The report, which complies with the Electricity Act 2023, provides an evaluation of operational, commercial, and regulatory performance. 

Growth in Power Generation Capacity and Performance

The average available generation capacity of Nigeria’s 28 grid-connected power plants reached 5,100.90MW in Q3 2024, showing a 16.04% increase (+705.13MW) compared to Q2 2024. 

This growth was largely driven by increased capacities in 19 of the 28 plants. 

Improvements were observed at Afam, which recorded a 182% increase, Omotosho with 92%, and Olorunsogo at 84%. These developments contributed to an average hourly generation of 4,280.24MWh/h, a 6.51% improvement from Q2, translating to a total quarterly generation of 9,450.76GWh, up by 7.68%.

The generation mix also saw hydropower contributing 32.60% of the total energy generated, an increase from 26.98% in Q2. 

Seasonal river flows helped in boosting the performance of hydropower plants such as Shiroro (+50.02%), Kainji (+21.86%), and Jebba (+38.56%). Despite this, thermal plants faced challenges, with a 1.69% drop in their cumulative average hourly generation due to constraints like gas supply issues and mechanical faults. Plants like Egbin and Geregu recorded declines of -26.32% and -35.42%, respectively.

Advances in Metering and Revenue Collection

An achievement was recorded in metering, with 184,507 meters installed during Q3, representing a 256.01% increase from Q2’s 51,826 installations. 

This surge elevated the net end-user metering rate from 45.43% to 46.15%. The installations were primarily carried out under the Meter Asset Provider (MAP) framework, accounting for 96.86% of the total. 

NERC has mandated Distribution Companies (DisCos) to leverage all available frameworks to close metering gaps, ensuring consumer protection against overbilling through energy caps for unmetered customers.

Revenue collection also saw improvements. DisCos collected ₦466.69 billion out of the ₦626.02 billion billed, an 8.24% increase compared to Q2. 

However, the collection efficiency dropped slightly to 74.55%, down from 79.31% in Q2. Aggregate Technical, Commercial, and Collection (ATC&C) losses rose to 39.10%, representing a 4.40-percentage-point increase from Q2. 

This included technical and commercial losses at 18.32% and collection losses at 25.45%. No DisCo met its ATC&C target as stipulated in the Multi-Year Tariff Order (MYTO), with Kaduna DisCo recording the worst underperformance (actual ATC&C at 70.84% against a target of 25.00%).

Grid Stability and System Losses

Grid performance remained a mixed bag in Q3. The Transmission Loss Factor (TLF) increased to 9.04%, exceeding the MYTO target of 7.00%. 

This showed that for every 100MWh of energy sent out, 9.04MWh were lost in transmission, marking a decline from the 7.79% recorded in Q2. One incident of partial grid collapse was reported during the quarter, occurring on 6th July 2024. This highlights the need for improved system coordination and infrastructure to prevent disruptions.

Frequency stability showed improvement, with the average quarterly frequency range narrowing to 1.19Hz from 1.51Hz in Q2. The grid operated closer to the standard 50Hz benchmark, thanks to enhanced monitoring systems. However, the absence of a Supervisory Control and Data Acquisition (SCADA) system continues to hinder real-time grid management.

Consumer Affairs and Safety

Consumer engagement remained a priority, with NERC hosting two town hall meetings in Gombe and Calabar to address issues like service-based tariffs, metering, and customer redress mechanisms. 

A total of 328,696 complaints were received across DisCo Customer Complaint Units (CCUs), a 14.35% increase from Q2. Common issues included metering, billing, and service interruptions. Forum Offices resolved 58.90% of active appeals, an improvement from the 54.90% resolution rate in Q2.

Safety remains an issue, with 56 accidents reported in Q3, resulting in 29 fatalities and 28 injuries. While fatalities decreased compared to Q2, injuries saw an increase. Investigations into these incidents are ongoing, and NERC is collaborating with stakeholders to enhance health and safety protocols.

