Anger, frustration over failed power privatisation: Consumers vent spleen on vendors, demand new deal

Anger, frustration over failed power privatisation: Consumers vent spleen on vendors, demand new deal


Adewale Sanyaolu

Stable Electric power, the artery and live wire of major industrial and economic revolutions in human history is a scare commodity in Nigeria.

In the midst of pervasive poverty, power shortages has become the Nigerian government’s albatross, that is threatening its efforts to stimulate growth and economic prosperity.

A recent by Fitch rating warned that power shortages may not allow Nigeria’s economy achieve the desired levels of growth in the years ahead.

Year after year and government after government, promises of raising the nation’s generating and distribution capacity beyond a paltry 4000 megawatts for its nearly 200million citizens have hit a brick wall despite trillions of Naira budget sunk into it.

For the global community, as well as other commentators within and outside the country, the Federal Government’s inability to provide stable power for its people nearly 60 years after political independence from Britain is indeed a national embarrassment that speaks volume about the quality of its leadership.

Beyond a pervasive corruption virus that has eaten deep into its political leadership, many who have followed the development trajectory of other developing and emerging economies across the globe believe the Federal Government also lacks adequate understanding of economics of stable electricity.

They however argue that the idea of making budgetary provisions to solve a problem without necessarily understanding the power value chain is one reason the Buhari administration as well as others before it is not getting it right.

Some agitated stakeholders who spoke to Daily Sun, said it remained regrettable that than five years after the privatisation of the sector, investors who took over the six generation companies and 11 Discos that emerged after the unbundling of the Power Holding Company of Nigeria are still struggling with the legacy problems in the sector.

Speaking in separate interviews, they lamented that most of the Federal Government ‘s interventions in the power sector have been in the wrong direction, hence its inability to create the right impact on consumers.

Only recently, the Chief of Staff to President Muhammadu Buhari , Mr Abba Kyari, held  a meeting with the Discos before the presidential inauguration on the vexed issue of government’s failure to provide stable power despite the electoral promises.Before then Kyari had held similar session, with representatives of the Ministry of Power, Works and Housing, the Bureau of Public Enterprises and the Nigeria Bulk Electricity Trading Plc all aimed at resolving the liquidity crisis in the sector and improving service delivery by the Discos.

Among the sector’s key headaches are the problems of gas supply shortages, limited distribution networks, limited transmission line capacity, huge metering gap, electricity theft, and high technical and commercial losses, among others.

So far, some the Federal Government’s interventions in the sector included a N37 billion grant for meter supply to Discos, recovery of $64.6 million electricity debt from international customers and a recent disclosure by the immediate past Minister of Power Works and Housing, Mr. Babatunde Fashola, on plan by the Federal Government to invest about N72 billion in the Discos.

Similarly, the Nigerian Electricity Regulatory Commission (NERC), recently put in place the Meter Asset Provider (MAP) scheme to bridge an estimated five million metering gap through the provision of meters by an independent investor, a scheme that rolled off on May 1 by some Discos with others taking off in due course.

But despite some of these initiatives by the Federal Government to boost power supply, the operators seemed to have failed woefully to deliver as power supply to homes and businesses has gone from bad to worse with consumers battling with huge estimated bills, old and fallen cables, dilapidated transformers and constant load rejection.

On June 9, 2019, report on power sector performance from the Advisory Power Team, Office of the Vice President indicated that the power sector lost an estimated N1,636,000,000 (One billion six hundred and thirty six million naira) due to constraints of insufficient gas supply, distribution and transmission infrastructure.

On the same day, 1,220.2 MW was not generated due to high frequency resulting from unavailability of distribution infrastructure.

But explaining these shortcomings, Director, Eko Electricity Distribution Company( Eko Disco), Mr.George Etomi, regretted the  piece meal intervention of government in the power sector warning it would not  create the desired impact since it is not long term and holistic. He further argued that government interference in tariff fixing remained a stumbling block to fresh investments, since  it does not have the required resources to fund the power sector alone.

Etomi noted that most of Federal Government’s interventions in the power sector have mostly been in the generation arm of the value chain, with little recently being done on the distribution arm.

He equally alluded to the N701 Power Sector Guarantee Fund, which, he said, was on the supply side and not for generation, adding that the N72 billion planned investment by the Federal Government in the Discos was yet to take effect, and cannot be counted as an intervention.

Etomi regretted that some of the promises made by the Federal Government prior to privatisation were never kept, citing a cost reflective tariff as an instance.

He said because government has decided to make tariff a political issue, it has failed to take the bold step by ensuring that what the Discos charge can take care of their cost of producing power, stressing that once the cost of production is more than the tariff, a liquidity gap that would not allow investors match service expectations would always be created.

