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NERC Urges FG  To  Intervene As Power Sector Debt Soars Amidst Low Power Supply

The Nigerian Electricity Regulatory Commission (NERC) has called for urgent intervention by the Federal Government to address the mounting debt and non-payment issues plaguing the power sector.

 According to the NERC’s latest report for the fourth quarter of 2023, the sector faces significant financial challenges due to unpaid debts by both local and international customers, alongside persistently low power supply.

The report  by Channels Television reveals that electricity Distribution Companies (DisCos) and four international customers collectively owe the power sector ₦97.5 billion as of the fourth quarter of 2023. 

Specifically, the 11 DisCos are responsible for ₦81 billion of this debt, while the four international customers, including Paras SBEE, Transcorp SBEE, Mainstream NIGELEC, and Odu-Pani-CEET, have failed to remit $12 million (approximately ₦16.5 billion) for services rendered during the same period.

The detailed breakdown shows that the cumulative upstream invoice payable by DisCos amounted to approximately ₦270 billion in 2023/Q4. 

This includes ₦223 billion for generation costs from the Nigerian Bulk Electricity Trading (NBET) company and about ₦47 billion for transmission and administrative services by the Market Operator (MO). 

However, DisCos only remitted a total of ₦188.7 billion, leaving an outstanding balance of about ₦81 billion. 

This marks a remittance performance of approximately 70%, down from 76% in the previous quarter.

The report also highlights a decline in revenue collection efficiency. In 2023/Q4, DisCos collected ₦294.9 billion out of the ₦399.7 billion billed to customers, translating to a 74% collection efficiency. 

This is a slight decrease from the 76% efficiency recorded in the third quarter of 2023, where DisCos collected ₦268 billion out of ₦349 billion billed.

None of the four international customers paid the $12.02 million cumulative invoice issued by the MO for services rendered in 2023/Q4. 

While some international customers made payments for outstanding invoices from previous quarters, the overall trend of non-payment continues to strain the sector.

Additionally, bilateral customers failed to remit ₦1.9 million against the cumulative invoice for services rendered in the fourth quarter of 2023. 

The special customer, Ajaokuta Steel Co. Ltd and its host community, also did not pay towards their respective invoices of ₦0.72 billion (NBET) and ₦0.07 billion (MO) in the same period.

NERC has urged the MO to enforce market rules to curb the payment indiscipline exhibited by various market participants. 

The Commission has also communicated the need for intervention to relevant Federal Government ministries to address these persistent issues.

The rising debt exacerbates the already critical issue of inadequate power supply.

 Despite having a combined grid capacity of about 12,000 megawatts (MW), the generation companies (GenCos) are only able to produce around 5,000 MW.

 This is significantly below the estimated 30,000 MW required to meet the needs of Nigeria’s over 200 million people.

Moreover, the Transmission Company of Nigeria (TCN) struggles to transmit even this limited power supply to the DisCos for distribution to end users, further compounding the nation’s power woes.

Given the complex challenges of escalating debt and insufficient power supply, NERC’s plea for Federal Government intervention underscores the urgent need for comprehensive solutions.

 Without decisive action, the financial instability and inadequate power generation will continue to impede Nigeria’s socio-economic development

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