A Review of the Nigerian Energy Industry

Litigations force govt to renew pre-privatisation meter contracts

10 February 2015, Abuja – The Federal Government is being forced to revalidate contracts entered into by the defunct Power Holding Company of Nigeria, PHCN, for the supply of electricity metres to Nigerians before the privatisation of the generation and distribution segments of the power sector.

prepaid-metersThe move became necessary following many litigation cases between the Federal Government and meter dealers that have trailed the country’s electricity metering programme more than one year after the companies were bought over by private investors.

The Permanent Secretary, Ministry of Power, Dr. Godknows Igali, said this in Lagos last week at the opening of the regional workshop on metering, billing and loss reduction for distribution utilities organised by the National Power Training Institute of Nigeria, NAPTIN.

Aside the 750,000 meter supply contracts, which had been looked into by government already, Igali said there were other contracts that were being reassessed to ascertain their validity.

Before the privatisation of the power distribution arm, he confirmed that over three million meters were tied to existing meter supply contracts, of which a good number of the meters have been stocked within the country in anticipation of a favourable market condition that would warrant their release.

He said, “Before privatisation, we had over 750,000 contracts for metre supply. These are the contracts we have looked into. Since privatisation, there have been many cases of litigation between government and dealers. The President had to come in, saying the cases should be taken out of court.”

On the value of the contracts, the Permanent Secretary said, “We are still working with the Ministry and the regulator on the details.”

Igali stated that the Transition Electricity Market pegged for January 1 this year had already started, adding that some contracts have been entered by stakeholders to maximise the potential of the market.

He said the Nigerian Electricity Regulation Commission, NERC, was already operating a transition market, which allows government to watch the market from afar and not to interfere at any given opportunity.

Earlier, the Director-General, NAPTIN, Mr. Reuben Okeke, described the workshop as a Power Africa Initiative of President Barrack Obama of the United States of America.

He said the quest to find a solution to Africa’s search for reliable and effective power distribution has gone beyond not only geographical barriers, but also linguistic.

He said the greatest challenge that the present utilities face is huge aggregate technical, commercial and collection, ATC&C losses, adding that, “You cannot reduce any losses and increase revenue unless the distribution network is improved upon in all its ramifications.

“In the product electricity, if you do not have a neat network, efficient equipment like distribution transformers, loyal marketers in particular, credible metres and effective billing system, good customer service ATC&C losses will be a mirage.”

Okeke said if distribution companies succeed in reducing the losses by 10 per cent, they would have full return on all their investments, even with the present level of generation and wheeling capacity of the Transmission Company of Nigeria.



– Vanguard

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