The Nigerian electricity market experienced a tumultuous fourth quarter of 2024, characterized by a significant increase in consumer payments despite persistent grid instability. Consumers paid a total of N509.84 billion during this period, a notable increase from the N466.69 billion collected in the previous quarter. This rise in revenue occurred against the backdrop of five grid collapses, comprising three total collapses and two partial collapses. These collapses underscore the fragility of the national power grid and its susceptibility to disruptions, impacting the reliability of electricity supply to consumers. Despite these challenges, the collection efficiency improved to 77.44 percent, a 2.89 percentage point increase compared to the third quarter of 2024. This suggests that despite the instability, efforts to improve revenue collection were gaining traction.
The enhanced revenue collection can be attributed, in part, to reduced energy offtake during the fourth quarter. With lower energy consumption, distribution companies (DisCos) were able to focus their resources on areas with historically lower billing and collection efficiencies. This strategic allocation of resources allowed them to maximize revenue generation even with reduced overall energy distribution. The report highlights the improved performance of Eko and Ikeja DisCos, which achieved collection efficiencies of 90 percent and 82.3 percent, respectively, leading the pack in revenue recovery. Conversely, Jos Disco lagged behind with a collection efficiency of only 49.68 percent, highlighting the disparity in performance across different DisCos.
The five grid collapses experienced during the fourth quarter of 2024 significantly impacted the reliability of electricity supply. These collapses, categorized into three total and two partial outages, occurred between October and December 2024. Partial collapses occurred on October 14 and November 5, while total collapses occurred on October 19, November 7, and December 11. The root causes of these disruptions are yet to be fully determined, with a detailed report from the system operator expected to shed light on the specific factors contributing to the grid instability. Furthermore, the report highlights the inherent vulnerability of the national grid, designed to operate within specific voltage and frequency parameters. Deviations from these parameters can lead to power quality issues and, in more severe cases, trigger partial or complete grid collapses, causing widespread power outages.
The Nigerian Electricity Regulatory Commission (NERC) is actively working to address the challenges plaguing the electricity sector. One of the key strategies employed is promoting meter deployment to enhance energy accounting and revenue recovery. This initiative aims to reduce commercial and collection losses, thereby improving the financial flow to upstream market participants. NERC issued an order for the operationalization of Tranche A of the Meter Acquisition Fund, mandating DisCos to prioritize metering Band A customers. By December 2024, over 4,000 Band A customers had been metered under this scheme. Alongside the Meter Acquisition Fund, DisCos are encouraged to leverage other metering frameworks outlined in the Meter Asset Provider (MAP) and National Mass Metering Programme (NMMP) regulations to further improve metering coverage.
The performance of individual DisCos varied significantly during this period. Eight DisCos showed improvements in collection efficiency compared to the third quarter, with Yola and Kano DisCos exhibiting the most significant gains, at 13.93 and 9.88 percentage points respectively. However, three DisCos saw declines in their collection efficiency, with Jos and Abuja DisCos experiencing the largest drops, at 3.61 and 3.39 percentage points respectively. This variation in performance highlights the need for targeted interventions to address the specific challenges faced by underperforming DisCos. The overall improvement in billing and collection efficiencies, despite the grid collapses, demonstrates the impact of these targeted efforts and the potential for further improvement with continued focus on revenue recovery strategies.
Looking ahead, the first quarter of 2025 has already witnessed two partial grid collapses, underscoring the ongoing challenges in maintaining grid stability. Sustained efforts are crucial to address the root causes of these collapses and ensure a more reliable electricity supply. The ongoing metering initiatives, coupled with efforts to improve grid stability, are critical steps towards enhancing the efficiency and reliability of the Nigerian electricity supply industry. These initiatives aim to not only improve revenue collection but also ensure that consumers receive a more consistent and dependable power supply, crucial for economic growth and development.
