Global Courant
Nigeria, with its large population and growing economy, has long faced problems related to power generation, distribution and access, which has served as a bottleneck to its economic growth as a result. Despite the potential to generate a total installed capacity of 10,396 MW of electricity, the country only manages to transmit about 5,000 megawatts – only about half of its capacity.
Recent data from the National Bureau of Statistics (NBS) has revealed that on a year-over-year basis, electricity supply has decreased by 1.74% compared to 5,956 (Gwh) reported in the first quarter of 2022. However, there was an increase in electricity supply from 5,611 (Gwh) in the previous quarter to 5,852 (Gwh) in Q1 2023.
Overall, the industry has shown significant growth in other areas, such as the total number of customers and the number of customers generated in the first quarter of 2023.
The total number of customers in Q1 2023 was 11.27 million compared to 11.06 million in Q4 2022, an increase of 1.89%. On a year-over-year basis, customer numbers in Q1 2023 increased 5.99% from 10.63 million reported in Q1 2022.
Among the distribution companies (discos), Ibadan Disco had the largest customer base, with approximately 2.2 million customers. Closely followed by Abuja Disco and Benin Disco, with 1.32 million and 1.2 million customers respectively.
Similarly, the number of customers measured was 5.31 million in Q1 2023, indicating a growth of 3.61% from 5.13 million recorded in the previous quarter. On an annual basis, this grew by 10.86% from the figure reported in the first quarter of 2022, which was 4.79 million. In terms of measured customers, Ibadan Disco maintained its lead, with the highest number of measured customers. Ikeja Disco and Abuja Disco followed suit, taking second and third place respectively.
In addition, estimated customers during the quarter were 5.96 million in Q1 2023, up 0.40% from 5.93 million in Q4 2022. Year-over-year, estimated customers increased 1.99% in Q1 2023 from 5.84 million in Q1 2022 .
The increase in both total customers and metered customers represents progress in expanding access to electricity and ensuring more accurate billing across the industry.
Revenue collected by the DISCOs during the period was N247.33 billion compared to N232.32 billion in the fourth quarter of 2022. On a year-over-year basis, revenue generated in the reference period increased by 20.81% over N204, 74 billion registered in the first quarter of 2022. .
Ikeja Disco recorded the most revenue for the quarter grossing approximately N49 billion, followed by Eko, Abuja and Ibadan Discos with N41.7 billion, N38.1 and N24.5 billion respectively.
An unbalanced scale
While these goals seem admirable, there are legitimate concerns about the power situation in the country. Let’s revisit the premise: “Electricity supply has experienced a year-over-year decline of 1.74%, as opposed to the 5,956 (Gwh) reported in Q1 2022.” This is, of course, in contradiction with the sales growth. Despite the increased turnover of DisCos, there is only a marginal improvement in the energy supply to customers. Ideally, one would anticipate progress in power generation, but unfortunately the opposite seems to be true.
Recent developments in the country’s energy sector add to the concerns. The federal government recently announced its intention to possibly increase electricity rates by 40% from July 1, 2023. The recurring question arises: why are rate increases always proposed? A simple answer lies in the socio-economic conditions of the country. As stated by energy stakeholders, the reasons for such increases stem from multiple factors, including the rise in petrol prices due to the elimination of subsidies and the fluctuating exchange rate due to the float of the Naira.
This means that Nigerians face higher electricity costs, while at best the power supply stagnates or, worse, decreases further.
Given the historical pattern, the latter scenario is more likely. This situation is detrimental to a country still struggling with the harsh realities of the recent abolition of the fuel subsidy. Endemic epileptic power supply in the country has made the use of generators an alternative for homes and businesses, making Nigeria the top importer of Premium Motor Spirit (PMS) and diesel generators in Africa from 2022. This is unsustainable, especially for companies.
In the first half of 2022, top listed companies by market capitalization, inclusive Dangote cementBUA Foods, Guaranty Trust Holding Company (GTCO) and Zenith Bank spent N207.54 billion on energy.
Moreover, the government itself is not immune to the consequences of the power problem. A recent analysis by Premium Times Analysis stressed that certain government ministries, departments and agencies (MDAs) are expected to spend around N22 billion on generator maintenance by 2023. This further emphasizes the magnitude of the problem. In addition, historical evidence has shown that the power problem harms investor interests. Numerous companies, such as tire manufacturers Dunlop and Michelin, have moved out of Nigeria and use the country as a market only after producing their products outside Nigeria. This trend has led to the creation of jobs for millions of people outside the country, while putting many unemployed Nigerians at a disadvantage.
But there is light at the end of this tunnel. In the first quarter of the year, former President Muhammadu Buhari approved a bill that would allow Nigeria’s 36 states to generate, transmit and distribute electricity in areas covered by the national power grid. There are high expectations that this could be done birth a new dawn for Nigeria’s crippled energy sector. However, it is important to note that this transformation will take time as the implementation of projects by different states cannot happen immediately. In the meantime, it is crucial that the government focuses on generating more power for citizens and the struggling economy. Immediate efforts should be directed towards improving the current energy situation and addressing the challenges facing the country in this sector.
