…As ATC&C losses also declined to 47.14%.
.. Eko DisCo most technically and commercially efficient, recorded lowest level of ATC&C losses of 28.23% in 2020/Q4.
Olusola Bello
The overall collection efficiency for all DisCos decreased to 65.34percent during the fourth quarter of 2020 representing a 1.38 percent point’s decrease from the 66.72 percent collection efficiency by DisCos recorded during the third quarter
This was contained in the fourth quarter report recently released by the Nigerian Electricity Regulatory Commission (NERC).
The consequences of these declines are that all the 11 Discos collected total revenue of ₦169.81billion out of the total bill of ₦259.90billion. Relative to the preceding quarter, the DisCos’ collection efficiency (i.e., the total revenue collected as a ratio of the total billing by DisCos) declined during the fourth quarter of 2020/Q4.
Also, whereas the technical and commercial losses decreased by 5.34 percentage points, the collection losses worsened by 2.63 percentage points during 2020/Q3 indicating the imperative of the need for DisCos to intensify effort in revenue collection to improve on their cash flow, operational performance and in meeting their contractual obligations
The collection efficiency for all DisCos implies that for every ₦10.00 worth of energy billed to customers by DisCos during 2020/Q4, approximately ₦3.47 remained unrecovered from customers. This low collection efficiency combined with billing inefficiency has continued to adversely impact the financial liquidity of the industry, which in turn, has led to low investment in the NESI.
In appraising individual performances, Abuja DisCo, though underperformed relative to 2020/Q3, had the highest collection efficiency of 89.57% followed by Ikeja DisCo with an efficiency index of 82.04%. Kaduna DisCo has the lowest collection efficiency of 29.09%.
On a quarter-on-quarter basis, only Benin, Eko and Kano DisCos recorded an improvement in collection efficiency with Eko DisCo having the highest increase of 6.67 percentage points moving from 75.37% in 2020/Q3 to 82.04% in 2020/Q4.
Noting that a major factor contributing to low collection efficiency is customers’ displeasure with estimated billing which often resulted in an unwillingness to pay, the Commission further amended the Order on capping of estimated bills during the fourth quarter 2020.
The amended Order aligns the total volume of energy an unmetered customer can be billed to the average monthly energy use of a typical pre-paid meter customer in the same feeders as against the Business Unit earlier used in the previous Order.
Similarly, the Commission during 2020/Q3 started the implementation of service-based tariffs to, inter alia, improve the utilisation of existing capacity and ensure that end-user tariffs are aligned with the quality of services.
The Commission also continued the monitoring of the implementation of the MAP scheme in accordance with the MAP Regulations, and the CBN financing of NMMP to ensure the speedy roll-out of meters in NESI.
On the issue of Aggregate Technical, Commercial l and collection ATC&C losses, the ATC&C losses of the industry is the combined index of losses due to technical, billing and collection inefficiencies in the industry.
The overall average ATC&C losses for all the DisCos during 2020/Q4 declined to 47.14%. Whereas the technical and commercial losses decreased by 5.34 percentage points, the collection losses worsened by 2.63 percentage points during 2020/Q3 indicating the imperative of the need for DisCos to intensify effort in revenue collection to improve on their cash flow, operational performance and in meeting their contractual obligations.
The ATC&C losses of 47.14% in 2020/Q4 are substantially larger than the expected industry average of approximately 22.11% – the allowable ATC&C losses provided in the MYTO Order applicable during the quarter. The implication of the level of the ATC&C losses in 2020/Q4 is that, on average, as much as ₦4.71 in every ₦10.00 worth of energy received by a DisCo was unrecovered due to a combination of inefficient distribution networks, energy theft, low revenue collection aggravated by the low level of metering of the end-use customer and unwillingness to pay by customers.
In appraising the individual performances of the DisCos, Eko DisCo was the most technically and commercially efficient DisCo by recording the lowest level of ATC&C losses of 28.23% in 2020/Q4.
This ended Ikeja DisCo dominance as the most technically and commercially efficient DisCo in the NESI since 2018/Q4.
The worst performing DisCo during the same quarter was Kaduna DisCo with the ATC&C losses of 76.96% as against the MYTO target of 20.12%. Based on relative improvement from the preceding quarter, Benin, Eko, Ibadan and Kano DisCos reduced their ATC&C losses during 2020/Q4 while Abuja, Enugu, Ikeja, Jos, Kaduna, Port Harcourt and Yola DisCos recorded increases in ATC&C losses during the same period. Kano DisCo recorded the biggest reduction in ATC&C losses by 2.12 percentage points from 50.48% in 2020/Q3 to 48.35% in 2020/Q4, while Abuja DisCo had the biggest increase in ATC&C losses by 6.63 percentage points during 2020/Q4.
However, none of the DisCos has attained the level of ATC&C loss trajectory embedded in their performance agreement executed by their core investors and BPE.