements in bill collection efficiency.
DisCos Payment Shortfall
Furthermore, the report indicates that in 2023, Distribution Companies (DisCos) received a total invoice of N858.033 billion for energy supplied by the Nigerian Bulk Electricity Trading (NBET) and for service charges by the Market Operator (MO).
Out of this, DisCos paid N706.73 billion, leaving a market shortfall of N151.30 billion. This resulted in an overall remittance performance of 82.37%, illustrating the ongoing challenges DisCos faces in meeting their financial obligations.
Despite efforts to improve payment collection, the remaining deficit highlights the financial strain on the electricity sector, which continues to impact its stability and sustainability.
Regional Analysis of Revenue Collection
On a regional level, electricity distribution companies in Nigeria showed varying remittance performances in 2023. Eko and Yola Distribution Companies (DisCos) led the pack with exceptional remittance rates to the Nigerian Bulk Electricity Trading (NBET), achieving 105.76% and 105.14%, respectively.
In contrast, Kaduna DisCo recorded the lowest remittance to NBET, at a mere 17.59%. When considering remittances to the Market Operator (MO), Yola, Eko, and Ikeja DisCos stood out, remitting 90.91%, 90.85%, and 90.38% respectively.
However, Kaduna again lagged, with the lowest MO remittance performance at just 10.75%. These disparities reflect significant regional differences in the financial obligations met by the various DisCos across the country.
What you should know
Despite numerous government interventions, the power sector continues to face significant challenges, largely due to underinvestment and a lack of liquidity within the system.
In May, the federal government announced a N130 billion payment as part of efforts to address the N1.3 trillion debt owed to gas suppliers within the Nigerian Electricity Supply Industry (NESI).
So far, about N205 billion has been paid to gas suppliers, to boost electricity output across the country. This ongoing debt settlement is part of a broader government strategy to enhance liquidity in the sector and, ultimately, improve power supply.