In 2023, the eleven distribution firms of electricity (DisCos) in Nigeria’s energy supply sector generated N1 trillion in revenue, which is the most amount ever reported during the same period in the previous decade.
This event is a turning point for the business and emphasizes how important the nation’s electricity distribution sector is becoming.
According to the National Bureau of Statistics (NBS) most current power report, income for the fourth quarter of 2023 was N294.95 billion, which added up to a total of N1.07 trillion for the year.
DisCos made N842.42 billion in income in 2022, the Nigerian Electricity Regulatory Commission (NERC) reports. Data taken from NERC revealed that the total amount of money that all DisCos collected during that time increased by 91 percent, from N442 billion in 2018.
According to analysts, metering technology monitoring developments, increased regulatory control, tariff hikes, significant infrastructure investments, expanding client bases, and greater collection efficiency are all responsible for the noteworthy growth in revenue for DisCos.
“Two important factors have made this development possible,” stated Pedro Omontuemhen, PricewaterCooper (PwC) Partner, West Market Area, Energy, Utilities & Resources Leader. “Among these are improvements to the onboarding procedures for customers and the reduction of technical and commercial losses.”
Omontuemhen asserts that the momentum behind this encouraging development will only last as long as Distribution Companies (DisCos) keep improving electricity supply and reducing losses.
“DisCos must guarantee the full connectivity of every customer and the minimization of both technical and financial losses in order to maintain this progress. Their income figures will consistently rise if these objectives are met,” he stated.
After a noteworthy 8.9 percent improvement from 2022, the Aggregate Technical, Commercial, and Collection (ATC&C) Loss for the year averaged 41.4 percent in the first three quarters of 2023.
ATC&C loss includes both collection losses from the DisCos’ inability to collect 100% of the invoices it issues to customers as well as billing losses it suffers from not being able to bill 100% of the energy delivered to customers (technical and commercial losses).
The Commission emphasized the importance of ATC&C loss, which represents the efficient losses that DisCos are allowed to recover from consumers, as a crucial performance criterion for tariff determination.
According to James Akwaji, a specialist in the energy sector, the income gain is being driven by three main factors: an increase in the expected number of customers, a rise in the customer acceptance of prepaid meters, and improved collection efficiency.
As a result, more money was recovered, nearly or equal to what the clients were billed, according to Akwaji.
Out of the 12,825,005 registered consumers, the Nigerian Electricity Supply Industry (NESI) had metered 5,707,838 as of September 30, 2023.
148,389 end-user users were successfully metered in the third quarter of 2023. “Ikeja, Abuja, and Ibadan DisCos accounted for 27.35 percent, 20.78 percent, and 17.53 percent of the total installations, respectively,” in terms of meter installations during this time.
“The metering rate increased by 0.35 percentage points from the previous quarter to reach 44.51 percent by the end of the third quarter of 2023.”
Five DisCos showed success in increasing the number of meter installations, with Benin and Abuja leading the way, according to NERC.
But when compared to the second quarter of 2023, Yola and Eko saw the biggest drops in meter installations in the third quarter.
NERC claims that a significant discrepancy between the macroeconomic indices used by MAPs to determine allowed prices and market realities has made it difficult for Meter Assets Providers (MAPs) to procure meters, which has resulted in an overall decline in the number of meters installed during this period of -18.04 percent.
