Fashola: Taking DISCOs to task on supply, metering
It was some moments of home truth last week at the 11th Monthly Stakeholders’ Meeting of the energy sector, held at the Ikeja West Transmission Station, Ipaja-Ayobo, Lagos State, where the Minister of Power, Works and Housing, Mr. Babatunde Fashola, warned power firms in the country to deliver better services to electricity consumers or exit the industry.
Giving the charge, Fashola said in spite of the challenges facing operators in the sector, “you will have to sacrifice, perhaps, more than what you have done, because as pioneers, you will carry some burden, but I am optimistic that it will get better; I am optimistic that we can win together and we can win for the Nigerian people.”
The Minister’s hard talk wasn’t misplaced, rather it was borne out of the frustration of millions of Nigerians across the country over the worsening power situation since the past three years that the private sector took over the generation and distribution of electricity in the country.
From Port Harcourt to Kebbi, Kano to Oshogbo, Sapele to Umuahia, Lagos to Sokoto and Akure to Abakiliki, the story is the same: No power while consumers pay for darkness. In Aguda area of Surulere, Lagos, a resident, Mrs. Toyin Awolowo, lamented how she celebrated the Yuletide in darkness.
“It was a hellish experience. So many things went bad, the light did not blink for days and the refrigerator all stocked for the season was messed up. To make matters worse, the generating set took a wrong time to pack up with the house filled with guests,” she said.
Awolowo’s pessimism may not be an exaggeration, after all, because information even from official quarters suggests that the power situation in the country, especially in 2016, was precarious.
For instance, Transmission Company of Nigeria’s (TCN) generation report disclosed that the nation witnessed total system collapse on June 28, 2016 and partial collapse on July 10. Overall, in 2016, the power grid collapsed 22 times – 16 total and five partial – up from 13 and 10 in 2014 and 2015 respectively.
The stakeholders meeting, which was chaired by Fashola, was jointly hosted by Ikeja Electric and Egbin Power firms and it focused on identifying and finding practical solutions to critical issues facing the country’s electricity supply industry.
Among the resolutions reached are that customer service should be the focus of the power sector. The Minister encouraged each operator and service provider to improve the user experience of its customers by improving metering and reducing estimated billing. The meeting noted that the family affected by the electrical accident at Oke-Ira in Ogba, Lagos has been compensated by Ikeja Electric. All operators agreed to prioritise safety in all their undertakings to avoid future accidents.
Three years after the privatisation, Nigerians have not seen the promised benefits of the private sector take-over of the distribution and generation of power. Amid the appalling power supply, many consumers are disturbed by inadequate meters and the crazy billing system popularly known as estimated bills.
According to Amos Simon, chairman of Palmgrove Housing Estate, Lagos, the objective of privatising the power sector has been subverted by the new owners. He believed that the new power sector operators are only interested in making money through crazy bills than metering electricity consumers.
He expressed regret that the Credit Advance Payment for Metering Implementation (CAPMI), a metering intervention programme introduced in 2014 by the Nigeria Electricity Regulatory Commission (NERC), has been stopped by the new operators.
The same sentiment is expressed by the chairman of Prestige Printing Press, Somolu, Lagos, Mr. Tajudeen Bamidele, who stated that NERC should begin to sanction DISCOs, which fail to provide meters for customers who had paid for them under the CAPMI scheme.
According to him, metering is important to the success of the privatisation of the electricity industry, particularly as it is to address the problem of estimated billing and protect the interests of the DISCOs against revenue losses.
“It is however imperative for the DISCOs to increase public awareness on metering through aggressive campaigns so that more willing customers can be encouraged. Electricity consumers are not happy about the outrageous bills received from electricity companies in spite of poor power supply since November 2015,” he said.
But making a case for the distribution firms, the power sector investors under the aegis of Association of Nigerian Electricity Distributors (ANED), said they may be compelled to declare force majeure to protect their investments. Force majeure refers to an irresistible force or unforeseen event beyond the control of an organisation making it materially impossible to fulfill an obligation.
