The Nigerian Electricity Regulatory Commission (NERC) has given fresh power generation licences to 14 operators to build and generate up to 2,809.1 megawatts (MW) of electricity, despite the lingering financial crisis rocking the country’s power sector.
According to the 2017 third quarter regulatory report of NERC, which was recently released, the licences included nine on-grid generation plants with a total nameplate capacity of 2,738 MW and five captive power generation plants with a total capacity of 71.1 MW.
he report also showed that the regulatory agency is concerned that the electricity distribution companies are hoarding market funds to the detriment of the other members of the value chain and is working on a framework to stop the Discos from keeping more than their due income in the market.
The report said the new licences brought the number of power generation licences so far issued by NERC to 132.
It added that 93 of them were on-grid licences; 29 were off-grid and 10 were independent electricity networks.
“During the quarter under review, the commission granted licenses, permits and certificates to a number of qualified applicants. The commission issued nine on-grid generation licenses with a total nameplate capacity of 2,738 MW, while five permits were issued for captive power generation with a total capacity of 71.1 MW.
“This brings the total number of on-grid, off-grid issued by the commission since inception up till the end of the third quarter of 2017 to 93, 29 and 10 respectively,” said the report.
The report equally indicated that while the commission issued the new generation licences which would when completed increase Nigeria’s power generation capacity, it is however worried about the financial status of the sector.
NERC’s report showed that the Discos were deliberately hoarding market funds to the detriment of the industry, noting that it was working on a framework to stop them from keeping more than their due income in the market.
According to the report, the Discos were still inefficient in their revenue remittances to the sector.
The report revealed that the Discos were issued a bill of N147 billion for energy received from the Nigerian Bulk Electricity Trading Plc (NBET) and for the services provided by the market administrators but they remitted only N44 billion of the invoice, even after collecting N90.3 billion out of the total bill of N151.8 billion they issued to their customers.
“The liquidity challenges in the industry continued to manifest within the quarter as evidenced in the Discos’ remittances relative to the invoice received for energy purchased from the Nigerian Bulk Electricity Trader (NBET) and the invoice received for administrative services from the Market Operator (MO).
“In the third quarter of 2017, whereas Discos were issued an invoice of N147 billion for energy received from NBET and for the services provided by the market administrators, only N44 billion of the invoice was settled, creating a total shortfall of N103 billion,” it said.
“Although part of the outstanding invoiced amount not paid to the upstream by Discos is due to tariff deficit, the commission has noted that some (if not all) Discos are not incentivised to improve on their revenue collection because they are currently opportune to appropriate market funds and sometimes keep more than their fair share,” the report added.
To address the poor remittance by Discos, NERC said it was developing a framework to ensure fair and equitable distribution of market revenue under a structured regime.
According to the agency, this framework aims at ensuring fairness and transparency in the utilisation of market funds, thereby improves the liquidity in the industry.”
The report further added that the overall remittance to NBET for the third quarter was just 26.2 per cent of the total energy invoice while the Market Operator received only 38.4 per cent remittance of the invoice for service charge.
NERC described this as a serious liquidity challenge in the industry as it impacts on the ability of NBET to honour its obligations to generation companies, while service providers also struggle to meet their statutory obligations due to financial constraints resulting from low upstream remittance by Discos.
“The total collection by Discos from their customers in the third quarter of 2017 stood at N90.3 billion out of the total bill of N151.8 billion. The data show that the collection efficiency of Discos is poor as just a little above the half of the revenue billed was recovered as at when due. On the average, the collection efficiency indicates that for every N10 billed to customers, N4.50 remains unrecovered as at when due. The implication of this Discos’ poor collection efficiency is inadequate liquidity which is currently affecting the industry,” the report explained.