Regulatory Achievements in Power Generation

In Q3, NERC issued 50 new orders and 50 licences, permits, and certifications. These include six off-grid generation licences with a combined capacity of 30.06MW, one on-grid licence renewal, and seven certifications for Meter Service Providers. 

The Commission also conducted five hearings to address stakeholder disputes and issued compliance directives to defaulting operators.

The Q3 2024 report stresses the duality of progress and challenges in Nigeria’s electricity sector. While advancements in generation capacity, metering, and revenue collection signify progress, issues like high ATC&C losses, grid instability, and safety reveal areas needing urgent attention. 

This development comes as the Nigerian Electricity Regulatory Commission (NERC) changed pricing control to competitive bidding, thereby aiming to increase transparency and efficiency in the sector.

Beginning November 5, 2024, the cost of single-phase meters has jumped from an average of N117,000 to as much as N149,800, depending on the DisCo and meter vendor. 

This upward revision impacts Nigerian electricity consumers, who are struggling with the growing cost of accessing metering services amidst inflationary pressures.

Breakdown of New Meter Prices Across DisCos

An overview of the latest prices reveals varied charges based on location and vendor, showing the diverse operational aspects and competition levels across the country:

• Eko DisCo: Single-phase meters range from N135,987.5 to N161,035, while three-phase meters are priced between N226,600 and N266,600.
• Ibadan DisCo: Single-phase meters cost between N130,998 and N142,548, with three-phase meters at N226,556.25 to N232,008.04.
• Abuja DisCo: Single-phase meters are priced from N123,130.53 to N147,812.5, and three-phase meters between N206,345.65 and N236,500.
• Kano Electricity: Single-phase meters range from N127,925 to N129,999.75, while three-phase meters cost between N223,793 and N235,425.
• Kaduna DisCo: The cost of single-phase meters varies between N131,150 and N142,548.94, with three-phase meters at N220,375 to N232,008.04.

Deregulation and the Changing Meter Market

Earlier in April, NERC announced a change in policy by deregulating the meter prices under the MAP scheme. Previously, NERC controlled meter prices across DisCos to reduce customer costs, but the centralised approach inadvertently hindered competition and transparency within the supply chain. 

NERC’s revised order now allows MAP permit holders to operate and price meters competitively, with the intention of enabling a healthier market that benefits both consumers and DisCos through improved pricing and service delivery.

Under the new model, DisCos and customers are encouraged to engage with multiple vendors, creating an open market where competitive bids determine meter prices. 

This flexibility also enables MAP providers to expand their services across Nigeria, provided they meet compliance and quality requirements set by NERC. 

However, some industry stakeholders warn that deregulation could make meters less affordable for the average Nigerian, as competitive pricing might not immediately translate to lower costs in a period of rising inflation.

Implications for Nigerian Consumers

With prices reaching over N140,000 for single-phase meters in some regions, affordability has become a focal issue, especially as electricity access and cost remain critical for many Nigerians. 

The adjustment in meter prices adds another layer to household expenses, making access to metered electricity increasingly challenging for lower-income households.

NERC has asserted that this policy is designed to boost the sector by enhancing competition among MAPs, which should theoretically lead to long-term benefits, such as better service quality and increased transparency. 

However, the short-term impact reveals further stress on consumers already facing high energy tariffs and rising costs of living.

While metering is essential for accurate billing and handling estimated billing issues, it’s just one piece of a much larger puzzle. 

Nigeria’s power sector lives with a lot of interconnected issues including a generation gap, as the country’s current generation capacity is around 13,000MW, falling short of the estimated 30,000MW required for a stable national grid. 

Approximately seven million consumers in Nigeria remain without meters. Even the available power struggles to reach consumers, less than 4,500MW is actually being distributed, due to an inadequate transmission network.

