Tariff hike: Discos revenue jumps to N887bn

Nigeria’s electricity distribution companies have raked in a total sum of N887.86bn as revenue in the first seven months of 2024 following the tariff increase for Band A customers and improved revenue collection, findings by The PUNCH have shown.

Despite consistent complaints over poor power supply by consumers and high tariffs, the 11 Discos increased their income by 46.96 per cent from N604.15bn recorded in the same period of 2023, spanning January to July.

This information emerges as stakeholders in the sector decreased their borrowings from commercial banks by N28.82bn.

According to an analysis of data released by the Nigerian Electricity Regulatory Commission, which contains Discos’ commercial performance for the seven months, the distribution companies had billed a total of N1.114tn over the period under review but were able to collect N887.86bn, achieving 79.7 per cent revenue collection efficiency in the country.
During the previous period of 2023, the companies issued bills totalling N797.18bn, while they managed to collect N604.15bn.

After about two years of tariff freeze in the power sector, the Federal Government had in April increased the rate paid per kilowatt-hour of electricity from about N68 to N225 for Band A customers, who it said consistently enjoyed 20 hours of supply daily.

However, after an intense public uproar, NERC announced an 8.1 per cent reduction to N206.8/kWh in the electricity tariff rate for Band A customers. The hike in electricity tariffs has put many Nigerians under heavy energy bills.
Last week, the Minister of Power, Adebayo Adelabu, assured Nigerians of a possible reduction in the price of electricity in the coming months, following a current effort to step up the generation and distribution of power.

However, Nigerians remain skeptical about the potential reduction, as many communities continue to appeal to be removed from the highest-paying tariff, which negatively impacts the cost of living and hampers economic growth.

A breakdown of the monthly revenue showed that N95bn was generated in January out of N130.92bn billed for the month.

The sum of N97bn was collected in February out of projected N113bn, N100.44bn was generated in March out of N126.56bn billed, N142.92bn was made in April out of N178.72bn, and N139.23bn was generated in May out of N191.65bn billed for the month.
In June, the revenue increased to N150.86bn out of an estimated billing of N176.57bn while N162.14bn was collected out of N197.11bn in July.

A comparison of the N95bn January revenue and N197.11bn generated in May gives a difference of N102.11bn, which is 107.48 per cent of the former.

With the current revenue collection pattern in the first seven months of 2024, the Discos have already exceeded their revenue for the whole of 2020 and are underway to break the records for 2021,2022 and 2023 by the end of 2024.
Data from the National Bureau of Statistics show an upward trajectory of N526.8bn in 2020, N761.2bn in 2021, N828.1bn in 2022, and N1.1tn in 2023.

With this considerable rise in revenue, the Discos are expected to plough back part into building the much-needed investment in infrastructure.

The electricity distributors have in the past been accused of under-investing in infrastructure to boost power supply to over 200 million Nigerians, who currently depend more on self-generated power for their homes and businesses, instead of the national grid.

Recall that the government in May secured a $500m loan from the World Bank to fund electricity Distribution Companies.

According to the Bureau of Public Enterprises, the loan would fill financing gaps in the distribution segment, considered as the most problematic in the industry.

It is expected that Discos would invest the funds “in critical distribution infrastructure; Improve ATC&C losses; increase power supply reliability; achieve financial sustainability in the power sector; and enhance transparency and accountability. Significant progress has been made in the preparation of the DISREP Programme,” BPE explained.

Meanwhile, players in the power and energy sector have reduced their borrowing from commercial banks by N28.82bn amidst the increased cost of debt servicing fuelled by high interest rates. An analysis of the Central Bank’s quarterly statistics, showed that the power sector reduced its loans from N1.12tn in January 2024 to N1.08tn in June.