Niger and Benin Republics – two of the international customers Nigeria supply electricity to are owing the country about N15.5 billion for electricity supplied to them between the fourth quarter of 2018 and the first quarter of 2019, the Nigerian Electricity Regulatory Commission (NERC) has disclosed. debt
The NERC declared in its first quarter (Q1) – 2019 report of operations in Nigeria’s electricity industry which was recently released, that both countries owed N12.8 billion to Nigeria for power supplied to them in January, February and March 2019; as well as a balance of N2.784 billion for their October, November and December 2018 supplies.
This is just as the NERC also stated in another document containing the outcome of a meeting it recently held with operators in the power industry that the Central Bank of Nigeria (CBN) has indicated the terms and conditions under which it would disburse an N600 billion intervention facility it freshly initiated for power distribution companies (Discos).
Historically, Niger and Benin Republics which get at least 300 megawatts (MW) of electricity from Nigeria every day have defaulted in prompt payments for such supplies. Nigeria in 2018, reportedly threatened to disconnect both countries from its suppliers for their rising debts to her power sector. It had also indicated it would negotiate fresh supply terms with them to reflect the operational realities in her privatised power market.
According to the NERC in the Q1-2019 report, the total billing to electricity consumers by the 11 Discos rose to N182.8 billion in the first quarter of 2019, but only an aggregate of N116.9 billion was collected by the Discos.
It revealed that the figure represented a 64.1 per cent collection efficiency by the Discos, and a 4.1 percentage points decrease from the last quarter of 2018.
NERC equally stated that the level of collection efficiency during the quarter under review indicated that a sum of N3.6 out of every N10 worth of energy sold during the first quarter of 2019 remained uncollected as and when due.
It thus noted that the severity of the liquidity challenge in the sector was further reflected in the settlement rate of energy invoices issued by the Nigerian Bulk Electricity Trading Plc (NBET) and Market Operations (MO) department of the Transmission Company of Nigeria (TCN) to Discos, as well as the payment by special and international customers.
“During the first quarter of 2019, the 11 Discos were issued a total invoice of N190.1 billion for energy received from NBET and for service charge by the MO, but only a sum of N52.8 billion (~28 per cent) of the total invoice was settled, indicating a significant deficit of N137.3 billion,” said the NERC.
It also noted that whereas the collection efficiency of the Discos ranged from 40 per cent as it was the case with Kaduna Disco to 84 per cent for Ikeja Disco, remittance performance, however, ranged from 10 per cent in Jos Disco to 43 per cent in Ikeja as well.
“During the same period, the invoices issued to Ajaokuta Steel Co. Ltd (designated as special customer) and international customers (i.e., Societe Nigerienne d’electricite – NIGELEC and Communaute Electrique du Benin–CEB) were N0.3 billion and N12.8 billion respectively.
“However, neither NBET nor MO received payments from the special and international customers during the period under review. The Nigerian government has continued to engage governments of neighbouring countries benefitting from the export supply to ensure timely payments for the electricity purchased from Nigeria.,” said the NERC.
The regulatory agency added that in the last quarter of 2018, CEB/SAKETE and NIGELEC were issued a supply bill of N12.402 billion out of which they paid N9.618 billion as part payment of their total outstanding debts, thus leaving out N2.784 billion debt which the NERC new report did not state if they had paid off.
On why the Discos’ remittance to the market has remained low, the NERC said it was partly attributable to the prevailing tariff shortfall. It, however, insisted that the Discos must improve on their efforts to reduce technical, commercial and collection losses to consequently improve sector liquidity.
Disclosing the conditions the CBN had insisted would guide its disbursement of the N600 billion intervention fund to the Discos, the NERC declared: “The CBN cautioned that the disbursement of the NGN600 billion intervention fund is premised on an accountability framework which hinges heavily on the performance of Discos and should be reflected in improved collection efficiency and revenue remittance. The CBN also reaffirmed its support to the commission that enforcement action is taken against defaulting operators.”