NERC Ascribes DisCos Losses to Energy Theft, Refusal to Pay Bills by Customers

The Nigerian Electricity Regulatory Commission (NERC) has revealed that the Electricity Distribution Companies (DisCos) in the country lose N4.79 out of every N10 worth of energy sold.

The NERC, has however attributed the losses suffered by the 11 electricity distribution companies to ineffective distribution networks, energy theft, poor revenue collection and refusal of customers to pay their bills promptly.

Investors King gathered that the Aggregate Technical, Commercial and Collection (ATC&C) loss of the DisCos amounted to 47.88 percent in Q1 of 2022.

The data from NERC further explained that the distribution companies recorded 22.62 percent technical and commercial losses and 32.64 percent collection loss.

“Conversely, DisCos that underperform relative to their allowed ATC&C losses (i.e., a higher ATC&C loss than allowed), will be unable to earn the expected returns on its set tariffs and could risk long-term financial challenges. 

“The ATC & C loss was largely driven by Benin (56.75%), Kano (53.89%), Kaduna (74.86%), Enugu (54.19%), and Jos (67.92%) DisCos,” NERC said.

The Commission directed the distribution companies to embark on emergency remedial actions to enhance their ATC&C losses by increasing revenue means.

It noted that if the situation persists, the companies will incur much debts which will affect their equity and hinder them from meeting the target.

“Failure to resolve this will not only prevent the DisCos from being able to meet their upstream obligations, but it will also saddle them with too much debt and erode their equity,” NERC stated.

The Electricity Regulatory body stated that on market remittance, the bills of both Nigeria Bulk Electricity Trading Plc (NBET) and the Market Operator (MO) to DisCos was N205.63 billion in the first quarter of 2022.

The breakdown of the invoices earmarks N164.86 billion as generation cost and N40.77 billion as cost for transmission and administrative services. The DisCos collectively paid a total sum of N135.69 billion from the estimated bill left with  N69.94 billion outstanding balance, placing its remittance performance at 65.99 percent.