The Nigerian Electricity Regulatory Commission (NERC) has revealed that the Nigerian Bulk Electricity Trading (NBET) Plc and the Market Operator (MO) issued a combined invoice of ₦3.10 trillion to electricity distribution companies (DisCos) and the federal government for energy supply and administrative services in 2024.
In its just-released 2024 Annual Report, NERC stated that DisCos were responsible for ₦1.37 trillion of the total amount invoiced. Of this, the companies remitted ₦1.18 trillion, representing a gross remittance rate of 86.47%.
However, due to the absence of cost-reflective tariffs across all DisCos, the commission said the federal government incurred a subsidy obligation of ₦1.94 trillion equivalent to 62.59% of the total invoice averaging over ₦161 billion per month.
“Out of the ₦1.16 trillion issued by NBET, DisCos remitted ₦1 trillion, reflecting a remittance performance of 86.65%. For the ₦209.95 billion invoiced by the MO, DisCos remitted ₦179.36 billion an 85.43% performance,” the report stated.
NERC identified a market shortfall of ₦185.47 billion, representing the unpaid balance from DisCos for 2024.
DisCo Performance Varies Widely
A comparative analysis of DisCo remittance shows significant disparities. According to NERC, Eko (98.56%), Ikeja (94.61%), Yola (92.10%), and Abuja (90.80%) recorded remittance rates above 90%.
On the other hand, Kaduna DisCo posted the lowest performance at just 31.55%, attributed to high Aggregate Technical, Commercial, and Collection (ATC&C) losses.
NERC noted that despite these partial remittances, the upstream segment of the electricity value chain comprising NBET, MO, and generation companies continues to struggle with liquidity, stating:
“DisCos’ inability to remit 100% under the payment assurance waterfall framework highlights their failure to earn significant portions of allowed revenues, limiting their capacity to invest in infrastructure and operations.”
Collection Efficiency and Customer Default
DisCos billed a total of ₦2.19 trillion in 2024 but recovered only ₦1.65 trillion, leaving an unpaid balance of ₦536.95 billion. This amounts to a collection efficiency of 75.56%, meaning ₦24.44 of every ₦100 billed was not recovered.
Eko (86.85%) and Ikeja (83.37%) topped the chart for highest collection efficiencies, while Yola lagged behind at 51.53%.
NERC attributed the poor performance to multiple factors including low metering coverage, poor service delivery, and consumer unwillingness to pay.
“The significant collection inefficiency, combined with billing inefficiency, continues to limit the Nigerian Electricity Supply Industry’s (NESI) financial viability and growth potential.”
Unpaid Energy Bills from Ajaokuta Steel
In a notable case of chronic default, NERC disclosed that Ajaokuta Steel Company and its host community made no payments toward energy bills and service charges totalling ₦5.63 billion in 2024.
The commission said it has escalated the matter to relevant federal ministries, warning that continued default could lead to disconnection from NBET and MO due to “gross indebtedness.”
Grid Stability Still a Concern
NERC also reported nine incidents of grid collapse in 2024, comprising four full collapses and five partial disruptions. However, other sources suggest there may have been as many as 11 system collapses during the year.
