DisCos poor remittances in 2019 Q4 created over N100bn deficits ― NERC

Electricity Distribution Companies, (DisCos), low remittances to the Nigerian Bulk Electricity Trading Plc (NBET) and Market Operators (MO) for energy supplied in 2019 fourth quarter has created a total deficit of N119.46billion, the Nigeria Electricity Regulatory Commission (NERC) has revealed.

It said during the period, the total invoice issued to DisCos for energy purchased from NBET and those received for administrative services from MO was N193.66billion but only a total of ₦74.20billion was paid.

Tribune Online reports that the commission in its 2019 fourth-quarter report, also said that the total market NBET’s & MO’s invoices issued to the special customer (Ajaokuta Steel Co. Ltd and the international customers, Societe Nigerienne d’electricite – NIGELEC and Communaute Electrique du Benin – CEB) during the same period were ₦29.50million and ₦2.07billion respectively.

However, it said no payments were received from these customers during the period.

A comparative analysis of the market invoice performance by each DisCos in Q4 showed that only Abuja and Eko DisCos were able to settle 50 percent of their invoices while Jos and Yola remitted the least percentage of their invoices.

Although the report revealed an improvement in Jos DisCo’ settlement from 19.43 percent in Q3, but stated that its remittance of 19.57% was the lowest in 2019 Q4.

Compared to the third quarter, it indicated slight improvements in the total remittances to NBET and MO in Q4 by 0.4 percent, but the Commission explained that the total settlement still falls short of the prescribed minimum remittance threshold (MRT).

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“The combined total market remittances to NBET and MO in 2019/Q4 increased by 0.4 percentage point from the total remittance recorded during the third quarter.

“However, the total remittance was lower than the minimum remittance threshold (MRT) prescribed by the Commission due to lower settlement rate to NBET during the quarter,” it said.

It, however, expressed concerns over DisCos low remittances to the market, saying this was one of the main causes of the liquidity challenge bedevilling the Nigerian Electricity Supply Industry (NESI).

“As highlighted in the preceding quarters, low remittance adversely affects the ability of NBET to honour its financial obligations to GenCos while service providers struggle with the paucity of funds impacting their capacity to perform their statutory obligations,” it stated.

The regulator partly blamed the development on tariff shortfall but stressed that after adjustment; “DisCos’ total expected MRT to the market (NBET & MO) during 2019/Q4 was 43.62% and ranged from 19.57% (for Jos DisCo) to 56.29% (for Ikeja DisCo).

“As at the end of the fourth quarter, the actual remittance rate of the individual DisCo, except for Jos DisCo, was lower than the projected MRT for the DisCos. This indicates that regardless of the prevailing tariff shortfall DisCos’ remittance was still below the expected MRT having adjusted for tariff shortfall.”

It submitted that for business continuity and improved sector liquidity, DisCos must improve on efforts towards reducing their Aggregate technical, commercial & collection (ATC&C) losses (ATC&C) losses.

The Commission also disclosed that it has since commenced the review of remittances by DisCos for enforcement actions.

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