Explaining some of the various agreements yet to be honoured by the Federal Government, ANED Executive Director, Research and Advocacy, Sunday Oduntan, said the two parties agreed that with base loss studies completed, there should be cost reflective tariffs from day one as specified under the performance agreement.
“However, this never happened as R2 customer class was politically frozen and collection losses removed in 2015. Consequently, sculpting or under-recovery of cost will result in N164 billion revenue shortfall for the period of 2016 through 2018, just as delay in reflecting costs means a growing increase in deficits.”
While certain conditions make their job quite challenging, the Electricity Distribution Companies (DISCOs) are now devising new ways to make electricity more available and, in the long run, improve their business prospects.
Investigations reveal that government indebtedness is one of the issues the DISCOs are grappling with. For instance, federal government ministries, departments, and agencies (MDAs) owe the DISCOs up to N100 billion.
Another problem facing the private electricity companies is the imbalance caused by the tariff system, which the government set for DISCOs in February 2016. The NERC fixed the maximum charges at N28.05/KW, whereas the price point at which the DISCOs claim they can operate effectively is about N54/KW.
“This has created a tremendous shortfall in the system, which is up to N500 billion” said a DISCO executive up north who pleaded for anonymity. “If the regulators don’t do something urgently about the situation, they may cause a reversal of the progress made so far,” he said.
In the meantime, some distribution companies say they are thinking creatively so as to increase power supply to their districts. Better services, they reckon, should boost customer confidence and show government that the DISCOs are playing their part to help advance the economy through the supply of electricity to businesses and residences.
For instance, Eko Electricity Distribution Company (EKEDC) has two direct partnerships it recently signed for generating power directly. At the moment, this bilateral arrangement generates 140MW of embedded power, which Eko DISCO distributes directly to its customers.
The agreement with Egbin Power Plc generates 100MW, while the one with Paras Energy & Natural Resources Development Limited, an international corporation with a plant in Nigeria, generates an additional 40MW. Sources within Eko DISCO said the company plans to create more opportunities for embedded energy, which is in line with the approach of the federal ministry of power on incremental power.
Already, the results are beginning to show as residents and business owners in its coverage areas are lauding improved power supply in Ajah, Lekki, VGC, Banana Island, and nearby neighbourhoods, experiencing as much as 20 hours of electricity supply daily.
According to James Babarinde, a lawyer whose office is in Banana Island, “it is a reprieve, not having to fuel the generating set for weeks is fantastic. You can’t even begin to imagine how this makes us feel.”
Another resident, Chioma Nwogwugwu, said she hoped Eko Disco would keep the power supply constant, even in its present form. “I don’t even mind the 20 hours. That’s a lot better than where we are coming from. I don’t know how they were able to do this, but it is all good and we will be watching.”
This impressive gain made in the last few week of 2016 has, however, been short lived as EKEDC on Monday apologised to its numerous consumers over the prolonged power outage currently being experienced, which has led to a drop in the 20 hours supply to its coverage areas.
A statement by the General Manager, Corporate Communications of the company, Mr. Godwin Idemudia, said the outage is due to a system collapse from the National Grid, affecting the entire country, as confirmed by the National Control Centre, Oshogbo.
The general manager said the system collapsed on Sunday evening at about 7:30p.m. He said repairs were being carried out to bring the system back on line and restore power, adding that the Ikeja West line, which comprised of Agbara and Akoka, had gradually been restored.
Meanwhile, residents of the Oke Afa undertaking of Ikeja Electricity Company are short of words over the zero supply situations in their neighborhood. Even the miserly supply of 30 minutes out of 24 hours has gone down to zero. Complaints mailed to communications department of the DISCO are not replied.Majority of the consumers are calling for a review of the privatization exercise.
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