The Nigerian Electricity Regulatory Commission (NERC) has unveiled encouraging statistics regarding the performance of distribution companies (DisCos) in the second quarter of 2023, signaling a positive turn of events in the country’s electricity sector. This new data, released by InfoStride News, shows that DisCos have reached a remarkable market remittance rate of 95.21%, marking the highest achievement so far this year.
In its recently published Electricity on Demand report, NERC shared insights into the financial health and operational efficiency of the DisCos during the specified period. The report highlights the financial obligations of the DisCos, their revenue collection efficiency, and their performance in reducing Aggregate Technical, Commercial, and Collection (ATC&C) losses.
One of the standout figures in the report is the combined upstream bill that Distribution Companies needed to settle, which amounted to ₦194.69 billion. This bill encompassed ₦154.04 billion for generation costs from the Nigerian Bulk Electricity Trading (NBET) and ₦40.65 billion for transmission and administrative services facilitated by the Market Operator (MO).
Remarkably, the DisCos collectively remitted a total of ₦185.36 billion, with ₦152.48 billion directed to NBET and ₦32.88 billion allocated for the MO. Although this remittance performance leaves an outstanding balance of ₦9.32 billion, it still represents a substantial improvement compared to the previous quarter. The 95.21% remittance rate recorded in the second quarter of 2023 far surpasses the 67.43% recorded in the first quarter of the same year. This substantial improvement is vital for the overall stability and efficiency of the electricity market.
The surge in remittance efficiency during the second quarter of 2023 indicates that DisCos have been more successful in meeting their financial obligations to NBET and MO, resulting in a higher percentage of payments made relative to the total amount due. This achievement is a significant step towards a more robust and sustainable electricity market in Nigeria.
Furthermore, the report reveals that during the second quarter of 2023, Distribution Companies collected a total of ₦267 billion in revenue. This commendable performance translates to a collection efficiency of 75.54% for the quarter, considering that the total billing amounted to ₦354.61 billion. This data represents a substantial improvement of 6.79% when compared to the first quarter of 2023, where the collection efficiency stood at 68.75%.
The improved collection efficiency in the second quarter of 2023 can be attributed to two primary factors. First, DisCos have intensified their efforts in metering, resulting in more precise measurements of electricity consumption. Second, they have implemented various collection campaigns targeting post-paid customers, thus encouraging timely and complete remittances.
These combined efforts have significantly contributed to enhancing efficiency in revenue collection, benefiting both the DisCos and their customers. A higher collection efficiency rate indicates that DisCos are collecting a more substantial portion of the billed amounts, reducing financial losses and ensuring a healthier financial ecosystem for all stakeholders.
A particularly notable aspect of the report is the information on Aggregate Technical, Commercial, and Collection (ATC&C) losses. In the second quarter of 2023, the ATC&C loss stood at 38.41%. This composite figure is composed of technical losses at 18.47% and commercial losses at 24.46%. This reduction in ATC&C loss represents a significant positive shift, marking a 7.98 percentage point improvement compared to the first quarter of 2023, where the loss rate was 46.39%.
The significant improvement in ATC&C loss can be primarily attributed to the 6.79% increase in collection efficiency observed between the second and first quarters of 2023. The data indicates that DisCos have made substantial progress in enhancing revenue collection efficiency during this period, leading to an overall reduction in losses in the distribution system.
In conclusion, the recent findings by NERC, as reported by InfoStride News, offer a glimmer of hope for the Nigerian electricity sector. The improved remittance rate, higher collection efficiency, and reduced ATC&C losses in the second quarter of 2023 reflect the industry’s efforts to enhance financial stability and operational efficiency. This positive trajectory bodes well for the future of Nigeria’s electricity market and its ability to serve both DisCos and consumers effectively.
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