Nigeria is not immune from all of these, with the power sector also affected. This newsletter focuses on the potential impact the global crisis may have on the power sector in Nigeria.
- Significant Reduction in Revenue and Cash Inflows
Commercial customers and Government & its Agencies
constitute a significant customer base for the power
sector. The majority of these organisations are currently
on full or partial lockdown, which would impact the
value of energy consumed. The energy may be diverted
to residential customers, whose consumption would
obviously have increased due to the stay at home order.
However, the tariff payable by this group is less than
that payable by industrial consumers. Consequently,
Distribution Companies (DisCos) should expect to
receive less revenue for the same amount of power
distributed during the lockdown.
There is also the issue of collection losses, which are
typically higher amongst residental consumers than with
industrial customers. Government and its Agencies may
pay late but the chances are that the bills will eventually
be settled rather than be totally lost as is the case with
many residental customers. DisCos will, therefore, have
to deal with the twin issues of reduced revenue and
The collection issue may be worsened by the closure
of banks and other financial institutions in some states
and reduced operations in others. Most residential
customers make payments for energy consumed
through designated banks or at the DisCos’ designated
agents that may also be closed or inaccessible as a
result of the lock down. This may impact the ability of
customers to quickly settle established bills, even when
they have the resources.
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