The Nigerian Electricity Regulatory Commission has confirmed the sum of N1.15tn as the tariff shortfall suffered by the 11 electricity distribution companies in the country from 2015 to 2018.
NERC disclosed this in the 2016-2018 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for Year 2019 for the Discos, copies of which were obtained by Sunday PUNCH on Friday.
The distribution and generation companies carved out of the defunct Power Holding Company of Nigeria were handed over to private investors on November 1, 2013, following the privatisation of the power sector.
Tariff shortfall is computed from the amount of electricity bill, which consumers could not pay and power distributors could not collect from their customers within a given period.
Ibadan Electricity Distribution Company suffered the biggest tariff shortfall of N161.88bn, followed by Ikeja Electric (N124.17bn), Benin Electricity Distribution Company (N115.35bn), and Kaduna Disco (N114.54bn).
Port Harcourt Disco’s tariff shortfall was put at N104.31bn, while that of Abuja Disco stood at N102.22bn.
Kano, Enugu, Eko and Jos Discos suffered tariff shortfalls of N97.82bn, N97.64bn, N95.65bn and N88.36bn, respectively.
Yola Disco, which was returned to the Federal Government by the core investor in 2015, had the lowest tariff shortfall of N51.63bn, according to NERC.
On July 2015, the Federal Government took over Yola Electricity Distribution Company following the exit of the core investor after it declared a force majeure, citing insecurity in the North-East region of the country.
NERC said under the Power Sector Recovery Plan approved by the Federal Government, all accrued liabilities in Discos’ financial records arising from tariff shortfalls would be transferred off the balance sheet and fully settled under the financing plan of the PSRP initiative.
According to the regulator, all funds retained by the Discos as represented by excess of market (remittance) shortfalls over tariff shortfall are to be recovered as a full liability of the Discos, including applicable interest, in line with the provisions of the Supplementary TEM Order, the Market Rules and respective industry contracts with the Nigeria Bulk Electricity Trading Plc and the MO.
It said, “All Discos with excess of tariff shortfall over market shortfall shall be compensated accordingly for the difference. All interest payable by Discos on unpaid invoices issued by the NBET and the MO and attributable to tariff shortfall shall be transferred off the balance sheet of the utilities.
“This order reiterates that the responsibility and initiative for revenue collections from all customers including ministries, departments and agencies of states and Federal Government rest with the Discos. Accordingly, this order makes it mandatory for all Discos to meter all the MDAs with appropriate meters of their choice within 60 days from the effective date of this order. All Discos reserve the right to disconnect any MDAs defaulting in the payment for electricity in line with the Regulation on Connection and Disconnection Procedures for Electricity Services.”
Power distribution companies have always complained of the tariff shortfall which they incur in the sale of electricity to consumers, a development that has further tightened the liquidity squeeze in Nigeria’s power market.
Authored By: ’Femi Asu and Nnodim Okechukwu