THE LIQUIDITY CRISIS AND FINANCIAL SUSTAINABILITY OF THE NIGERIAN ELECTRICITY VALUE CHAIN: CAUSES, TRANSMISSION, AND REMEDIES
A Case Study of the Benin Electricity Distribution Company (BEDC)
Nigeria’s electricity value chain has been mired in a protracted liquidity crisis that has impeded power sector reform since privatisation in 2013. This study investigates the causes, transmission mechanisms, and remedial strategies of the financial sustainability challenge confronting the Benin Electricity Distribution Company (BEDC), one of eleven successor distribution companies (DisCos) carved from the defunct Power Holding Company of Nigeria (PHCN). Adopting a mixed-methods case study design, the research draws on a longitudinal dataset spanning 2015 to 2025, sourced from BEDC financial records, the Nigerian Electricity Regulatory Commission (NERC) tariff orders, the Nigeria Bulk Electricity Trading (NBET) payment data, the Central Bank of Nigeria (CBN) economic reports, and primary survey data. The study reveals that accumulated revenue shortfalls, infrastructure deterioration, tariff inadequacy, high aggregate technical, commercial, and collection (ATC&C) losses, and macroeconomic headwinds — including persistent naira devaluation and energy subsidy arrears — collectively constitute the structural underpinnings of BEDC’s liquidity distress. Evidence shows that BEDC’s collection efficiency improved from approximately 61% in 2015 to 74% in 2024, yet remained insufficient to achieve cost-reflective viability. Total metered transactions grew from an estimated 4.2 million in 2015 to over 11.8 million in 2024, while revenue remittance to NBET consistently fell short of contractual thresholds. Theoretically grounded in the Resource Dependency Theory and the Systems Thinking framework, the study prescribes a multi-pronged intervention encompassing smart metering deployment, multi-sided platform strategies, regulatory price path reform, and the adoption of Integrated Financial Management Systems. The findings contribute substantively to scholarship on energy economics, utility governance, and sustainable infrastructure financing in sub-Saharan Africa.
Keywords: BEDC, liquidity crisis, Nigerian electricity sector, DisCo, ATC&C losses, financial sustainability, smart metering, tariff reform, NERC, NBET, collection efficiency, energy subsidy, power sector privatisation.
