Band A: DisCos Monthly Revenue Soars by 42.29% to N142.92bn
The revenue collected by electricity distribution companies, DisCos, increased significantly by 42.29% to N142.92 billion in April 2024, following the hike in electricity tariffs for approximately two million customers in Band A. The revenue in March was N100.44 billion.
The removal of electricity subsidies for customers in Band A in April resulted in a tariff increase from N68/kWh to N225/kWh, a surge of over 230%.
Data published by the Nigerian Electricity Regulatory Commission, NERC, showed that the jump in revenue also followed a marginal rise of 0.29 percent in collection efficiency after a total of N178.72 billion billings were sent out by the DisCos including Aba DisCo.
The data showed that the top three revenue collectors were Ikeja Electric with N29.4 billion, Eko DisCo with N24.93 billion and Abuja Disco with N22.92 billion.
The least revenues were collected by Yola DisCo with N1.1 billion, Aba N1.41 billion and Kaduna Electric N5.01 billion.
The increase in revenue is expected to reduce the amount of subsidies payable by the Federal Government for the month of April.
A top government official in the electricity market payment system told Vanguard on Sunday that payment to Power Generation Companies, GenCos, is expected to rise from the current nine percent to about 50 percent of their total invoice.
The official who didn’t want to be named said the new revenue would improve the market liquidity, but pointed out the government needs to pay its subsidy obligations to avoid a collapse of the market.
Power generation companies’ owners have for four weeks raised alarm over the deteriorating financial status of the companies following a huge N1.3 trillion debt from the market.
They claimed that they were holding the short end of the stick as they received the least attention when payments were made in the market.
In a note to Vanguard on the financial crisis facing the electricity sector, energy market expert, Mr. Lanre Elatuyi pointed out the current financing model in the sector was unsustainable and could lead to the total collapse of the industry.
According to him, “It is not sustainable! This has been going on for many years, and one wonders how the GenCos have managed to stay afloat with this level of indebtedness to them. Not surprising though that the available generation capacity is below 7,000MW today despite our installed capacity of over 14,000MW.
“Besides, we haven’t seen any new investment in power generation in the last few years and the implication on our resources adequacy is that we may wake up one day to realise the whole country is in darkness”.
Mr. Elatuyi warned that “there may not be enough power to transmit and distribute in the future, thus making the country look for alternative off-grid solutions that may not meet our reliability and affordability needs for economic growth and social wellbeing”.
He explained that “subsidy removal for Band A customers was another strategic move to lessen this burden of subsidy, but given the reactions to the recent move that mandated the Band A customers to pay the cost-reflective tariff, the government may have to continue to subsidize. The inevitable end goal is for the market to transition to a full wholesale competitive electricity market where any intervention by the government will be minimal”.