Nigeria’s Electricity DisCos Break All-time Revenue Records with N1 Trillion
April 26, 2024
… tops countries with serious power shortages in 2023
By Abubakar Ibrahim
Nigeria's Electricity Distribution Companies (DisCos) have collectively generated a revenue of N1 trillion in 2023, their highest revenue levels in a decade, even amidst persistent power outages across the nation.
Despite the longstanding issue of inadequate power supply plaguing Nigeria, this development is significant in the sector since it highlights the growing importance of the country's electricity distribution industry.
The country’s statistics body reported that the fourth quarter of 2023 alone saw DisCos generating revenue of N294.95 billion, contributing to the cumulative total for the year.
Analysts attribute this remarkable increase in revenue to various factors, including advancements in metering technology, enhanced regulatory oversight, tariff adjustments, substantial infrastructural investments, a growing customer base, and improved collection efficiency.
Pedro Omontuemhen, a Partner at PricewaterCooper (PwC) Nigeria, said the power supply must be enhanced while minimising losses to sustain this positive trend.
He highlighted the need for comprehensive customer connection and reduction of technical and commercial losses to ensure continual revenue growth for distribution companies.
On the other hand, Nigeria was ranked first among countries with serious power shortages in 2023, among growing economies such as Pakistan and Kenya, according to a recent International Energy Agency (IEF) assessment.
On September 14, 2023, Nigeria experienced a statewide blackout lasting around 10 hours, due to a fire on a main transmission line that caused the system to collapse.
Bismarck Rewane, Managing Director and Chief Executive Officer of Financial Derivatives Company Limited said the largest economy in Africa saw 12 national grid failures in 2023.
The Transmission Company of Nigeria also revealed that the country has experienced recurrent power outages, with around 46 grid breakdowns between 2017 and 2023. Nigeria's grid continues to have problems due to aging infrastructure and vandalism.
In 2022, 73 percent of Nigeria's population had access to electricity, a rise of more than 70 million people over the previous decade. Despite the country's total installed capacity of over 13 GW, the average available capacity remained at 4.5 GW in 2023 due to a mix of factors such as aging units, poor maintenance, and liquidity constraints.
According to the IEF, inconsistent power supply due to insufficient grid infrastructure, underinvestment, and inefficient regulatory frameworks have resulted in backup generators producing an estimated 40 percent of the country's total electricity consumption.
To meet rising demand, the performance of the Nigerian energy delivery Industry (NESI) is being assessed, and the federal government continues to prioritize energy delivery.
Nigeria passed the Electricity Act 2023 in June 2023, to create a comprehensive legislative and institutional framework for a privatized contract and rule-based competitive electricity market to attract private sector investment in the power industry.
“While the act strengthens the role of regulatory bodies, as it introduces consumer protection measures and provides for a transparent tariff-setting process, it also opens up the possibility of multiple licensing regimes by enabling regulation at the state level.
“Although regulation at the federal level remains the rule where no state regulation is specified, careful co-ordination and streamlining of regulatory approaches across states would be required to minimise the uncertainty of different regimes.”
Meanwhile, one of 2023's significant blackouts happened on January 23 in Pakistan due to overloaded transmission lines, resulting in a power drop. Simultaneously, the northern region saw lower power generation due to plant operational concerns.
"These combined causes caused an uncontrollable power surge, resulting in a countrywide blackout that affected 220 million people for more than 12 hours.
Notably, this was the second incidence in a year, following a previous catastrophe on October 13, 2022, which caused a complete blackout in the south and a partial blackout in the north, resulting in a loss of over 8,000 MW.
Also, Kenya faced a massive power outage, affecting more than 50 million people, with power restored about 24 hours later, on August 25, 2023. According to the IEF, the cause of this outage is unknown.
“This incident marked Kenya's fifth nationwide blackout in the past four years and is noted as one of the longest on record. Kenyans saw another nationwide outage in early December. The event lasted less than a day but it was the third major blackout in four months.”
In response to the deteriorating situation, Kenya Power, the national power operator, has scheduled power outages throughout December as a load-shedding tactic while also allowing for infrastructure maintenance and modernization.
Other countries that experienced blackouts last year due to insufficient power capacity, fuel supply challenges, grid-related technical issues, and extreme weather events included Egypt, Brazil, Canada, the United States, Kazakhstan, Kyrgyzstan, Uzbekistan, Sri Lanka, India, Madagascar, Bangladesh, and Yemen.
