cases where power purchases are not cost-reflective requires far more data collection and detailed examination of the data collected, and is beyond the scope of this study.

- If the seller is a state-owned generation or transmission utility, the seller’s financial statements are examined to identify expenditures on loan repayments to isolate capex. The distribution company’s opex is adjusted accordingly to avoid double counting capex costs, assuming that capex of the upstream company is built into the purchase price. In cases where the financial statements were not available for upstream state-owned sellers (Republic of Congo, Ghana, and Mozambique), power purchase costs were assumed to be fully cost-reflective including capex costs, and to avoid double counting calculated capex estimates exclude the assets of the companies with missing information.

- Where the main utility is selling to other utilities performing distribution activities to end-users including exports, such as those in group 4 in figure 1, the sales to these other utilities are treated as end-user sales for the main utility.

- Where there is horizontal unbundling in distribution as well as vertical unbundling, as in Ghana and Uganda, the calculated capex is scaled to the share of the total electricity generated or transmitted that is purchased by the distribution company in question. For Nigeria, this study did not follow this procedure and instead used information from the Multi-Year Tariff Order (see below for more detail).

Treating all payments to IPPs or SPVs for power purchase as opex means that opex and capex are not comparable across countries. As an (extreme) illustrative example, consider two utilities, both of which rely 100 percent on hydropower generation. The first utility is vertically integrated, so that capex is high and opex is low. The second utility is a distribution company which buys all of its electricity from SPVs running hydropower plants assumed to be operating on a commercial basis. The second utility would then have much higher opex and much smaller capex than the first.

Lastly, one of the questions this study asks is whether the power system in a given country is generating enough revenue first to pay for opex, and second how much of the capex needed can be covered. The definitions of capex and opex would be different when considered in the context of a given utility. For a utility, all purchases—whether fuels and other consumables or electricity—are opex. Being able to pay for opex is the first priority, more urgent than generating sufficient income to pay for new replacement values of assets owned by other utilities. For the power system, however, being able to cover capex is important for its financial health, and it would not be correct for this purpose to regard power purchases as consisting entirely of opex. The only power purchase that falls under opex in this context is purchase of imported electricity.

# Special case of Nigeria

Nigeria has recently unbundled the power sector and all distribution companies have 60-percent private ownership. Financial statements are not yet available. For these reasons, alternative sources of data were used:

- Actual revenues from domestic sales were provided by the World Bank’s energy team working in Nigeria.

- Revenues from power exports were taken from the 2015 model for the Multi-Year Tariff Order (MYTO) and assumed to have a 100-percent collection rate.

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