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Discos’ Collections Rise to N831bn in Two Years

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Power - Investors King
  • Discos’ Collections Rise to N831bn in Two Years

Electricity consumers who are hooked on to the national grid paid N831 billion to the Distribution Companies (Discos) out of about N1.3 billion worth of electricity that was sent to their homes and offices between the second quarter of 2017 (Q2 2017) and first quarter of 2019 (Q1 2019).

According to the records obtained, the 10 Discos were Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano and Port Harcourt. Yola Disco which is now under the management of the federal government having gone back to it on account of a force majeure earlier declared by its private operator, was not covered by the report.

It showed that between the period – Q2 2017 and Q1 2019, the Discos received 52,185 gigawatt hour (GWh) of electricity from the grid and billed their customers for 40,901 GWh of electricity sent to them.

The total worth of the billed electricity to the consumers, the report showed was N1.3 trillion for the period, but N831 billion was realised. It explained the Discos within the period, improved on their revenue collection efficiency, which rose from 62 per cent in Q2 2017 and Q1 2018, to 66 per cent in Q2 2018 and Q1 2019.

“The total energy collection (across the 10 Discos) increased by N61 billion more, as compared to the previous 12 months (+16 per cent). This is mainly due to improved performance (+12 per cent), as well as the incremental energy received (4 per cent). In this quarter, in general, Discos have increased their revenue collection,” the report obtained from the Discos trade association – Association of Nigerian Electricity Distributors (ANED) showed.

“Overall, the ATC&C (Aggregate Technical Commercial and Collection) keeps reducing and reached a new low in February 2019 (47.2 per cent) versus a starting point of 56 per cent, on set of privatisation,” it added.

According to it, in Q1 2019, energy received increased for five Discos but decreased for the other five Discos which were not named in the report.

It equally stated that between 2016 and Q1 2019, the Discos’ average revenue collection efficiency has improved from a low of 47.8 per cent to 68.4 per cent.

“Overall, the amount of revenue collected increased immensely (+16 per cent), as well as energy billed (+7 per cent), which summarises that the performance improvement of Discos is not only due to the benefit of receiving more energy (+4 per cent),” it added.

Furthermore, showing the distribution, the report noted that between Q2 2017 and Q1 2018, the total energy billed by Discos was 19,741GWh which was equivalent to N628 billion, and from which N385 billion was collected. Between Q2 2018 and Q1 2019, the total energy billed was 21,160GW, equivalent to N672 billion, and from which N446 billion was earned.

For Q1 2019, it said the total amount of energy billed was 5,576.8GWh, equivalent to N176.5 billion, and from which N114.6 billion was also collected from consumers.

Based on a moving average, it explained that since July 2016, there had been a gradual rise in both energy received by Discos and, consequently, in the energy billed.

It further stated: “Although the retail tariff has remained unchanged since Feb 2016, the revenue collection has been increased continuously, up by almost N40 billion in March, compared to the average of N24 billion per month in 2016. This is a consequence of improved Disco performance.

“The energy received by ANED´s members have increased by 7 per cent in the last quarter compared to the previous one and in some Discos the increase is above 10 per cent.”

While calling for an improved rapport with the Transmission Company of Nigeria (TCN) on proactive energy management, the Discos in the document stated: “It is important to better understand the reasons behind these variations to avoid decreasing scenarios, while in parallel, there is an urgent need to improve the energy management communications between TCN and Discos on daily basis.

“Until this operational coordination is completed, Discos might face erratic scenarios that negatively affect the evolution of their KPIs (Key Performance Indicators), under their PIPs (Performance Improvement Plans).”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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