Electricity distribution companies (DisCos) in Nigeria are grappling with significant revenue losses due to low power allocation, stemming from a lack of gas supply to generating companies.
The ongoing challenges have hampered operations for DisCos, making it increasingly difficult to cover essential expenses such as staff salaries and operational costs.
The situation has persisted for more than a month, with gas companies withholding supply to power-generating firms due to outstanding debts totalling approximately N1.3 billion. Mr. Bayo Adelabu, Honourable Minister for Power, cited this debt as the reason for the suspension of gas supply.
Mr. Sunday Oduntan, the Executive Director of Research and Advocacy of the Association of Nigerian Electricity Distributors, emphasised the adverse effects of the power sector’s current challenges on DisCos. He highlighted the strain on operations, liquidity, and increasing debt burden faced by distribution companies.
Mr. Oduntan underscored the impact of low power allocation on DisCos’ efficiency, noting the heightened demand for electricity from both residential and commercial consumers. Despite being the closest link to consumers, DisCos often face accusations of inefficiency due to factors beyond their control, such as gas shortages and technical complexities in power generation.
Furthermore, he shed light on the reliance on gas-fired thermal plants for a significant portion of Nigeria’s power generation, emphasising that the country’s hydropower capacity alone is insufficient to meet national demand. Consequently, any disruptions in gas supply directly translate to power outages, exacerbating the financial strain on DisCos.
Addressing the challenges ahead, Oduntan called upon the federal government to engage all stakeholders in charting a viable solution to the current predicament. With mounting pressure on DisCos and the broader power sector, collaborative efforts are essential to navigate through these turbulent times and ensure sustainable electricity supply for all Nigerians.
