Nigerian DisCos Secured N273.34bn Credit Facility from CBN to Boost Electricity Infrastructure

In a significant move to address the persistent challenges in Nigeria’s power sector, the eleven Electricity Distribution Companies (DisCos) have secured a credit facility totaling N273.34 billion from the Central Bank of Nigeria (CBN).

This substantial sum, allocated under the Nigerian Electricity Market Stabilization Facility intervention project, aims to bolster the country’s electricity infrastructure and enhance distribution capacity nationwide.

The allocation, detailed in a report from the CBN covering a comprehensive assessment of the N10.3 trillion developmental finance between 2015 and 2022, is poised to make substantial strides in transforming Nigeria’s electricity landscape.

According to the report, the allocated funds are earmarked for the procurement of 414,000 meters, a crucial step towards addressing metering deficiencies and improving billing accuracy. These meters encompass various types, including maximum demand meters, Smart meters, and Single-Phase meters, among others.

The infusion of these meters into the system is expected to alleviate the longstanding concerns of customers regarding unfair billing practices and contribute to the overall efficiency of the electricity market.

The overarching objective of the credit facility is to ramp up electricity capacity from the current 3,400MW to approximately 4,900MW, a move poised to significantly alleviate the burden of power shortages experienced nationwide. This enhancement in capacity is anticipated to mitigate the adverse effects of inadequate electricity supply, which stem from aging infrastructure, infrastructural deficits, and insufficient investment within the sector.

Breakdown Analysis of the Allocation

A detailed breakdown provided in the report reveals that Lagos and Abuja distribution companies emerged as the top beneficiaries of the CBN’s intervention. The Ikeja Electricity Distribution Company received a substantial allocation of N40.74 billion, followed closely by the Eko Electricity Distribution Company with N34.85 billion. Similarly, the Abuja Electricity Distribution Company secured N34.69 billion from the CBN under the Nigerian Electricity Market Stabilization Facility.

Other recipients of the credit facility include the Ibadan Electricity Distribution Company, which obtained N27.73 billion, the Enugu Electricity Distribution Company with N27.84 billion, and the Kaduna Electricity Distribution Company with N24.36 billion, among others. This equitable distribution of funds underscores a concerted effort to address the infrastructural needs across various regions and ensure equitable access to reliable electricity services.

Challenges and Remedial Measures

Despite these concerted efforts, the Nigerian power sector continues to grapple with multifaceted challenges, including liquidity constraints, foreign exchange scarcity, and inadequate distribution infrastructure.

The Nigerian Electricity Regulatory Commission (NERC) recently reported that approximately 58% of registered electricity consumers in the country lack meters, exacerbating concerns over billing transparency and accuracy.

In response to these challenges, NERC imposed a fine of N10.5 billion on all eleven Electricity Distribution Companies for their non-compliance with mandated capping of estimated billing for unmetered customers. Additionally, Minister of Power, Adebayo Adelabu, issued a stern warning, threatening to revoke the licenses of non-performing distribution companies.

Adelabu emphasized the ministry’s commitment to holding DisCos accountable for their performance, asserting that willful non-compliance would not be tolerated. He further instructed the Transmission Company of Nigeria (TCN) to prioritize repair works on damaged transmission infrastructure to improve supply in affected regions.