The Nigerian Electricity Regulatory Commission (NERC) reported a complex financial landscape within the Nigerian electricity supply industry for the fourth quarter of 2024. International customers, primarily from Benin Republic and Togo, accumulated a significant debt of $8.84 million for electricity supplied by Nigerian Generating Companies (Gencos). This debt underscores the challenges in cross-border electricity trade and the need for robust payment enforcement mechanisms. While some payments were made, the overall remittance performance from international customers was a mere 37.08%, indicating a persistent struggle to recover dues. Conversely, domestic bilateral customers demonstrated better payment adherence, with a remittance performance of 63.36%. This disparity highlights the varied payment dynamics between international and domestic clients.
A deeper analysis of the international customer payments reveals the specific breakdown of outstanding debts. Benin Republic, through its entities Paras-SBEE and Paras-CEET, owed a combined $4.29 million. Togo’s sole customer, Odukpani-CEET, accrued a debt of $2.37 million. Transactions with Transcorp-SBEE, operating in Benin from two different Nigerian power plants (Ughelli and Afam 3), highlighted both successful and incomplete payments. While Mainstream-NIGELEC fully settled its $2.60 million invoice, the overall picture remained marred by significant outstanding amounts. The report also acknowledged partial payments made towards previous quarter invoices, demonstrating some effort to address the accumulated debt. However, the persistence of these arrears raises concerns about the financial stability of these international trade arrangements.
The report also sheds light on the financial performance of the Nigerian electricity distribution companies (DisCos). In the fourth quarter of 2024, the DisCos recorded a total revenue collection of N509.84 billion, representing 77.44% of the total amount billed to customers during that period. This collection efficiency demonstrates an improvement over the third quarter performance, where the collection rate was 74.55%. This positive trend indicates increased effectiveness in revenue recovery efforts by the DisCos. However, the substantial gap between billed amounts and actual collections continues to pose a challenge to the overall financial health of the electricity sector.
Turning to domestic bilateral customers, NERC reported a cumulative payment of N1.25 million against an invoice of N1.98 million, indicating a relatively healthier payment performance compared to international customers. Similar to the international transactions, some domestic customers also made payments towards outstanding invoices from previous quarters, contributing to a more complete picture of the ongoing financial interactions. This practice suggests a concerted effort to clear backlog payments and improve overall financial standing. The specific amounts paid by each domestic customer, as detailed in the report, further illuminate the individual payment patterns and contribute to a more granular understanding of the domestic market segment.
The NERC report also highlighted a critical concern regarding the Ajaokuta Steel Co. Ltd, a special customer categorized under the “special customer” classification. Ajaokuta Steel Co. Ltd. and its host community failed to make any payments towards their substantial combined invoices totaling N1.38 billion, representing a longstanding pattern of non-payment. This ongoing issue poses a significant financial burden on the Nigerian electricity market and raises concerns about the enforceability of payment obligations for such customers. The commission’s communication with relevant Federal Government of Nigeria (FGN) authorities further underscores the seriousness of this non-payment issue and the need for effective intervention.
In conclusion, the NERC report for the fourth quarter of 2024 presents a multifaceted picture of the Nigerian electricity market’s financial performance. While there are positive indicators, such as the improved revenue collection efficiency of the DisCos and relatively strong payment adherence by domestic bilateral customers, significant challenges remain. The substantial debt accumulated by international customers, particularly those in Benin Republic and Togo, highlights the need for strengthened cross-border payment mechanisms. Moreover, the persistent non-payment by Ajaokuta Steel Co. Ltd. underscores the necessity for decisive government intervention to address this longstanding issue. These combined challenges warrant a comprehensive strategy to ensure the long-term financial sustainability of the Nigerian electricity sector.
