Nigeria: Electricity Regulator Body Rakes N1bn from Importers of Generating Sets, Others

The Nigerian Electricity Regulatory Commission (NERC) generated approximately N938.5 million from fees collected from importers of generators and other internal revenue sources from June 2020 to June 2021, an analysis of the data for the four quarters provided by the industry regulator, has shown.

NERC had in 2013 introduced a N25,000 charge per unit of 100KVA generator imported into the country in its guidelines for obtaining clearance certificate for the importation of generating sets and related matters.

It also fixed a charge of N3,500 per unit of between 25kva and 100kva generators imported into the country, while generators between 5kva and 25kva attract a charge of N1,000 per unit.

Furthermore, it resolved to begin the collection of N250 per unit of between 2.5kva and 5kva, while between 0.45 Kva and 2.5 Kva generators attract a charge of N150 per unit.

The amount collected by NERC is exclusive of duties and other taxes paid by the importers in the country.

Nigeria still relies largely on generating sets to power its over $400 billion economy.

The Lagos State government had in October 2021 revealed that as a result of the country’s inefficient and over-centralised electricity supply system, residents of the state alone, generated over 4,500MW daily through the use of generators.

Details of the financial position of the NERC showed that in the second quarter (Q2) of 2021, the IGR from fees arising from the importation of generator sets , licence processing and licencing fee was N431 million.

A breakdown of the amount showed that N20.23 million was generated in April, N160.79 million in May and N250.25 million in June of that year.

Furthermore, in the first quarter of 2021, NERC raked in N126.53 million, broken down into N50.80 million, N28.13 million and N47.60 million in January, February and March, respectively.

An analysis of the last six months of 2020 showed that in the third quarter of 2020, covering July, August and September, the industry regulator made N276.31 million from the same sources, segmented into

N71.10 million, N111.11 million and N94.10 million, in the three months.

Similarly, in the last three months of 2020, NERC raked in N104.88 million from import fee imposed on the sale of generating sets, among others.

However,  the total operating levy received from market charges were N4.868 billion for Q2,2021 and N5.061 billion for Q1,2021. Total revenue for the period was N5.299 billion and N5.18 billion respectively, with personnel cost gulping N1 billion and N1.88 billion respectively.

Before then, in the last six months of 2020, operating levy was N2.64 billion for Q3 and N2.19 billion for Q2, with personnel cost standing at N843 million and N1.17 billion for the two quarters.

But the commission’s total expenditure profile for the period was N6.1 billion shared into N1.6, N1.0 billion, N2.0 billion and N1.44 billion for the period spanning June 2020 to June 2021.

“During the quarter under review (Q2,2021), the total revenue realized by the commission was N5.30 billion, about 2.12 per cent higher than the N5.19 billion revenue realised in the preceding quarter.

“There was a 230 per cent rise in other internally generated revenue while the operating levy (i.e., market charges) recorded a decline of 3.75 per cent.

“The higher revenue recorded in 2021/Q2 was partly due to the recovery of outstanding licencing fees and the fund released from the statutory budget for capital project.

“During the same period, the total (capital and recurrent) expenditure of the commission stood at N1.44 billion which is lower than the N2.01 billion incurred during the first quarter of 2021,” NERC stated.

For Q3, 2020, it pointed out that the total revenue that accrued to the commission was N2.93 billion, representing an increase of 31 per cent from the revenue recorded in the second quarter and a decrease of

10 per cent from the revenues recorded in the first quarter.

“Notwithstanding the improvement in revenues, the commission’s expenditure declined to N1.05 billion in the quarter from N1.36 billion in the second quarter and N1.94billion in the first quarter.

“Similarly, liabilities also declined to N123 million from N218 million in the preceding quarter. The observed decline in expenditure was due largely to the reduction in operating activities of the

commission as a result of the Covid-19 movement restriction imposed by the government,” it stated.

As for the summary of the commission’s revenue and expenditure during the third and fourth quarters of 2020, it stated that the total revenue realised by the commission N1 .95 billion, about 33.35 per

cent lower than the revenue realised in the preceding quarter.

NERC noted that the higher revenue recorded in 2020/Q3 was partly due to the recovery of outstanding licencing fees, the grant received from Mac-Arthur foundation and the fund released from the statutory budget for capital project.

Nonetheless, it stressed that both the operating levy (i.e., market charges) and other IGR such as licencing fee charged by the commission declined significantly during the fourth quarter of 2020.

“The operating levy and IGR respectively declined by 30.36 per cent and 62.04 per cent during the fourth quarter of 2020. During the some period, the total (capital and recurrent) expenditure of the

commission stood at N1.60 billion which is higher than the N1.05 billion incurred during the third quarter of 2020.

A comparison of the revenue and expenditure of the commission within the fourth quarter of 2020, it stated,  indicated lesser expenditure incurred when compared to actual cash receipts.

NERC explained however that there was a positive net cash flow of N347.47 million during the period. “However, the total liabilities as at the end of the quarter stood at N419.68million,” it added.

Emmanuel Addeh in Abuja

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