‘‘By regulation, distribution companies are not allowed to charge above N29 per mega watt hour at the maximum and the cost we buy electricity is around N55 per mega watt hour. By this, you can see there is a shortfall. It is this shortfall that has led to liquidity gap which the government tries from time to time to bridge up

Government is also meant to review the Multi Year Tariff Order (MYTO) which is a minor review that ought to take care of inflation every six months while a major one takes place once in 10 years. Even though the MYTO review has been done since privatization about six years ago, it was yet to be implemented.

Foreign exchange has also gone up. Remember, when the assets were bought, exchange rate was N190 to $1 today, it is N360 to $1. And yet, we are replacing equipment and carrying out procurement with the new exchange rate without a review of the tariff to take care of this new rate. This and many more are some of the constraints.’’

He said energy theft and metering still remained major issues Discos are contending with, and that the failure of government to institute a cost reflective tariff informed the NERC’s decision to come up with MAP having realised that the Discos don’t have the required resources to provide meter to all consumers under the current regime.

Etomi, was however full of optimism that the MAP would eventually address the problems around metering, which abnitio was, and should be the responsibility of Discos if they have the right tariff in place.

For his part, Partner, Bloomfield Law, Mr. Ayodele Oni, backed Etomi’s position on cost reflective tariff , stressing it would checkmate energy theft .

He said most of the Federal Government’s interventions were on the generation side while many of the initiatives on the distribution side which included MAP and power franchising are recent developments.

‘‘We cannot be talking of initiatives when the pricing model is still lopsided. When the cost of producing a product is far more than the cost of selling same, then that is bad business model. Many of the Discos have said the price is not cost reflective.’’

Oni however took a swipe at some of the investors in the Discos, saying they are not necessarily the right people in terms of having the requisite knowledge about the power sector or the right capital to fund grid investment.

‘Our government always thinks that throwing monies at problems solves them which is not true. You must understand the nature of a problem, especially technical ones before you can throw money at such. The problem will continue to reoccur because you don’t know the root cause.’’

The energy expert decried the approach deployed by some of the investors in raising funds to acquire the power assets. According to him, about 70 percent of the money was sourced from local banks while some of their directors took 30 per cent personal loan, which shows clearly that they lack managerial skills.

Some consumers who spoke to Daily Sun in separate interviews said the Federal Government interventions in the Discos have not translated to gains for them.

Chairman, Olowogbowo Community Development Association (CDA), Lagos Island, Mr. Wole Ogunleke, lamented that no consumer within his CDA has been metered except for those who got pre-paid meters before privatisation of the power sector.

He accused Eko Disco of not complying with the regulations of NERC as 97 per cent of the consumers are still on estimated billing.

Ogunleke equally alluded to the fact that consumers who are using the old analogue meters are not exempted from estimated billing as the officials of EKEDC do not come to read the meters but just issue estimated bills at the end of the month.

He also lamented that the number of hours of daily electricity supply has also gone down drastically, thus compelling them to spend a fortune fueling generators, solar panels or inverters.

Ogunleke said EKEDC had failed in the discharge of its responsibilities to consumers as its response time to fault rectification is nothing to write home about.

‘‘We are compelled to procure materials by ourselves. We buy service cable; contribute money to buy fuses and all other things that the DISCO should ordinarily provide. We are tired and angry with this rip-off.”

Meanwhile the Chairman, Electricity Committee, Oke Arin CDA, Lagos Island, Mr Kayode Tella, said that the deployment of pre-paid meters to electricity consumers on Lagos Island has become an albatross for EKEDC as the majority of houses are without meters.

He said that the monthly progression of estimated bills has become a source of worry to consumers as various businesses are now on the brink of collapse.

Tella said NERC should match its talk with action by ensuring that any DISCO that fails to comply with its directive on metering would have its license withdrawn.

He lamented that a situation where DISCOs rip-off consumers through estimated billing should not be allowed to stand.

Chairman, Epe Local Government Area, Mr Adesanya Adedoyin, said that Epe seems to be the worst hit as the entire local government has suffered years of lack of power supply until recently when an upgrade was done.

Despite the upgrade, he said that the situation appears not to have had an appreciable effect as the communities still suffer power outage for several days.

Adedoyin disclosed that the majority of houses in Epe are without meters, but are continually slammed with estimated billing.

In his reaction, a resident in Ijeshatedo, Surulere, who simply identified himself as Mr Olufemi, lamented the harrowing experience he has been going through in the hands of EKEDC.

He said his electricity bill has ballooned to over N250,000 as a result of estimated billing, adding that all efforts to compel the marketer to get him a pre-paid meter has proved abortive.

‘‘On a monthly basis I am given a bill of over N15,000, even when I am not producing anything. My house is a residential building and not commercial. I have called on them severally to install a meter for me so that I can be liberated from the outrageous billing system, but that seems not to be working,’’ Olufemi said.

As a community, we have resolved to take the battle to their head office to register our displeasure and compel them to meter us after which if nothing is done, we will desist from paying electricity bill,’’ he warned.

The post Anger, frustration over failed power privatisation: Consumers vent spleen on vendors, demand new deal appeared first on The Sun Nigeria.



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