Nigeria’s electricity distribution companies have achieved significant revenue growth, totaling N887.86 billion in the first seven months of 2024.
According to The PUNCH, this marks a substantial increase following a tariff hike for Band A customers and improved revenue collection strategies.
Despite ongoing consumer complaints regarding unreliable power supply and elevated tariffs, the 11 distribution companies have seen a remarkable 46.96% rise in their income compared to the N604.15 billion recorded during the same period in 2023.
According to an analysis by the Nigerian Electricity Regulatory Commission, which outlined the commercial performance of the Discos, these companies billed an impressive N1.114 trillion over the review period but managed to collect N887.86 billion, translating to a revenue collection efficiency of 79.7%.
This is an improvement from 2023 when the Discos issued bills totaling N797.18 billion, with only N604.15 billion collected.
After a two-year freeze on electricity tariffs, the Federal Government increased the rate for Band A customers in April 2024, raising it from approximately N68 to N225 per kilowatt-hour, citing consistent supply of around 20 hours daily.
However, following widespread public outcry, the Nigerian Electricity Regulatory Commission announced an 8.1% reduction, bringing the tariff down to N206.8/kWh.
Last week, Minister of Power Adebayo Adelabu reassured Nigerians of a potential decrease in electricity prices in the coming months, citing ongoing efforts to enhance power generation and distribution.
However, skepticism remains among citizens, many of whom are appealing to be moved to lower-paying tariff bands, as the current situation exacerbates living costs and hampers economic growth.
A monthly breakdown of the revenue collection reveals that the Discos generated N95 billion in January from a projected billing of N130.92 billion, followed by N97 billion in February out of N113 billion billed, and N100.44 billion in March from N126.56 billion.
In April, the companies collected N142.92 billion out of an estimated N178.72 billion, while May saw N139.23 billion generated from a billing of N191.65 billion.
June’s revenue increased to N150.86 billion from N176.57 billion, and July saw collections rise to N162.14 billion out of a projected N197.11 billion.
The comparison between January’s N95 billion revenue and May’s N197.11 billion illustrates a staggering difference of N102.11 billion, representing a 107.48% increase.
Given the current revenue trends, the Discos have already surpassed their total revenue from the entirety of 2020 and are on track to break records set in 2021, 2022, and 2023 by the end of 2024.
Historical data from the National Bureau of Statistics highlights this upward trend, showing revenues of N526.8 billion in 2020, N761.2 billion in 2021, N828.1 billion in 2022, and N1.1 trillion in 2023.
With this substantial rise in revenue, there is an expectation that the Discos will reinvest a portion into vital infrastructure improvements.
In the past, these companies have faced criticism for under-investing in the infrastructure necessary to provide adequate power supply to Nigeria’s over 200 million citizens, who frequently rely on self-generated electricity rather than the national grid.
Additionally, in May, the Nigerian government secured a $500 million loan from the World Bank aimed at supporting the electricity distribution companies.
According to the Bureau of Public Enterprises, this loan is intended to fill financing gaps within the distribution sector, which has been recognized as one of the most problematic areas in the industry.
The funds are expected to be used for critical infrastructure projects, reduce aggregate technical, commercial, and collection losses, improve power supply reliability, achieve financial sustainability, and enhance transparency and accountability within the sector.
The Bureau has noted that significant progress is being made in the preparation of the Distribution Sector Recovery Program.
Meanwhile, stakeholders in the power and energy sector have decreased their borrowings from commercial banks by N28.82 billion, amid rising debt servicing costs driven by high interest rates.
An analysis of the Central Bank’s quarterly statistics indicates that total loans within the power sector fell from N1.12 trillion in January 2024 to N1.08 trillion by June.
