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N60bn revenue shortfall hampers electricity distribution- NERC

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N60bn revenue shortfall hampers electricity distribution- NERC

A report by the Nigerian Electricity Regulatory Commission (NERC) has said the over N60 billion revenue shortfall in the books of power distributors is slowing down the distribution of electricity across the country.

NERC stated this in its quarterly report released in Abuja, saying that power distributors recorded a revenue shortfall of N64.5bn in the first quarter of this year.

According to NERC, financial illiquidity remained the most significant challenge affecting the industry’s sustainability.

“This serious liquidity challenge is partly attributed to non-cost-reflective tariffs, and high technical and commercial losses aggravated by consumers’ apathy to payment, arising from estimated billing and poor quality of supply in most load centres.

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“Out of the N171.1bn billed to customers in the first quarter of 2018, only N106.6bn was recovered, representing 62.3 per cent collection efficiency. Therefore, out of every N10 worth of electricity sold during the quarter under review, N3.8 is uncollected”, the commission said.

NERC also revealed that “the liquidity challenge in Nigeria Electricity Supply Industry was further reflected in the Discos’ remittances relative to the Nigerian Bulk Electricity Trading company and the Market Operator’s invoices.

“In the first quarter of 2018, whereas Discos were issued a total invoice of N163.1bn for energy received from NBET and for the service charge by MOs, only N51.2bn (31.4 per cent) was settled by Discos, creating a huge shortfall of N112bn.”

The commission however said that it had initiated a process for thorough technical assessment of Discos’ utilisation of capital expenditure allowances for relevance and cost efficiency, adding that it was also planning a tariff reset that adequately catered for revenue requirement necessary for the Transmission Company of Nigeria and Discos’ optimal performance.

According to the report, to resolve the issue related to gas supply shortage, the government had started the implementation of gas payment assurance facility for power generation to enable Gencos fulfil their payment obligations to gas suppliers.

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