Data from the National Bureau of Statistics revealed that from 2019 and the first quarter of 2024, the combined revenue earned by Nigeria’s energy distribution businesses was around N3.95 trillion.
The power distributors made N482.6 billion in 2019, N526.8 billion in 2020, N761.2 billion in 2021, N828.1 billion in 2022, N1.07 billion in 2023, and N291.6 billion in the first quarter of 2024, according to NBS statistics, indicating an upward trend in revenue generation over the previous five years.
Experts credit several reasons for the steady increase in revenue, including the ongoing tariff modifications that have enabled the Discos to align revenue with the cost of supplying energy in the direction of cost-reflective pricing.
Furthermore, by increasing the number of metered users, the National Mass Metering Programme has decreased estimated billing and improved revenue collection accuracy.
Additionally, the program has helped to lessen the sector’s historical struggles with aggregate technical, commercial, and collection losses.
Continuing, processes have been streamlined, revenue leakages have been avoided, and collection efficiency has increased as a result of improved regulatory monitoring and the use of contemporary technology in billing and collection. The Discos still have a lot of obstacles to overcome despite this increase in revenue, such as high rates of delinquent bills, electricity theft, inadequate infrastructure, and energy losses.
The Discos’ capacity to take full advantage of Nigeria’s energy market potential has been hampered by these problems.
In response, Kunle Olubiyo, President of the Nigeria Consumer Protection Network, questioned the effectiveness of the Discos and demanded immediate reforms.
He stated in a Friday national news report for BrandSpur that the electricity distributors had mostly fallen short of their responsibilities, even with the Discos’ pre-privatization promises to meter customers and the increased efficiency of collection and billing.
Olubiyo stated: “We cannot score the Discos more than five percent. In terms of complaints resolution, they lack the software to track issues and have failed woefully in conflict resolution.”
Olubiyo went on to draw attention to the Discos’ shortcomings despite large investments made in the companies by the Nigerian government and Central Bank to enhance the network.
He expressed concerns about the National Mass Metering Program being implemented by the Federal Government and accused certain meter vendors and Discos of conspiring.
Continuing, he stated: “Many of the customers listed as metered were not metered. The idea was to attach GPS coordinates to every metered point as a precondition for metering, but this was not done.”
Olubiyo claims that the government’s continuous interference, which includes utilising public funds to import and install two million meters a year, begs the question of what exactly privatisation is all about.
He cited cases where the Bureau of Public Enterprises selected interim management teams when governance or liquidity concerns put Discos under receivership.
However, he pointed out that internal politics and job instability among Disco executives frequently hampered the efficacy of these efforts.
Highlighting how unstable the situation is, he disclosed: “We’ve seen board chairmen abruptly remove MDs in Abuja, Port Harcourt, and several other Discos.”
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He hailed as a positive development the recent power granted to states by the Electricity Act to regulate electricity within their borders.
According to him: “The migration of electricity from the exclusive to the concurrent list is a good omen.”
He implored the Federal Government to switch to resource-driven energy solutions and invest its forty percent stake in discos.
Olubiyo regretted the stagnation in the production of electricity as he evaluated the performance of the power sector following privatisation.
Stating further: “In 2013, the peak generation on the grid was 5,800 megawatts. As we speak, from 2013 to now, we haven’t even been able to hit 6,000 megawatts of electricity evacuation on the grid.”
The NCPN President explained the situation: “As decline or backward growth, progressing in error.”
Positively speaking, Olubiyo applauded the recent licensing of businesses like MTN and Honeywell to participate in captive generation or bulk electricity trading in Nigeria. Off-grid generation, independent power plants, and other similar initiatives, he claimed, were positive moves towards stabilising the power supply, especially for industrial districts.
This occurred after the Federal Government-owned Transmission Company of Nigeria, which transfers electricity from producers to distributors, disclosed that it has been experiencing financial difficulties.
According to the report accessed by BrandSpur national news story, this has caused 129 important projects to go unfinished. TCN’s managing director, Abdulaziz Sule, made this revelation yesterday in Abuja. He stated that the firm needed N1.79 trillion, but there was an N637.37 billion funding imbalance.
Sule made a plea to the National Assembly to step in and resolve these issues to guarantee the timely completion of the important projects. He stated that the lack of financing is impeding the timely completion of projects and the effective provision of services.
Inadequate contemporary tools, port clearance concerns, protracted procurement processes, a shortage of spinning reserve, delayed donor-funded projects because of unmet counterpart money, and recent VAT and levy charges on offshore equipment are just a few of the challenges he said the company is facing.
According to recent announcements made by the Minister of Power, Adebayo Adelabu, the cost of producing one kilowatt-hour of electricity was N120.
Adelabu said that this expense was a major contributing factor to the Federal Government’s exorbitant expenditure on electricity subsidies during a House of Representatives oversight visit.
Continuing, he underlined that other fees paid by power utilities within the Nigerian electricity supply industry are not included in this amount.
“Those in Band A are paying N209 while Band B is paying N65. The average cost of producing one kilowatt per hour of electricity was not less than N120 before we had the evacuation, wheeling, and distribution charges.
“So anybody paying N65 or N58 is paying way below the cost, and that is what the Federal Government is still subsidising,” he added.
The minister added that different energy usage has an impact on how efficiently electricity is produced, particularly during off-peak hours. In response, he stated that the Federal Government is thinking about implementing a differential rate structure during off-peak hours to boost electricity demand and improve access to energy throughout Nigeria.
According to him, this differential tariff method entails charging various amounts depending on demand, consumption trends, or other factors.
When referring to electricity, it refers to charging various prices depending on the amount consumed or the time of day.
Adelabu underlined the importance of having more faith in the national grid as a dependable source of electricity, noting that a lot of large electricity users, especially businesses, had switched to utilising their own captive power plants as a result of previous trust concerns.
He went on to say: “The majority of bulk electricity users such as industries, are off the grid due to a lack of trust and confidence in the past. They now have their captive power plants in their industries, which is more expensive.”
He made the argument that generating power in captivity had far higher expenses than using grid electricity.
He explained that: “The average cost of producing captive power is about N350 to N400 for those connected to gas lines. For diesel, it’s about N950, while petrol is about N550.”
In response, Adelabu disclosed the government’s plan to boost grid reliability and rebuild trust to get these heavy users to rejoin the system.
Adding that: “Once consumers and industries see the trust, the confidence, and the stability we are giving, they would be encouraged and reconnect to the grid for a cheaper source of power.”
