A Review of the Nigerian Energy Industry

Electricity consumers paying for investors’ losses — Source

ERERA Power lines13 April 2014, Lagos – Electricity consumers are now paying for the technical losses being suffered by new power investors, investigation has revealed.

A senior official in one of the electricity distribution companies, who asked not to be named, told Sunday PUNCH that over 20 per cent of the generated power sent to the distribution companies is lost to technical deficit.

The country currently generates about 3,500 megawatts.

The Federal Government handed over 11 distribution companies to private investors on November 1, 2013. About four months after, most the new owners have yet to inject fresh funds into the network to improve their distribution capacity.

According to the source, the Discos are battling with technical losses, which is why they cannot distribute every megawatt received from the Transmission Company of Nigeria.

“The major reason behind technical losses is over age, weak and under-sized aluminium conductors (wires). We pass the technical losses to customers. This is the secret of the business that I am not supposed to be telling you,” the source said.

The source said, “With the exception of the Ikeja Electricity Distribution Company, none of the Discos has invested a single kobo into the business since they took over the assets over four months ago.

“They are not deploying infrastructure and that is why there has been no improvement in power distribution. About 20 per cent of the power sent to the Discos is not accounted for due to technical losses.”

The Country President, Schneider Electric Nigeria Limited, an Original Equipment Manufacturer supplying the country’s power distribution and transmission firms, Mr. Marcel Hochet, had in an interview with our correspondent, rated the capacity of the distribution companies low.

He noted that the Discos lacked the capacity to distribute the available power.

He pointed to the fact that the Discos were losing technical deficit by saying they did not know how much power they received from the TCN and how much power they actually distribute.

The Schneider Electric boss also explained that the Discos lacked the capacity to efficiently bill their customers and recover payment for electricity supplied.

He said, “The Discos need to optimise their assets. We have to make sure they are able to distribute what is available, which is about 3,500MW. They (Discos) don’t know the megawatts of energy they receive and what they deliver to their customers. They also need to be able to bill their consumers correctly.”

The Director-General, Bureau of Public Enterprises, Mr. Benjamin Dikki, had said technical and commercial losses represented a serious challenge affecting the power sector.

He said the Federal Government had made investors reduce losses in the system as well as ensure a reduction in the number of customer interruptions due to network faults, among others.

He said, “The investment to be made by the Discos must cover the commitments they have all made in the following areas: metering (about six million meters), health, safety and environmental practices; reduction in the number of customer interruptions due to network faults; new customer connections and network expansion; and improving customer services and complaints handling procedures.”

On why technical losses had continued even after private investors took over the power Discos, the source argued that the Discos  had been battling with lack of funds to scale up distribution networks, inject new transformers, replace several kilometres of aluminium conductors and acquire pre-paid meters for a robust metering scheme.

The source added that the investors had signed an undertaking in their bid documents to replace at least 13 kilometres of aluminium conductors in the first six month of operations, but decried that none of these critical electricity distribution wires had been replaced, thus causing huge technical losses.

– The Punch

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