Disco’S Q2 Revenue Surges By 40% To N433Bn Driven By 230% Tariff Increase For Premium Customers

Emmanuel Addehin Abuja

Electricity Distribution Companies (Discos) in Nigeria saw a significant increase in revenue in the second quarter of 2024, from April to June, reaching N433 billion. This surge in revenue is attributed to the recent tariff hike for Band A customers in the country.

Despite this growth, there have been complaints from electricity consumers in Abuja who claim they are being wrongly moved to Band A without receiving the promised 20 hours of power supply per day.

Data from the Nigerian Electricity Regulatory Commission (NERC) indicates that in Q1 2024, the Discos generated N291.6 billion in revenue. This figure continued to rise after the tariff adjustment took effect on April 3, resulting in a total revenue of N433 billion three months later.

The federal government increased the tariff for Band A customers in April, following a two-year tariff freeze in the power sector. The new rate per kilowatt hour (kWh) of electricity rose from about N68 to N225 for Band A customers, who were expected to receive 20 hours of power supply daily.

NERC stated that only 15% of the 12 million registered power customers would be affected by the tariff increment. The decision aimed to alleviate the government’s burden of subsidizing electricity costs, which amounted to N240 billion per month and N2.9 trillion per year.

Analysis of commercial performance by the Discos reveals that in April, they generated N142.92 billion in revenue. In May and June, the figures stood at N139.23 billion and N150.86 billion, respectively.

Following NERC’s decision on Band A customers, the Discos experienced a 42.29% increase in revenue, amounting to an additional N42.4 billion in April compared to the previous month of March.

As for NERC’s revenue collection ranking in April, Ikeja Electric collected N29.4 billion, Eko Disco collected N24.93 billion, and Abuja Disco collected N22.92 billion.

However, some Discos struggled to gather revenue efficiently, with Yola Disco collecting N1.10 billion, Kaduna Disco collecting N5.01 billion, and Jos Disco collecting N6.05 billion.

In May, the total billed amount was N191.65 billion, with a collection efficiency of 72.65%. Ikeja Disco remained the highest earner with N26.92 billion, followed by Eko Disco with N23.92 billion and Abuja Disco with N22.97 billion.

In June, NERC billed N176.57 billion, and the collected amount was N150.86 billion, marking a collection efficiency of 85.44% during the month. The top revenue collectors were Ikeja Disco (N30.06 billion), Eko Disco (N26.37 billion), and Abuja Disco (N24.29 billion).

The overall collection efficiency indicated that Ikeja Disco collected 102.44% of the billed amount, Eko Disco achieved 97.07% efficiency, and Abuja Disco reached 86.97% efficiency.

Historical data from the National Bureau of Statistics (NBS) reveals that the Discos generated N526.77 billion in revenue in 2020. This figure increased to N761.17 billion in 2021, N828 billion in 2022, and N1.1 trillion in 2023.

With the outstanding revenue collection in the first half of 2024 already reaching N724.6 billion, the Discos have surpassed their total revenue for 2020. They are on track to break the revenue records for 2021, 2022, and 2023 by the end of this year.

The increased revenue provides an opportunity for the Discos to invest in much-needed infrastructure. Critically, these electricity distributors have been accused of under-investing in infrastructure, resulting in unreliable power supply for Nigeria’s population of over 200 million people.

Experts argue that the Discos are the weakest link in the power distribution value chain, capable of distributing only 5,500MW at a time, while the Generation Companies (Gencos) can produce 13,000MW and the Transmission Company of Nigeria (TCN) has the capacity to transmit 8,000MW.

Simultaneously, the Discos claim they are not allowed by the government to collect cost-reflective tariffs. This limitation restricts their ability to attract substantial investment in the sector.