The liquidity challenges faced by Nigeria’s electricity Distribution Companies (DisCos) worsened in December 2024, with uncollected revenue soaring by ₦60 billion. Data from the Nigerian Electricity Regulatory Commission (NERC) reveals that the DisCos were unable to collect ₦60.25 billion of the ₦238.21 billion billed to customers during the month. This resulted in total collections of ₦177.96 billion, translating to a collection efficiency of just 74.71%.
This underperformance reflects a broader issue across the electricity sector, as the total revenue collected by all DisCos for the third quarter of 2024 (Q3) was ₦466.69 billion out of a ₦626.02 billion total bill, resulting in a collection efficiency of 74.55%. This marks a decline from the previous quarter (Q2), which had a collection efficiency of 79.31%.
The inability to collect billed revenue is having a serious impact on the DisCos’ operations. The spokesperson for the Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, has previously pointed out how low cash flow hampers the DisCos’ ability to invest in infrastructure, maintain their networks, and pay for electricity purchased from generation companies (GenCos). This affects the overall quality and reliability of electricity supply to consumers.
In Q3 of 2024, the weighted average ATC&C (Aggregate Technical, Commercial, and Collection losses) for the DisCos stood at 39.10%, comprising technical and commercial losses of 18.32% and collection losses of 25.45%. This is a sharp increase from Q2 (34.70%) and highlights the inefficiencies in the sector.
The most significant underperformance was recorded by the Kaduna DisCo, which had an actual ATC&C loss of 70.84% compared to a target of 25.00%. NERC stated that no DisCo met its ATC&C target for the quarter, underscoring the deep-rooted issues within the sector.
A major contributor to these losses is the reluctance of customers to pay their bills on time, coupled with poor service delivery by the DisCos and insufficient metering. Minister of Power Adebayo Adelabu recently disclosed that the federal government plans to restructure the DisCos, citing their unwillingness to invest in the sector. He emphasized that the lack of investment is hindering the capacity of the DisCos to provide reliable electricity, and noted that their balance sheets are not robust enough to attract financial support.
In response to these ongoing challenges, the Lagos State government has taken over the regulatory functions of the Ikeja Electricity Distribution Company (IKEDC) and the Eko Electricity Distribution Company (EKEDC). Additionally, regulatory oversight of the electricity market in Kogi State has been transferred from NERC to the Kogi State Electricity Regulatory Commission (KSERC).
