April 20, 2023/United Capital

Data from the Q3/Q4-2022 Electricity Report released by the National Bureau of Statistics (NBS) revealed that the total electricity supplied by the eleven Distribution Companies (DisCos) in FY-2022 stood at 21,817.1GWh, 6.6% y/y down from 23,360.6GWh provided in the FY-2021. The decline can be attributed to the national grid’s collapse (eight times during the year), as poor maintenance and low gas supply hampered transmission and distribution. Despite the decline in electricity supply, the total number of customers connected to the grid increased by 5.2% y/y to 11.1mn from 10.5mn as of December 2021.

Looking at the report, we observed that the total revenue generated by the DisCos printed at N828.1bn in FY-2021. This represents an 8.8% y/y increase compared to N761.2bn generated in FY-2022. Most of the revenue came from Ikeja Electricity Distribution Company (IEDC), contributing 20.0% (N166.0bn) to the total lump sum. Trailing behind were Abuja Electricity Distribution Company (AEDC) and Eko Electricity Distribution Company (EKECD), accounting for 15.2% (N125.7bn) and 15.1% (N124.8bn), respectively. Although revenue increased, the sector continues to struggle, as evident by the 2.2% contraction in 2022. This is primarily due to the inability of DisCos to collect receipts amid the sustained metering gap, as only 46.3% of total customers are metered.

We remain pessimistic in our outlook for the electricity sector on the back of lingering perennial challenges, such as inadequate infrastructural facilities and weak investments in the sector, among others. This will result in lower generation capacity and reduced electricity supply hours in the nation. However, we note that the recent constitutional amendment that grants states the authority to generate, transmit and distribute electricity presents an upside for growth in the power sector. If effectively put in place, the private sector will bridge funding gaps, reducing the nation’s current power deficit.