A Review of the Nigerian Energy Industry

Consumers paying for power firms’ commercial losses –Nebo

22 January 2015, Lagos – The Minister of Power, Prof. Chinedu Nebo, has attributed the unusually high bills being sent to electricity consumers who are without meters to the huge commercial losses being incurred by the distribution companies.

Power4He said while the technical losses had been significantly reduced, the commercial losses remained huge as many Nigerians were not paying for power supply to the electricity distribution firms.

Nebo, who spoke to journalists in Lagos on Wednesday, said the quantum of the commercial losses had necessitated the decision by the government to provide one million prepaid meters.

“When the tariffs were designed, they were not actually effectively cost-reflective. So, there is no way that the system under private governance will be able to raise enough funds to continue to stay afloat. So that’s part of the problem,” he said.

The minister added that the technical losses, from generation to transmission, transmission to distribution, and from distribution to supply, were partly as a result of faulty infrastructure.

“But then, the more serious losses are commercial losses. We have reduced technical losses substantially. But commercially, do you know that many Nigerians get power and they don’t pay for it? The Discos are not collecting enough money,” Nebo said.

He described the estimated billing system that many of the Discos were doing as “amorphous averaging that has nothing to do with technical and scientific reality,” stressing that this had necessitated the need to provide prepaid meters to all customers.

The minister said, “That’s why we are moving to prepaid meters. Less than 50 per cent of Nigerians are metered. How do you collect your money? The commercial losses are huge and unfortunately somebody has to pay for it. And unfortunately again, it is those who are paying that are penalised to pay for those who are not paying.

“That’s why the regulator, Nigerian Electricity Regulatory Commission, is working very hard to make sure that the companies provide meters. But the government said instead of waiting for you to start, let us start by giving you up to one million meters so that you can jump on that and begin to spread meters to the people.”

Nebo said it was because of the commercial losses affecting the Discos’ revenue that the Central Bank of Nigeria came up with the N213bn facility “to smoothen the whole thing, stabilise the market, infuse a little more capital and allow these Discos to pay over a 10-year period to make sure that the market is solvent.”

The minister said the Federal Government was working hard to improve power supply in the country, adding, however, that vandalism of key infrastructure was taking a toll on its efforts.

“We do have a serious problem with vandalism. That’s why we are synergising with the office of the National Security Adviser, the army, the navy and the Nigeria Security and Civil Defence Corps,” he said.



– The Punch

In this article

Join the Conversation