#NERC: Over 25% Energy Wheeled by TCN Lost to Theft, Technical Inefficiency

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Over 25 per cent of the total energy wheeled by the Transmission Company of Nigeria (TCN) to electricity Distribution Companies (Discos) is lost to theft and technical inefficiency, a report from the Nigerian Electricity Regulatory Commission (NERC) has indicated.

The NERC quarterly document for Q4, 2020, noted that the level of Discos’ billing efficiency showed that for every 10kWh of energy received by Discos from the Transmission Service Provider (TSP) in 2020/Q4, approximately 2.52kWh was recorded as leakages.

In comparison, it explained that for every N10 worth of electricity received by Discos during the third quarter of 2020, approximately N2.43k was lost due to energy theft and poor distribution infrastructure when put side by side the one for the 4th quarter.

According to NERC, the performance of the Discos showed that during the quarter under review, Ikeja followed by Eko Disco had the highest billing efficiency of 88.82 per cent and 86.38 per cent respectively, but still with lower efficiency relative to 2020/Q3.

However, the power sector regulator stated that the amount of energy received, billed and billing efficiency by Discos during the third and fourth quarters of 2020 indicate an increase in Discos’ billing efficiency during 2020/Q4.

“Out of the 8,035GWh total energy received by all Discos during 2020/Q4, 6,082GWh (75.70 per cent) was billed to the end-users, implying 0.92 percentage points increase in billing efficiency and relatively lower technical and commercial losses of 24.30 per cent compared to 2020/Q3,” NERC stressed.

But Yola Disco recorded the lowest billing efficiency at 48.31 per cent, indicating that Yola Disco lost more (i.e., 51.69 per cent) energy to technical inefficiency and energy theft in 2020/Q4 than the total energy billed to customers during the same quarter.

“Yola Disco has consistently recorded the lowest billing efficiency since the fourth quarter of 2018. This might be attributable to insecurity within the franchise which has affected the operational performance of the utility,” it added.

Based on relative improvement from the preceding quarter, NERC stated that six Discos with the exception of Abuja, Benin, Eko, Enugu and Ikeja recorded an improvement in their billing efficiencies during the quarter under review, ranging from 1.84 percentage points (for Kano Disco) to 12.12 percentage points (for Kaduna Disco).

To address commercial losses (poor energy accounting or theft), the commission pointed out that it had continued to monitor the Discos’ asset mapping and tagging under the framework of the customer enumeration in order to identify illegal consumers and bring same onto the Discos’ billing platforms.

It mentioned that the total revenue collected by 11 Discos from customers in the fourth quarter of 2020 stood at N169.81billion out of the total bill of N259.90 billion.

Relative to the preceding quarter, the Discos collection efficiency (i.e., the total revenue collected as a ratio of the total billing by Discos), NERC said, declined during the fourth quarter of 2020/Q4.

It explained that the overall collection efficiency for all Discos decreased to 65.34 per cent during the fourth quarter of 2020 representing 1.38 percentage points reduction from the 66.72 per cent collection efficiency by Discos recorded during the third quarter of 2020.

“The collection efficiency for all Discos implies that for every N10.00 worth of energy billed to customers by Discos during 2020/Q4, approximately N3.47 remained unrecovered from customers.

“This low collection efficiency combined with billing inefficiency has continued to adversely impact the financial liquidity of the industry, which in turn, has led to low investment in the Nigerian Electricity Supply Industry (NESI).

Appraising individual performances, the industry regulator noted that Abuja Disco, though underperformed relative to 2020/Q3, had the highest collection efficiency of 89.57 per cent followed by Ikeja Disco with an efficiency index of 82.04 per cent.

NERC declared that Kaduna Disco had the lowest collection efficiency of 29.09 per cent, stressing that on a quarter-on-quarter basis, only Benin, Eko and Kano Discos recorded an improvement in collection efficiency with Eko Disco having the highest increase of 6.67 percentage points moving from 75.37 per cent in 2020/Q3 to 82.04 per cent in 2020/Q4.

However, NERC noted that a major factor contributing to low collection efficiency was customers’ displeasure with estimated billing which often resulted in an unwillingness to pay, but reported that the commission has further amended the Order on capping of estimated bills which an unmetered customer can be billed.

On the Aggregate Technical, Commercial & Collection (ATC&C) Losses, which is the combined index of losses due to technical, billing and collection inefficiencies in the industry, the report noted that the overall average ATC&C for all the Discos during 2020/Q4 declined to 47.14 per cent.

It added: “Whereas the technical and commercial losses decreased by 5.34 percentage points, the collection losses worsened by 2.63 percentage points during 2020/Q3 indicating the imperative of the need for Discos to intensify effort in revenue collection to improve on their cash flow, operational performance and in meeting their contractual obligations.

“The overall ATC&C losses of 47.14 per cent in 2020/Q4 are substantially larger than the expected industry average of approximately 22.11 per cent – the allowable ATC&C losses provided in the MYTO (Multi Year Tariff Order) applicable during the quarter.

“The implication of the level of the ATC&C losses in 2020/Q4 is that, on average, as much as N4.71 in every N10.00 worth of energy received by a Disco was unrecovered due to a combination of inefficient distribution networks, energy theft, low revenue collection aggravated by the low level of metering of the end-use customer and unwillingness to pay by customers.”

NERC noted that Eko Disco was the most technically and commercially efficient Disco by recording the lowest level of ATC&C losses of 28.23 per cent in 2020/Q4.

“This ended Ikeja Disco’s dominance as the most technically and commercially efficient Disco in the NESI since 2018/Q4. The worst performing Disco during the same quarter was Kaduna Disco with the ATC&C losses of 76.96 per cent as against the MYTO target of 20.12 per cent.

“Based on relative improvement from the preceding quarter, Benin, Eko, Ibadan and Kano DisCos reduced their ATC&C losses during 2020/Q4 while Abuja, Enugu, Ikeja, Jos, Kaduna, Port Harcourt and Yola Discos recorded increases in ATC&C losses during the same period.

“Kano Disco recorded the biggest reduction in ATC&C losses by 2.12 percentage points from 50.48 per cent in 2020/Q3 to 48.35 per cent in 2020/Q4, while Abuja Disco had the biggest increase in ATC&C losses by 6.63 percentage points during 2020/Q4,” NERC declared.

However, it noted none of the Discos had attained the level of ATC&C loss trajectory embedded in their performance agreement executed by their core investors and Bureau of Public Enterprises (BPE).

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