A Year After DisCo Takeover, Persistent Darkness and Liquidity Crisis

The electricity distribution companies (DisCos) in Nigeria are facing a crisis of performance and liquidity as the Federal Government, commercial banks and Asset Management Corporation of Nigeria (AMCON) struggle to revive the five utility firms they took over a year ago.

The situation is worsened by the fact that President Bola Tinubu has said that the DisCos need up to N2 trillion capitalisation to improve their operations. However, the DisCos have failed to meet the revenue collection, investment and efficiency targets set by the regulator and have left the consumers to bear the cost of their shortcomings.

The five DisCos that were taken over by the government, banks and AMCON are Kano Electricity Distribution Company (KEDCO), Ibadan Electricity Distribution Company (IBEDC), Benin Electricity Distribution Company (BEDC), Kaduna Electric, and Port Harcourt Electricity Distribution Company (PHED). These DisCos have been unable to attract new investors despite the directive of the Bureau of Public Enterprise (BPE) to sell their shares to qualified buyers.

According to the latest report by the Nigeria Electricity Regulatory Commission (NERC) for the second quarter of 2023, the DisCos rejected 114.53 megawatt-hours per hour of electricity during this period and reduced their load offtake to about 3,200MW, far below the 5,000MW required by the Partial Activation of Contract regime. The DisCos also have a high level of Aggregate Technical, Commercial and Collection (ATC&C) loss, which means that they are unable to recover a large portion of the revenue from the energy they receive and distribute.

The NERC report shows that the ATC&C loss in the first quarter of 2023 was 46.39 per cent, comprising 22.03 per cent technical and commercial losses, and 31.25 per cent collection loss. This implies that on average, the DisCos lost N46.40 in every N100.00 worth of energy they received due to inefficient distribution networks, energy theft, low revenue collection and unwillingness of customers to pay their bills.

The report also reveals that the DisCos with the highest ATC&C loss in the first quarter of 2023 were Kaduna Electric with 75.91 per cent, KEDCO with 53.23 per cent, IBEDC with 50.04 per cent, PHED with 47.68 per cent and BEDC with 45.27 per cent. These figures are far above the Multi Year Tariff Order (MYTO) targets set by the NERC for each DisCo.

The DisCos with the highest decrease in energy offtake in the first quarter of 2023 were Kaduna Electric with -9.22 per cent, BEDC with -7.60 per cent, KEDCO with -6.02 per cent and IBEDC with -5.56 per cent. The total energy offtake by all DisCos was 7,495.49GWh in the first quarter of 2023, compared to 7,661.97GWh in the fourth quarter of 2022. The report states that eight DisCos recorded a decline in energy offtake between the two quarters.

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