According to Statista, in 2022, Nigeria’s electricity consumption per capita was 147 KWh. In comparison, India had a per capita consumption of 1,297 KWh, Brazil 3,162 KWh, China 6,199 KWh, and Russia 7,704 KWh.

Examining the power capacity-to-population ratio, Nigeria had an installed generating capacity of 12 GW for a population of 222 million. India, with an installed generating capacity of 433 GW, served a population of 1.43 billion. Brazil had 195 GW for 204 million people, China had 2,212 GW for 1.41 billion people, the UK had 113 GW for 68 million people, and Russia had 276 GW for a population of 143 million. These figures highlight the significant disparity in electricity generation and consumption between Nigeria and other nations. 

In 2023, Nigeria’s national grid could only handle 4,886.40 MW of electricity, as reported by the Nigeria Electricity Supply Industry (NESI). In the first three quarters of 2023, the Nigerian government-subsidized power to the tune of N375.8 billion due to the absence of a cost-reflective tariff. 

Power demand in Nigeria is projected to grow by 7% annually from 2024 to 2026, reaching 45,662 MW by 2030. To meet this rising demand, investments are being directed towards gas-fired power generation and renewable energy sources.

Thermal power plants, the mainstay of generation, rely on an unstable gas supply chain impacted by infrastructure limitations and pipeline vandalism. 

This lack of accurate billing leads to revenue losses for distribution companies (DisCos) and bigger troubles for consumers. 

The NERC’s loan seeks to bridge this gap, with the fund allocation to DisCos being based on their contributions to the Meter Acquisition Fund (MAF) as of the April 2024 market settlement. However, some DisCos have historically underperformed, leaving us to ponder about accountability. The DisCos themselves have lots of debt, hindering investment in infrastructure and maintenance.

N21 Billion: A Drop in the Ocean?

The N21 billion allocation seems good enough at first glance. However, consider this: with an estimated seven million unmetered customers, this translates to roughly N3,000 per meter. 

Industry experts assert that smart meter installation, considered ideal for data collection and grid management, can cost upwards of N60,000 per unit. This initial tranche may meter a fraction of Band A customers, leaving the huge majority and the key Band B and C categories (residential consumers) in the dark, literally and figuratively.

Transparency and Accountability

The opaque allocation process for the N21 billion brings further wonders. DisCos with the highest allocations (Ikeja, Abuja, Eko) might not necessarily have the most metering gaps. 

The breakdown of the allocation is as follows: Ikeja Electric will receive N4.35 billion, Abuja DisCo N2.99 billion, Eko DisCo N2.92 billion, Enugu DisCo N1.72 billion, Ibadan DisCo N2.51 billion, Jos DisCo N521 million, Kaduna DisCo N1.22 billion, Kano DisCo N1.56 billion, Port Harcourt DisCo N1.36 billion, and Yola DisCo N243 million.

A transparent and data-driven allocation strategy would inspire greater confidence while proper monitoring of DisCo performance in meter deployment and addressing potential misuse of funds are important to ensure this initiative delivers on its promises.

Power Sector Debacle, The Fate Of SMEs 

Waiting for the sun to rise before being able to see would be a terrible thing today. However, those who discovered fire realized it could light rooms at night, while those who could afford it used candles. Later, kerosene was used in special lamps. As time passed, illuminating gas provided light in homes and on streets.

Eventually, electricity came along, and now nearly everyone has access to artificial light. Since its invention, humanity has become increasingly dependent on electricity. It is an important form of energy, essential to modern life.

For Africa’s most populous nation, electricity access is a major problem. From households to firms, power seems elusive. According to a report, the electricity grid collapsed 99 times in eight years under President Muhammadu Buhari, with little success recorded in terms of generation and distribution. 

Between 2018 and 2023, the Federal Government of Nigeria budgeted N829.788 billion for various electricity infrastructure projects, excluding the $2.3 billion Siemens deal, which failed to deliver the 700 megawatts of power it promised. 

