The Electricity DisCo Law: Lower supply, Higher revenue

These 10 Charts throw more light on this.

The beautiful colleague who composed Dataphyte’s daily Data Card passed the latest draft on Friday. 

I perused with mixed feelings 🤷. 

Then the handsome colleague that designed it came up with lit graphics that captured the mood of media reports that day - the National Bureau of Statistics (NBS) Electricity Report Q1 2023 which reviewed the performance of the 11 Electricity Distribution Companies (DisCos) in the first 3 months of the year.

Most of the news headlines and coverage focused on the increased revenue of the DisCos, plus a passing mention of the amount of electricity these companies actually supplied to earn another fabulous revenue of N247.3 billion in the first quarter of 2023.

“Revenue collected by the DISCOs during the period was N247.33 billion from N232.32 billion in Q4 2022. On a year-on-year basis, revenue generated in the reference period rose by 20.81% from N204.74 billion recorded in Q1 2022. Electricity supply was 5,852 (Gwh) in Q1 2023 from 5,611 (Gwh) in the previous quarter. However, on a year-on-year basis, electricity supply declined by 1.74% compared to 5,956 (Gwh) reported in Q1 2022, the NBS reported.”

The devil is in the (last) detail - that last sentence - one that is easily missed, especially at a time Nigerians are weighed down by anxiety and apathy towards the looming increase in electricity tariffs, planned for next month.

Yet, the problem surpasses the coming high electricity tariffs that will warrant one to pay higher bills. The dilemma is the likelihood of a higher bill and lower electricity supply.

This has been the case.

These 10 Charts throw more light on this.

First, the N247 billion the 11 DisCos jointly received from paid electricity bills between January and March this year (the first quarter) is a little addition to the N828 billion revenue collected from Nigerians last year.

In 2022, the N828.1 billion revenue from paid bills to Nigerian DisCos surpassed the N761.2 billion in 2021. 

Yet, these 11 companies supplied 21,817 Gwh of electricity in 2022 lesser than the 23,361 Gwh in 2021.

Within 8 years, the 11 DisCos together tripled their revenues (an increase of 197%) but barely increased their supply of energy to their customers (an increase of 7%) for almost a decade.

Over the years, DisCos supply of electricity to their customers was never proportional to the revenue they got off their customers. 

Between earnings and efficiency, Nigeria’s electricity retailers chose the former in the past 8 years.

I shared my findings with another colleague, and he suggested we delay our conclusions. He reminded me that the revenue figures were nominal estimates. Inflation across the years could have inflated the actual value of those seemingly high revenues.

Hmm. 🤔

That’s true. Let’s see what these revenue figures would be reduced to after factoring in inflation.

After factoring in inflation, the real revenue of the 11 DisCos still tripled (x2.6 or an increase of 165%) within 8 years without any significant increase in the supply of electricity to their customers in all those 8 years.

How can this be?

Let’s simulate.

DisCos’ customers increase annually due to growing populations.

If some bad guys run the DisCos, all they need is to connect more and more customers, then sit and relax.

With arbitrary estimated billings of unmetered customers, it is easy to get 10 hours of revenue for 1 hour of electricity supplied.

If these bad guys need more money, they turn to their metered customers at frequent intervals. They complain and collude to increase the electricity tariff, that is, the price of each electricity unit, so they can milk the metered customers too.

But the DisCo guys are not bad guys. They don't think like this. They measure out energy supplied without a meter because their brains can know how much you use than a meter can do. 

And often times people have complained that the DisCos even underestimated their bill. 🤭

It is easy to find many unmetered customers who return from their travel and come straight to the DisCos’ offices complaining that they were not billed for the electric energy they consumed when they were away from home.🙃 

Now we’re clear about this. There is little or no effect of inflation on the high revenues that DisCos declare annually. As for the Nominal Revenue figures, growth in supply was not always commensurate with the growth in inflation-adjusted revenue of DisCos.

Second, it is useful to know the DisCo you’re dancing with, sorry, dealing with, as you move across the country.

Source: Wikipedia

Of these 11 DisCos, Ikeja Electricity DisCo leads others with total revenue of N737 billion from 2015 to 2022. Yola Electricity Disco trails others with a N70 billion revenue in the same period.

Ikeja Electricity DisCo began to outshine it’s revenue pairs in 2018 and has remained the topmost in revenue from bills. It further led others in Q1 2023 with a revenue of N41.7 billion in January, February and March 2023, directly ahead of Eko, Abuja, and Ibadan electricity DisCos.

Though Ikeja Electricity DisCo’s annual energy supply to its customers declined at several points within the 8 years in review, its revenue still soared through those years. Same for a number of its revenue contemporaries like Eko, Abuja, and Ibadan Electricity DisCos.

However, Ikeja still leads in the total electricity supplied in the 8 years under review.

Yet, despite being the lowest in total revenue from bills and energy supplied, when the electricity supplied in 2022 is compared with that in 2015, Yola Electricity DisCo leads others, supplying 45% more electricity in 2022 than in 2015. 

Kaduna Electricity DisCo trails behind others, supplying 15% less electricity in 2022 than in 2015.

This time, Ikeja comes fifth, supplying just 15% more in 2022 than in 2015.

The real culprits are Kaduna, Ibadan, and Abuja. They decreased their electricity Supply year after year but got more revenue year after year (2016-2022).

On average, Kaduna Electricity DisCo decreased its supply by 1.3% annually for 8 years. Ibadan Electricity DisCo reduced supply by 0.6%, while Abuja Electricity DisCo reduced its supply annually by 0.5%.

The rest grew their revenues annually in 2-digits but grew supply in single digits.

Who then is underserved with electricity? You and me.

Who loses more money to unfinished work, to alternative sources of electricity? You and me.

Who rakes in more and more revenue, regardless? The Monopolistic DisCO running your state of residence.

Would things continue like this? Likely, Yes - If the DisCos get another revenue increase from a higher electricity tariff this July, as usual, besides the arbitrary estimated bills.

It pays to run this kind of business. But it perplexes businesses and residents that suffer from this disservice and under-service.

What should citizens and the Government do about this?

We’ll share more detailed perspectives on this shortly.

Thanks for reading this piece. I hope you pay more for electricity only because your Electricity DisCo supplied you with more. We’ll know by next week Saturday.