FG Earns N135 Billion from Electricity

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CEM REPORT, ENERGY | A total sum of ₦135.69 billion was collectively remitted by Nigerian Electricity Distribution companies (DisCos) resulting to remittance performance of 65.99%.

The Nigerian Electricity Regulatory Commission (NERC) in it Q1 2022 report disclosed that the Nigerian Bulk Electricity Trading (NBET) plc remitted ₦109.96 billion while Market Operators (MO) remitted ₦25.73 billion.

NERC stated that combined invoices from NBET (MRO1 adjusted) and MO (market operator) to DisCos in Q1’22 was ₦205.63 billion: The invoice costs were Generation costs – ₦164.86 billion and Transmission and Administrative Services – ₦40.77 billion.

However, the report further states that the Nigerian Bulk Electricity Trading plc was expected to receive ₦164.86 billion under the MRO derived from the allowed tariff as FG is responsible for covering the difference in form of subsidy to energy consumers (₦35.27 billion) but only received ₦109.96 billion for the period.

“Out of this amount, the DisCos collectively remitted a total sum of ₦135.69 billion (₦109.96 billion for NBET and ₦25.73 billion for MO) with an outstanding balance of ₦69.94 billion; this corresponds to a remittance performance of 65.99% during the quarter.”

“Poor remittance is a direct consequence of the DisCos recording higher than allowed ATC&C performance as established above.”

“Out of the total invoice of ₦203.13 billion issued by NBET to DisCos for energy generation costs, it was expected to receive ₦164.86 billion under the MRO derived from the allowed tariff; this means the government is responsible for covering the difference in form of subsidy to energy consumers (₦35.27 billion). “

“However, NBET received only ₦109.96 billion during the quarter. Overall, the total DisCo remittance performance to NBET was 66.70% of the expected MRO for 2022/Q1 compared to 68.34% (₦109.45 billion remitted against an MRT adjusted invoice of ₦160.13 billion) in Q4’21.”

Similarly, the report added the total invoice from Market Operator to DisCos in 2022/Q1 for which a 100% remittance is expected was ₦40.77 billion.

“However, only ₦25.73 billion was received across all the DisCos, meaning that the remittance performance to MO for the quarter was 63.12%.

“This represents a 15.47 pp decrease compared to 78.59% (₦39.75 billion remitted against an invoice of ₦50.58 billion) recorded in Q4’21.”

Meanwhile, for Remittance by Special/International Customers, no remittance was made by Ajaokuta Steel Company for invoices of ₦391.65 million and ₦69.45 million issued to it by NBET and MO respectively.

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NERC noted that for the period, bilateral customers; Paras-SBEE, Transcorp-SBEE, and Mainstream-NIGERLEC received invoices of $2.72 million, $2.74 million and $4.61 million from MO and each remitted $2.72 million (100%), $2.74 million (100%), and $4.52 million (98%) respectively.

Odukpani-CEET received an invoice of $3.42 million from MO during the period but no payment was made by this customer.”

NERC warned the non-settlement of market obligations by this category of market participants should push MO(Operators) and NBET to activate relevant safeguards for remittance shortfalls.

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