Nigeria’s electricity supply industry is facing a significant shortfall as Benin Republic and Togo owe a combined $8.84 million for electricity consumed during the fourth quarter of 2024. The outstanding debts were revealed in a recent report by the Nigerian Electricity Regulatory Commission (NERC), which provided details on the payments made by both domestic and international customers, including those in neighboring countries.
The debts from Benin and Togo are part of the broader issue of remittance shortfalls that have plagued Nigeria’s power sector. According to the NERC’s report, the total invoices for electricity services issued in the fourth quarter of 2024 amounted to $14.05 million for international bilateral customers. However, only $5.21 million was paid, leaving a considerable 37.08% of the owed amount unpaid.
Specifically, Benin Republic, which has multiple electricity companies relying on power supplied by Nigeria, is responsible for the largest share of the unpaid amount. The companies Paras-SBEE and Paras-CEET owe $2.65 million and $1.64 million, respectively. Additionally, Transcorp-SBEE, a company involved in power distribution in Benin, owes $1.71 million for electricity provided by the Ughelli plant and $0.90 million for the Afam 3 plant, making the total debt from Benin $6.9 million.
Togo, another neighboring country, is also falling short in its payments. The Odukpani-CEET company in Togo has an outstanding debt of $2.37 million. These debts highlight a continuing trend of non-payment by some international customers, which is creating financial strain on Nigeria’s electricity market.
Despite the unpaid balances, the report indicated that Mainstream-NIGELEC, a power distribution company in Niger, was the only international customer to fully pay its invoice for the quarter, settling a debt of $2.60 million. This shows a stark contrast to the situation in Benin and Togo, where payment rates remain troublingly low.
At the same time, Nigeria’s domestic bilateral customers also made partial payments. The total payments by domestic customers amounted to N1.25 million out of the N1.98 million billed, reflecting a 63.36% remittance performance. This is relatively better than the international customers, but still highlights a significant shortfall in the expected payments. Some domestic customers, such as Paras-CEET, Paras-SBEE, and Transcorp-SBEE, also made payments towards outstanding invoices from previous quarters.
In total, the Market Operator (MO) received N135.81 million from domestic bilateral customers, including contributions from companies like NDPHC-Weewood, North South/Star Pipe, Taopex, and Trans-Amadi. Despite these efforts, the non-payment from high-profile customers like Ajaokuta Steel Co. Ltd remains a key concern. The steel company and its host community did not make any payment towards their outstanding invoices totaling N1.27 billion (NBET) and N0.11 billion (MO). This long-standing trend of non-payment by Ajaokuta Steel has prompted the NERC to call for government intervention to address the issue.
While payments from customers remain inconsistent, Nigeria’s electricity distribution companies (DisCos) have shown some improvement in revenue collection. According to the NERC, the total revenue collected by all DisCos in the fourth quarter of 2024 was N509.84 billion, representing 77.44% of the N658.40 billion billed to customers. This is an improvement over the previous quarter (Q3 2024), where DisCos collected N466.69 billion out of the N626.02 billion billed, reflecting a 74.55% collection efficiency.
The increase in collection efficiency in Q4 2024 by 2.89 percentage points is a positive development for Nigeria’s power sector, which has long struggled with high levels of unpaid bills. However, the NERC’s report underscores the persistent challenges faced by the sector, particularly in terms of payments from both domestic and international customers.
The report also highlights the importance of improving payment rates across all sectors of the power industry. Without timely and consistent payments, the Nigerian electricity supply industry faces significant financial instability, which could lead to further difficulties in delivering reliable power to both domestic and international consumers.
The debts owed by Benin Republic and Togo are a reminder of the need for stronger enforcement of payment agreements between Nigeria and its neighboring countries. These unpaid bills not only strain the Nigerian power sector but also hinder efforts to improve electricity supply in the region. Without resolving these outstanding debts, the ability of Nigeria to continue supplying power to these countries may come into question.
The NERC has called for continued efforts to improve the collection efficiency of payments from both domestic and international customers. This includes pushing for more consistent payment schedules and exploring alternative mechanisms to ensure that payments are made in a timely manner.
The federal government and NERC are also working on strategies to strengthen the regulatory framework surrounding the power sector to minimize payment defaults and ensure that Nigerian power suppliers are compensated for their services. This is critical for maintaining the financial health of the industry and ensuring that the necessary investments are made to expand and improve Nigeria’s electricity infrastructure.
Despite these challenges, the Nigerian government remains committed to ensuring a stable and reliable electricity supply both within the country and for its neighboring nations. As regional electricity cooperation continues, it is expected that mechanisms will be put in place to encourage timely payment and prevent the accumulation of significant debts in the future.
In conclusion, while Nigeria’s power sector is showing signs of improvement in revenue collection, significant challenges remain, particularly with regards to unpaid bills from international customers like Benin Republic and Togo. The situation calls for increased efforts from all stakeholders, including governments and regulatory bodies, to ensure that the industry operates more efficiently and that payments are made consistently. Only with such efforts can Nigeria hope to achieve a more stable and sustainable electricity supply for itself and its neighbors.
