NERC Reveals Reason Discos Recorded 40% Revenue Loss in 2022

Adaobi Rhema Oguejiofor 

The Nigerian Electricity Regulatory Commission (NERC) has advised electricity distribution companies (Discos) to make investments in infrastructure upgrades, as well as modernize their metering systems and improve revenue collection methods in order to ensure better efficiency and more revenue. 

This advice was contained in a report released by NERC, where it was revealed that the call came following the losses recorded by Discos after exceeding their allowed targets for Aggregate Technical, Commercial, and Collection (ATC&C) losses. The losses recorded include technical, commercial, and collection inefficiencies in the power distribution processes, such as power theft, meter tampering, billing inaccuracies, and revenue leakages. 

The Commission’s data for June 2023, disclosed that the ATC&C losses of all the Discos surpassed their permitted targets. According to NERC, the failure to meet the target comes at a time when the sector was considering an increase in electricity tariffs, which was brought about by macroeconomic conditions. 

NERC noted that the collection losses arose from difficulties in retrieving payments from consumers and that the losses were recorded between the third and fourth quarters of 2022. 

According to the report, the losses put the cumulative Disco ATC&C loss in the fourth quarter of 2022 at 44.15 percent, which comprised of 23.84 percent technical and commercial losses, and 26.67 percent collection losses. 

“Thus, this level of the ATC&C loss implies that throughout the fourth quarter of 2022, on average, N44.15 in every N100 worth of energy received by a DisCo was unrecovered due to a combination of inefficient distribution networks, energy theft, low revenue collection, and the unwillingness of customers to pay their bills,” the report explained.

The report also stated that any DisCo that could outperform its allowed ATC&C, which implies, a lower actual ATC&C than the target used to compute its cost-reflective tariff, would earn more returns on its set tariffs, noting that conversely, any Disco that under-performs relative to its allowed ATC&C, that is, has a higher actual ATC&C than the target will be unable to earn the expected returns on its set tariffs and could risk long-term financial challenges.”

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