Only metering’ll guarantee tariff collection efficiency index for Discos—Expert
Reference to recent third quarter report by Nigerian Electricity Regulatory Commission (NERC), which revealed that the total billing to electricity consumers by the 11 electricity distribution companies (DisCos) was N172.9bn in the third quarter of 2018 but only a total collection of N106.7bn, representing 65.5 per cent collection efficiency, industry analysts have called for total metering of customers to reverse the trend.
Power industry expert, Dr Cyprian Jomoh, in an interview with Business Hilights, argued that “The financial viability of the Nigerian Electricity Supply Industry (NESI) and the liquidity challenge is linked to the non-implementation of cost-reflective tariffs, high technical and commercial losses exacerbated by energy theft, and consumers’ apathy to payments under the widely prevailing practice of estimated billing”.
He argued that “The problem with Discos is their regrettable love for estimated billing which can be attested from the delaying way and manner they are implementing prepaid metering regime and jerking up estimated billings without any form of decorum”.
“From all indication, Discos are more at home with estimated billing than metering their customers which is standard operating system everywhere in the world.
“Even though the government in its wisdom, has come up with Meter Access Providers (MAP) to fast track metering of Nigerians, from the look of things, it is very clear that Discos are not eager to buy in to the scheme simply for their love on estimated billing.
Business Hilights recalls that the MAP Regulations issued by the Commission in March 2018, aims at fast-tracking the roll-out of end- use meters through the engagement of third-party investors for the financing, procurement, supply, installation and maintenance of electricity meters. The Commission said it is also finalising a framework that would ensure a fair and equitable distribution of market revenues as a further initiative towards addressing the fragile financial standing of the electricity market.
Continuing, Dr. Jomoh argued that “Until government gives Discos time limit to meter all their customers across the 11 undertakings, MAP operators will continue to hang in the balance even after NEMSA had finished whatever checks they are carrying out on them.
Still on the NERC report, it added that the collection efficiency indices show that a sum of N3.45 out of every N10 worth of electricity sold during the third quarter remains uncollected as and when due.
Besides, additional evidence of the severity of the liquidity challenge in the NESI was further reflected in the settlement rate of Nigerian Bulk Electricity Trader’s (NBET), and Market Operator’s (MO), energy invoices issued to Discos.
The report further revealed that in the Q3 2018 statistics all the 11 Discos were issued a total invoice of N162.5billion for energy received from NBET, and for service charge by the MO, but only a sum of N54.1billion (33.3 per cent) was settled by c, creating a significant deficit of N108.4billion in the market.
The DisCos’ collection efficiency and remittance performance in Q3 2018, showed that with the collection efficiency ranges from 45 per cent (Kaduna) to 83 per cent (Ikeja), for instance, remittance performance ranges from 10 per cent (Kaduna) to 43 per cent (Ikeja).
Still in Q3, 2018, invoices issued to international customers (CEB/SAKETE and NIGELEC), and the Ajaokuta Steel Company Limited (as special customer) were N12.109 billion and N316 million, respectively. However, only a payment of N1million was received from Ajaokuta Steel Company.
In its recommendations, NERC made it clear that “While the low remittance by Discos to NBET and MO is partly due to tariff shortfall, the Discos must improve on their technical and commercial efficiencies for improvements on the payment obligation to the market thereby improving sector liquidity. A major initiative towards improving revenue collection in the electricity industry is the provision of meters to all registered end-use consumers of electricity.
“To this end, the Commission continues to monitor Discos’ process of procuring Meter Asset Providers (MAP) in compliance with the provisions of the MAP Regulations.”
On the strength of the recent pronouncements of the Minister of Power, Works and Housing, Babatunde Fashola, “Discos will still answer for their failure to meter Nigerians based on existing contracts despite government’s new MAP policy, which is targeted at accelerating the process by engaging private businesses”.
