Liquidity challenge threatens Nigeria’s power industry

first_img Generation The Nigerian Electricity Regulatory Commission (NERC) has pointed out that financial viability is threatening the sustainability of the country’s power industry. Low carbon, solar future could increase jobs in the future – SAPVIA BRICS AFD and Eskom commit to a competitive electricity sector During Q3 2018, the 11 DisCos were issued a total invoice ofN162.5 billion for energy received from NBET, and for service charge by the MO,but only a sum of N54.1billion (33.3%) was settled by DisCos, creating asignificant deficit of N108.4billion in the market. Collection efficiency Q3 report released in January, indicated that the total billing to electricity consumers by the 11 electricity distribution companies (DisCos) was N172.9 billion ($478 million) in Q3 of 2018 but only a total collection of N106.7 billion ($296 million) was achieved, representing 65.5% collection efficiency. The liquidity challenge is partly attributed to thenon-implementation of cost-reflective tariffs, high technical and commerciallosses exacerbated by energy theft, reports The Guardian. A good indicator of the severity of the liquidity challengein the NESI was further reflected in the settlement rate of Nigerian BulkElectricity Trader’s (NBET), and Market Operator’s (MO), energy invoices issuedto DisCos. “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. 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. NERC noted: “While the low remittance by DisCos to NBET andMO is partly due to tariff shortfall, the DisCos must improve on theirtechnical and commercial efficiencies for improvements on the paymentobligation to the market thereby improving sector liquidity. A major initiativetowards improving revenue collection in the electricity industry is theprovision of meters to all registered end-use consumers of electricity. Featured image: Stock The DisCos’ collection efficiency and remittance performancein Q3 2018, showed that with the collection efficiency ranges from 45% (Kaduna)to 83% (Ikeja), for instance, remittance performance ranges from 10% (Kaduna)to 43% (Ikeja). UNDP China, CCIEE launch report to facilitate low-carbon development According to the industry regulator, the Nigerian governmenthas continued to engage governments of neighbouring countries benefitting fromthe export supply to ensure timely payments for the electricity purchased fromNigeria. In the period under review, the invoices issued to internationalcustomers (CEB/SAKETE and NIGELEC), and the Ajaokuta Steel Company Limited (asspecial customer) were N12.109 billion and N316 million, respectively. However,only a payment of N1million was received from Ajaokuta Steel Company. The collection efficiency indices indicate that a sum of N3.45 out of every N10 worth of electricity sold during the third quarter remains uncollected as and when due. Read more: Willing buyer, willing seller arrangement to solve power challenges TAGSdiscos Previous articleRwanda tender: EDCL invites bidders to install solar home systemsNext articleWill Ramaphosa’s SONA unbundle Eskom? ESI Africa RELATED ARTICLESMORE FROM AUTHOR Finance and Policylast_img read more