Business

Power distribution market shortfall surges to N1.83trn

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Federal Government is bearing the burden of N20 per kilowatt deficit recorded from electricity tariff, as against N50 per kilowatt every customer ought to pay

 

T

he total shortfall suffered by Nigeria’s power distribution market has surged to N1.83 trillion in the last four years.

 

 

This deficit, a statistics of the Nigerian Electricity Regulatory Commission (NERC) showed, was recorded between 2015 and 2019.

 

The commission also explained that loan of N701 billion was advanced to Nigerian Bulk Electricity Trading Company (NBET) as payment assurance facility to ensure a settlement of 80 per cent and 90 per cent of electricity generation companies (Gencos) and gas supplier invoices to cover obligations in 2017 and 2018.

 

 

“This was in addition to additional loan of N600 billion given to NBET by Central Bank of Nigeria (CBN) as payment assurance facility covering 100 per cent of gencos’ invoices for the payment for year 2019 and part of 2020,” the electricity industry regulator said.

 

 

It added that the release of the funds under this tranche was based on deliverables of the power sector recovery programme.

 

 

The NERC Chairman, Professor James Momoh, also added that a projected tariff support worth N380 billion and additional N60 billion for first quarter (Q1) and Q2 of 2021 had been capped by the PSRP financing plan, while Federal Government is in the process of securing a World Bank loan of $750 million.

 

 

“On the other hand, the statistics available showed that the 11 discos recorded N1.830 trillion market shortfall between 2015 and 2019,” NERC said.

 

 

The breakdown showed that AEDC recorded N233.077 billion; Benin – N161.452 billion; Eko – N154.853 billion; Enugu – N174.209 billion; Ibadan – N226.408 billion; Ikeja – N203.666 billion; Jos – N115.907 billion; Kaduna – N177.759 billion; Kano – N145.259 billion; Port Harcourt – N165.960 billion and Yola – N71.825 billion, respectively.

 

 

Momoh explained that based on the outcome of the baseline study on the level of aggregate technical commercial and collection losses conducted, Federal Government approved loan worth N213 billion from CBN with a view to paying off the tariffs’ shortfall for all market participants during the interim rules and outstanding legacy gas debts.

 

 

On the other hand, out of the N210.626 billion allocation from NEMSF to the Discos as at March 2020, a total sum of N189.191 billion has so far been disbursed leaving a balance of N21.435 billion payment.

 

 

He added that the Federal Government is bearing the burden of N20 per kilowatt deficit recorded from the electricity tariff, as against the N50 per kilowatt which every customer ought to pay.

 

 

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