The third edition of the 2021 Power Sector Watch highlights some of the recent developments in the Nigerian Power Sector:
The Central Bank of Nigeria (CBN), in response to the liquidity challenge faced by distribution companies (DisCos) in Nigeria, had in 2015, set up a Nigerian Electricity Market Stabilization Fund (NEMSF) through which DisCos could access loan facilities under certain conditions. However, the challenge remained largely unresolved and has affected their ability to meet their financial obligations to players in the Nigerian Electricity Supply Industry (NESI).
Consequently, the CBN, in conjunction with relevant Regulators, set up a process to drive monetary discipline in the electricity market. The CBN delegated oversight of electricity bill collections to Deposit Money Banks (DMBs) and required all DisCos to retain collection accounts with the DMBs. Deductions for specific financial obligations are taken as first line items from the monies in the collection account while the balance is transferred to the respective DisCos to fund operations. Based on recent data provided by the Presidential Power Sector Working Group (PPSWG), revenue from the NESI increased by 33.93% to ₦184.26 billion as at February 2021 – with a total revenue of ₦137.57 billion for the first three months of implementation of the new collection structure (September to November 2020) and ₦184.26 billion for the next three months, December 2020 to February 2021.
There is concern from the DisCos though, that the amount transferred to them after the deductions is not sufficient to meet their operational needs and facilitate investment in much needed distribution infrastructure. The measure may not also directly address the metering gap and energy theft issues which have contributed to poor collection.
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