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Despite persistent electricity supply challenges in the country, the revenue collection of eleven electricity distribution companies (DisCos) witnessed a 30% increase to N782.74 billion in the first nine months of 2023, compared to N598.13 billion in the same period in 2022, according to recent data from the Nigerian Electricity Regulatory Commission (NERC).
During the review period, collection efficiency also improved by three percentage points, reaching 73.6%, compared to the 70.12% recorded in the first nine months of 2022.
On a monthly basis, revenue collection for September 2023 saw a 9.9% increase to N94 billion from N85.51 billion in August 2023.
Despite the improved collection efficiency in 2023, NERC data indicates that revenue shortfalls by the DisCos rose to N503.13 billion from January to September 2023, compared to N268.31 billion during the same period in 2022.
The combination of revenue shortfalls and the government’s decision to freeze electricity tariff increases last year has elevated electricity subsidies to approximately N600 billion for 2023, with a projection of N1.6 trillion for 2024.
This situation has prompted calls for the removal of electricity subsidies and the implementation of a cost-reflective tariff. Some stakeholders express concerns about the poor service quality despite increased revenue collection, emphasizing the need for improved electricity supply.
In response to the financial state of the industry, stakeholders at the NESI Market Participants and Stakeholders’ Roundtable recommended the implementation of a fair and cost-reflective tariff structure. They also emphasized the need for DisCos to introduce energy efficiency programs, expand the deployment of smart meters, and reduce electricity theft.
Addressing the financial challenges, the Convener and Executive Director of PowerUp Nigeria, Mr. Adetayo Adegbemle, stated that the government cannot sustain electricity subsidies, especially with rising inflation and the devaluation of the Naira impacting existing tariffs. Adegbemle highlighted the need to gradually phase out subsidies to allow Nigerians to pay a cost-reflective tariff. The MYTO 2022, approved by regulators, aimed to transition away from subsidies, but challenges persist in achieving a balanced tariff structure.