Electricity market to lose N1trn in 9 months


Analysis of the suspended tariff structure shows that the electricity market will lose N1.1trillion in nine months.

The breakdown shows that the operators will lose N122billion every month. Given a 23,803bn kilowatt-hour (Kwh) energy allocation to the 11 Distributing Companies (DisCos) from April to December 2020, the firms would have raked in a revenue of N1.094 trillion by selling the energy at an average rate of N46 per kWh.

According to its implementation timeline, after the tariff hike this year, the NERC had planned to approve another tariff hike from January to December 2022 by raising the average electricity cost from N46/kwh to N50.3/kwh.

The market had already lost N366 billion from the April 1 suspension and will lose another N734billion in this July suspension, up till December 2020.

The N1.1trn expected revenue is N336billion higher than what will be generated within these nine months under the prevailing electricity tariff, leaving a shortfall of N764billion.

The prevailing average Allowed Tariff (AT) for the DisCos is an average of N30.7/kwh with a projected 23,572 billion kWh of energy allocation.