Tension is gradually building up in the power sector with the likely resultant disruption of electricity over the longstanding debts by both local and international customers to the secor.
Also, following the surge in electricity tariffs for Band A customers in the nation from N66/kWh to N208/kWh, the Manufacturers Association of Nigeria (MAN) has lodged a petition with the Nigerian Electricity Regulatory Commission (NERC), urging a reversal of the new electricity rates for its members.
Citing numerous economic challenges confronting manufacturers and business owners in the country, the association argued that the escalated electricity tariffs would further exacerbate the hardships of conducting business in the nation.
Consequently, NERC said it has communicated the need for the Federal Government to intervene.
This was contained in the 2023 fourth-quarter report, the latest, obtained by Channels Television.
According to the report, as of the quarter under review, electricity Distribution Companies (DisCos) and four international customers serviced by the Market Operator, did not remit a total of ₦97.5bn to the power sector in the fourth quarter of 2023.
It was gathered that Discos are contemplating widespread disconnections of several companies and factories, fearing substantial losses estimated in billions of naira, ocassioned by the manufacturers decision to pay the old tariff rates instead of the new rates approved by industry regulators.
MAN has instructed its members across the country to persist in paying the previous rate of N66/kWh to DISCOs pending a resolution of the petition filed by the association to NERC.
The report also showed that about 52% of electricity costs would not be subsidized monthly as government has halted a significant portion of the electricity subsidy.
With the refusal of MAN to pay the tariff, DisCos is expected to bear more losses in the coming months.
According to the latest report by NERC, DisCos, revenue collections stood at N294.95 billion out of the N399.69 billion billed to customers in the fourth quarter of 2023, indicating a N105.1 billion loss in total.
MAN, had recently written its members instructing them to adhere to the previous tariff rates and urged them not to be deterred by NERC’s actions, emphasizing the association’s commitment to escalating discussions with the DisCos and the federal government.
But, according to statistics from NERC’s 2023 fourth quarter report, the 11 DisCos held unto ₦81bn, while four international customers (Paras SBEE, Transcorp SBEE, Mainstream NIGELEC and Odu-Pani-CEET ), did not remit $12m (₦16.5 billion when converted using ₦1,367/$1 rate) invoice issued to them by the MO for services rendered in 2023/Q4.
This puts total debt by DisCos and international customers at ₦97.5bn for the period under review.
A breakdown of the explanation of the debt by the DisCos, showed that in 2023/Q4, the cumulative upstream invoice payable by DisCos was approximately ₦270bn, consisting of ₦223bn for generation costs from the Nigerian Bulk Electricity Trading (NBET) company, and about ₦47bn for transmission and administrative services by the MO.
However, out of this amount, the DisCos collectively remitted a total sum of ₦188.7bn (₦156bn for NBET and ₦32.5bn for MO), with an outstanding balance of about ₦81bn. This translates to a remittance performance of about 70 per cent in 2023/Q4 compared to the 76 per cent (remittance of ₦158bn out of the total invoice of ₦208.7bn) recorded in 2023/Q3.
The total revenue collected by all DisCos in 2023/Q4 was ₦294.9bn out of the ₦399.7bn that was billed to customers. This translates to a collection efficiency of 74 per cent. In comparison with the total revenue collected by all DisCos in 2023/Q3, which was ₦268bn, out of the ₦349bn billed to customers, translating to a 76 per cent collection efficiency.
The 74 per cent collection efficiency recorded in 2023/Q4 is –2.77per cent lower than the efficiency recorded in 2023/Q3 (76 per cent).
The report further detailed that none of the four international customers being supplied by GenCos in the Nigerian Electricity Supply Industry (NESI), made payment against the cumulative invoice of $12.02m issued by the MO for services rendered in 2023/Q4.
The report, however, noted that some international customers made payments during 2023/Q4 for outstanding MO invoices from previous quarters.
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It also said that there were no remittances by bilateral customers against the cumulative invoice of ₦1.9m issued to them by the MO for services rendered in 2023/Q4.
The recurrent delay of remittances by international and bilateral customers, NERC said should prompt the MO “to invoke the provision of the market rules to curtail the payment indiscipline being exhibited by the various market participants”.
The special customer (Ajaokuta Steel Co. Ltd and the host community) did not also make any payment towards the ₦0.72bn (NBET) and ₦0.07bn (MO) invoices received in 2023/Q4.
“This continues a longstanding trend of non-payment by this customer and the Commission has communicated the need for intervention on this issue to the relevant FGN ministries,” NERC added.
The power sector debt continues to rise, as the country battles inadequate power supply as a result of low generation.
The GenCos currently generate about 5000 megawatts (MW) despite the grid having a combined capacity of about 12,000 MW.
Experts have said Nigeria’s over 200 million populace requires at least 30, 000MW to attain sufficiency.
Despite even the meagre 5000MW power generation, the Transmission Company of Nigeria (TCN), has struggled to transmit same to the DisCos for onward distribution to end users.