DisCos May Lose N366bn Revenue Over 3 Months Suspended Tariff Hike

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The 11 electricity Distribution Companies (DisCos) are expected to lose N366 billion revenue as the three months of suspending a new tariff hike ends in June 2020.

 

The Nigerian Electricity Regulatory Commission (NERC) was to approve the tariff hike on April 1, 2020 but suspended it till June 30 due to the outbreak of the Coronavirus, COVID-19 pandemic. NERC may announce the approval by July 1, 2020 for the new hike to kick in.

 

A study of the Extraordinary tariff review template containing the planned tariff increase obtained from NERC indicates that from April to June 30 that the freeze covers, the DisCos and the entire power sector is losing N122bn every month.

 

The top three DisCos affected the most by the three months tariff freeze, is Ikeja DisCo as it will lose N58bn expected revenue between April and June, with a monthly loss of N19.3bn. Ibadan DisCo has N17.3bn monthly loss, amounting to N52.1bn loss in three months. Eko DisCo will loss N40.8bn in three months, recording N13.6bn every month.

 

Yola DisCo will be the least loser as it is losing N3.5bn every month, and will lose N10.6bn expected revenue by the end of June 2020.

 

Giving a 23,803 billion kilowatt hour (kwh) energy allocation to the 11 DisCos within the planned nine months (April to December 2020) of the initial tariff hike, the firms would have raked in a revenue of N1,094 trillion by selling the energy at an average rate of N46 per kwh.

 

NERC had also planned to approve another tariff hike from January to December 2021 by raising the average electricity cost per hour from N46 to N50.3. That was if this initial hike was successful, barring the disruption by the COVID-19 pandemic.

 

The N1trn expected revenue is about N336bn higher than what they could generate for the nine months period this year, if the electricity tariff rate remains at its current level. The prevailing average Allowed Tariff (AT) for the DisCos is an average of N30.7/kwh with 23,572 billion kwh of energy allocation.

 

A breakdown of the expected N1.094trn revenue collection by DisCos shows that for the nine period, Ikeja DisCo will be the highest revenue generator with N173.9bn. Ibadan DisCo is next with N156.4bn, followed by Eko DisCo with N122.4bn, and Enugu DisCo expecting N11.9bn in revenue.

 

Benin DisCo was expecting N98.7bn, Abuja had expected N92.4bn while Kaduna was to get N85.8bn. At the lower rung, Yola DisCo (run by the federal government) ought to get N31.8bn. Jos DisCo expected N50.2bn, and Kano DisCo expected N65.8bn.

 

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