October 20, (THEWILL) – In a paradox that has defined Nigeria’s electricity sector, the eleven Distribution Companies (DisCos) across the country recorded increased revenue during the second quarter of the year (Q2 2024) amid poor power supply and a growing population of estimated billings. Data conveying these facts were obtained from the National Bureau of Statistics (NBS) Electricity Report for Q2 2024.released last week.
According to the report, electricity supply during the review period (Q2 2024) was 5,612.52 Gwh from 5,769.52 Gwh in the previous quarter. Similarly, on a year-on-year basis, electricity supply decreased by 5.03 per cent, compared to 5,909.83 (Gwh) reported in Q2 2023.
Despite the poor performance in power supply, the electricity distribution firms accumulated more revenue during the period. According to the report, revenue collected by the DisCos in Q2 2024 rose to N391.72 billion from N291.62 billion in Q1 2024. On a year-on-year basis, revenue generated in the reference period also increased. It rose by 48.90 per cent from N263.08 billion recorded in Q2 2023.
The increased revenue was recorded by the DisCos who continue to feed fat on the anomaly called estimated billing which number during the quarter was 7.07 million, higher by 10.04% from 6.43 million in Q1 2024. On a year-on-year basis, estimated customers increased by 17.86 per cent in Q2 2024 from 6.00 million in Q2 2023.
Estimated billing refers to the system of arbitrary charging against unmetered electricity consumers for the volume of energy they did not actually consume. The billing is based on perceived pattern of consumption, or on the ‘best of judgment’, with unjustified high revenue targets as the motive. Consumers in this system are mandated to pay far above what they consumed on a monthly basis and the charges are usually outrageous.
Meter Costs Surge
The fate of the increasing number of electricity consumers under the estimated billing system has become more worrying following the astronomical increase in the cost of electricity meter.
Over the years, the DisCos have blamed the shortage of meter for their inability to provide their customers with the commodity as a result of which majority of the electricity users are placed on the notorious estimated billing system. The affected consumers, in turn, accuse the DisCos for deliberately starve them of meters in order to continue their arbitrary estimated billing system.
Incidentally, the deregulation of meter pricing has led to a significant increase in meter costs, with some three-phase meters now selling at over N250,000 as against N80,000 thereby making it unaffordable to an average consumer. This has raised concerns not only about availability but also affordability, especially for consumers still subjected to estimated billing.
While energy experts agree that this move may help address the metering gap in the country, they caution that it does little to tackle the broader challenges posed by high inflation and the rising cost of living.
The Nigerian Electricity Regulatory Commission’s (NERC) move to deregulate Meter Asset Providers (MAP) was hailed as the much-needed solution to the country’s persistent metering gap crisis, but the high rate of inflation has dampened the euphoria that the arrangement created.
For millions of Nigerians, the sharp rise in metering costs from about N80,000 to over N200,000 in just one year has become as burdensome as the problem it was meant to solve: eliminating estimated billing.
The arrangement was intended to empower customers, allowing them to obtain meters from any approved vendor without relying on the DisCos. While this policy appeared commendable on paper, it has brought new challenges.
The most pressing of these is the increase in meter prices, exacerbated by the prevailing economic conditions and rising inflation. Another worrying dimension is the increase in electricity tariff under the clouded arrangement of categorizing the consumers under Bands A, B … groups which has led t higher cost of electricity amid poor supply.
THEWILL reports that the Nigerian Electricity Regulatory Commission (NERC) announced on June 21 2024, the approval of N21 billion for the 11 DisCos to provide meters for end-use customers at zero cost.
This comes on the heels of years of exploitation of electricity consumers who waited unavailingly for the supply of meters even after they had made the prescribed payments for the facility yet remained unmetered long thereafter.
Since the Federal Government introduced the metering system in 2018, it has maintained that electricity consumers face no hurdles in procuring meters. But that remains far from being the truth. The DisCos are raking in enormous revenue from poor services, while their estimated customers continue to increase and groan.
The report however stated that metered customers stood at 5.92 million in Q2 2024, indicating a growth of 0.25 per cent from 5.91 million recorded in the preceding quarter. On a year-on-year basis, this grew by 8.18 per cent from the figure reported in Q2 2023 which was 5.47 million.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