As of the second quarter of 2022, only 4.95 million customers were metered, whereas those on estimated billing were estimated at 5.8 million by the National Bureau of Statistics. 

According to Ali Bukar Ahmad, the General Manager of Regulation and Compliance at the Transmission Company of Nigeria (TCN), out of an estimated population of 230 million, only 13,112,134 Nigerians are officially registered to use electricity. 

We could go on and on, but one thing is clear: there is a direct relationship between a stable electricity supply and the industrialization of any country. The need for electricity in the industrialization of the country is non-negotiable. 

According to the Federal Office of Statistics, 97% of all businesses in Nigeria employ fewer than 100 employees, implying that 97% of all companies in Nigeria are “small businesses.” This was also corroborated by the National Bureau of Statistics (NBS), which posited that SMEs contribute 48% of Nigeria’s GDP and employ over 84% of the workforce. 

Thus, Small and Medium Scale Enterprises are the backbone of the economy, and anything that affects them threatens the fabric of the entire society.

In the dire straits that the Small and Medium Enterprises find themselves, what is likely to be their fate? Frequent power outages and unreliable supply highly disrupt SME operations, causing production halts, plummeting efficiency, and increased spoilage. 

High operational costs arise as SMEs are forced to rely on expensive generators, straining their finances and impacting profitability. Inconsistent electricity hinders expansion plans and innovation, keeping businesses stagnant and reducing their competitiveness compared to those in regions with stable power. 

If the power situation remains dire, only SMEs with substantial resources to invest in backup power might survive, leading to a less diverse business industry. 

Businesses might adapt by operating at a reduced capacity, hindering overall economic contribution. Additionally, some businesses might relocate to areas with better electricity infrastructure, leading to job losses and missed economic growth opportunities in Nigeria.

SMEs must take practical steps to find solutions, as a longer wait may not bring the desired results. Here are some suggestions:

1. SMEs Must Seek Alternative Sources of Energy

While we appreciate the government’s deliberate efforts to address the myriad of challenges in the power sector, the pace at which solutions are coming cannot keep up with the needs of result-oriented entrepreneurs. 

Therefore, SMEs should seek alternatives, such as renewable energy, while waiting for the government to fulfill its promises. According to Statista, as of April 2024, Mauritius, Seychelles, Morocco, Tunisia, and Egypt had the most reliable electricity supplies in Africa between 2021 and 2023. 

Egypt’s total installed capacity in the power market was 59.5 GW in 2021, expected to grow at a CAGR of more than 2% during 2021-2035, with renewable power growing rapidly but still trailing behind thermal power. 

The majority of Egypt’s electricity supply is generated from thermal and hydropower stations. As of 2023, Egypt’s solar energy capacity was 1,856 megawatts, representing a 7.66% increase compared to the previous year. Solar energy accounted for 68.5% of Egypt’s total renewable energy capacity in 2023.

2. The Need for an Influx of Private Sector and Entrepreneurs in the Power Sector

There is a belief that the government has no business in business, though some dispute this. Regardless, the government must create an enabling environment for the private sector to thrive. 

For example, years ago, one telecommunications company dominated the Nigerian market, exploiting consumers until other providers entered the market. 

Today, Nigerians can choose between multiple networks, benefiting from competition. To ensure the strength and efficiency of SMEs, private sectors must be allowed to do business, thereby improving Nigeria’s power sector.

3. The Government’s Sincere Approach

Lots of funds have been invested in Nigeria’s power sector, from the defunct NEPA to PHCN and later to GENCOs and DISCOs. 

Effective monitoring, sanctions, and recognition of deserving stakeholders are essential. Transparency in this sector is essential. 

An entrepreneur like Alhaji Aliko Dangote has led a revolution in the Oil and Gas sector, resulting in the seventh-largest refinery in the world. The government can enhance the power sector, benefiting SMEs and business owners.