DISCOs’ revenue soars 47% after major Band A tariff hike

Electricity distribution companies (DisCos) in Nigeria saw a significant boost in their revenue in the second quarter of 2024, following the steep hike in electricity tariffs for customers in Band A.

According to a new government report, DisCos’ revenue rose by 47%, from ₦291.62 billion in the first quarter to ₦431.16 billion in the second quarter.

“The total revenue collected by all DisCos in 2024/Q2 was ₦431.16 billion out of the ₦543.64 billion that was billed to customers. This translates to a collection efficiency of 79.31%,” the report by the Nigerian Electricity Regulatory Commission (NERC) seen by Pluboard says.

The increased revenue came after the government approved a more than threefold increase in tariffs for Band A customers, who were promised at least 20 hours of electricity daily—an assurance that has largely remained unfulfilled.

The tariff increase, implemented in April, allowed DisCos to charge Band A customers ₦225 per kilowatt hour, up from ₦68. Despite the substantial price hike, many Band A customers say they have continued to experience poor and unreliable power supply.

“Where I am in Abuja, power supply has become even poorer since they migration to the so-called Band A,” said a customer in Kubwa, Abuja.

The Band A classification covers about 15% of Nigeria’s electricity consumers, primarily in urban areas. They were expected to benefit from improved electricity access as part of the government’s justification for the price increase, but the reality on the ground has been quite different.

Collection Efficiency

The surge in revenue for DisCos comes at a time of deep economic hardship for Nigerians. The removal of fuel subsidies, the devaluation of the naira, and soaring inflation have already strained household budgets.

The sharp increase in electricity tariffs has further compounded the financial burden on consumers, many of whom were already struggling to cope with rising living costs.

 The power sector has been troubled for over a decade, despite the privatization of power generation and distribution. DisCos have consistently argued that government price controls and delayed subsidy payments limit their ability to operate efficiently and provide reliable service.

NERC report shows that revenue collection efficiency barely improved after the hefty tariff rise.

According to the report, on average, the 11 DISCOs in the country were only able to collect 79.31% of tariff they billed customers in the second quarter. The figures for the previous two quarters were 79.11% and 73.79% respectively.

Ikeja and Eko DisCos recorded the highest collection efficiencies, at 94.67% and 88.03%, respectively. In contrast, Yola DisCo posted the lowest collection efficiency, at 55.67%.

Yola DisCo, however, showed the most improvement in collection efficiency, up by 12.64 percentage points compared to the first quarter.