Nigeria’s DisCos Earn N1.1trn Amid Power Supply Crisis

Revenue jumps 28% despite grid collapses, consumer outrage.

by Oluwatosin Racheal Alabi

In 2023, amidst a backdrop of ongoing grid crises and unreliable power supply across the nation, Nigeria’s electricity distribution companies (DisCos) reported a remarkable revenue surge, amassing a total of N1.1 trillion. This figure represents a significant 28.2% increase, amounting to an additional N234.4 billion, compared to the N831 billion generated in the preceding year. This financial uptick emerges despite numerous challenges, including 46 national grid collapses between 2017 and 2023, as highlighted in a report by the International Energy Agency.

The National Bureau of Statistics, in its recent electricity report, underscored these financial gains against a scenario of frequent nationwide blackouts, the most notable of which was triggered by a fire on a crucial transmission line on September 14, 2023. Despite these operational hurdles, the revenue inflow to DisCos has been unabated, fueled by the imposition of steep billing on consumers, many of whom grapple with the inaccuracies and high costs associated with estimated billing.

A closer examination of the revenue distribution reveals Ikeja Electricity Distribution Company at the forefront, securing N218.6 billion, a 31.7% increase from the previous year. Eko Distribution Company and Abuja Electricity Distribution Company follow, with significant revenue upticks of their own. Other companies, including Ibadan, Enugu, Yola, Benin, Kaduna, Jos, Kano, and Port-Harcourt Electricity Distribution Companies, also reported substantial revenue increases.

The drive towards improved efficiency in revenue collection has been partly attributed to an aggressive push towards capturing more customers under the estimated billing system, despite a slight reduction in the number of customers billed this way. Moreover, the period saw a 9.38% increase in the number of metered customers, reflecting a complex scenario of customer billing dynamics.

The Nigerian Electricity Regulatory Commission (NERC) has responded to the billing controversy by announcing a deduction of N10,505,286,072 from the annual allowed revenues of the 11 DisCos as a sanction for their non-compliance with billing capping regulations. This move aims to compel the DisCos to refund customers overcharged between January and September 2023 and ensure adherence to fair billing practices moving forward.

The persistent power supply issues have significantly impacted Nigerian businesses and households, with many resorting to alternative energy sources. The removal of the fuel subsidy in June 2023 exacerbated these challenges, leading to an astronomical rise in petrol prices and, consequently, an increased demand for electricity amid environmental and health crises.

Public and private health facilities have voiced concerns over the detrimental effects of power supply shortages on healthcare delivery. The Minister of Power, Adebayo Adelabu, attributed the dire power situation primarily to the inadequate supply of gas to generating companies, which has severely limited the availability of bulk power for distribution.

Efforts to address these challenges have seen the Federal Government threatening to revoke the licenses of DisCos failing to ensure reliable power supply, a situation compounded by the DisCos’ substantial indebtedness to gas suppliers. The National Secretary of the Nigeria Electricity Consumer Advocacy Network, Uket Obonga, criticized the DisCos for prioritizing revenue generation over network improvement and customer service, attributing their financial success to controversial policies such as the Service Based Tariff and the Performance Improvement Plan.

Obonga’s call for stringent sanctions against DisCos neglecting to meter their customers reflects a broader discontent with the current state of electricity distribution in Nigeria. The NERC’s decision to enforce refunds for overbilling is a step toward addressing these grievances, but as the DisCos continue to navigate the complexities of Nigeria’s energy sector, the balance between profitability and service quality remains a contentious issue.

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