26 January 2017, Abuja – Consumers are embittered by the poor electricity supply and unfair treatment by power companies, while the firms have continued to trade blame, OKECHUKWU NNODIM writes
Power consumers in Nigeria are unhappy with the abysmal supply of electricity from the distribution and generation companies across the country. The latest data from the Power System Operator on Wednesday showed that electricity generation was still low as the country generated 2,815.1 megawatts on Tuesday, a development that resulted in outages in many parts of Nigeria.
Although the Federal Government, through the Nigerian National Petroleum Corporation, has ensured that the cost of Premium Motor Spirit, popularly known as petrol, remains N145 per litre, findings have shown that the complete deregulation of other white products and the instability of the naira have led to an astronomical rise in the cost of diesel and kerosene.
Figures from the National Bureau of Statistics showed that the average monthly landing costs of a litre of kerosene, diesel and petrol increased from N60.13, N58.33 and N66.87 in January 2016 to N144.05, N142.82 and N136.71 in December 2016, respectively.
Aside from the PMS, the increase in the landing costs of the commodities has resulted in a hike in the pump prices of the products, a development that has made it more difficult for small and large-scale electricity users to fuel their individual generators.
Chinedu Ogbue, an operator of a barbing saloon in Kubwa, Abuja, said the poor power situation in the country had almost crippled his small business.
He said, “As a graduate of the Anambra State University, I decided to run this barbing saloon after I couldn’t find a job. Aside from the fact that I’m given outrageous estimated electricity bills, the worst of it now is that we hardly get power to run our business.
“I depend largely on electricity from my generator because it is painful and annoying when you consider the kind of suffering one goes through in the hands of these power companies. Their inefficiency had almost crumbled this business, if not that we have relied on generators.”
The Secretary, National Electricity Consumers Advocacy Network, Mr. Obong Eko, told our correspondent that a lot of power users were suffering as a result of the poor supply to households and industries.
He said, “When the sector was privatised in November 2013 and the electricity distribution and generation companies were handed over to private investors, many Nigerians thought that within some few months, things would improve.
“But it is more than three years since the companies were handed over to private operators and we are still complaining and suffering. This is despite the fact that consumers pay more for less supply of electricity. When is this suffering going to end?”
Also speaking on the poor power situation in the country, the President, Nigerian Society of Engineers, Mr. Otis Anyaeji, stated that engineers were not comfortable with the service being provided by the power generation and distribution companies.
According to him, engineers have observed that the poor power generation and supply across the country was because of the inability of electricity firms to invest significantly in revamping the companies they bought in November 2013.
This, he said, had warranted poor service delivery from the power generation and distribution companies as well as several transmission bottlenecks.
Anyaeji said, “The market is still facing numerous challenges, ranging from the inability of the generating stations and distributing companies to invest in the system and increase capacities; inadequate metering of consumers; several transmission bottlenecks; and poor quality of services.”
The NSE president further stated that the lack of access to reliable power supply by rural dwellers had adversely affected the economic activities in the affected areas.
This, he said, had inhibited the establishment of Small and Medium Enterprises, despite their high potential economic activities, thereby escalating poverty levels of the society.
Similarly, the Grand Patron, Progressives Solidarity Forum, a community support group, Dr. Ibrahim Emokpaire, told our correspondent that the present government should have reviewed the licences of the investors who bought the power firms.
According to him, the inability of the firms to meet their mandates three years after they took over the country’s power sector has clearly shown that the companies were not prepared enough before acquiring the facilities.
Emokpaire said, “From the very first day that this government came into office, I think what they should have done was to review the licences of the power companies. This is because the licences were given to the cronies of government officials in power at the time of the privatisation.
“This is because majority of the power companies do not have the financial, intellectual and technical capacities to run the utilities they bought. Virtually all of them rushed to the banks to borrow money. They were not qualified because they don’t have the expertise and capacity, which is why we are suffering this much today.”
Power firms trade blame
The power sector since it was privatised has been characterised by several instabilities. Recently, the industry witnessed system collapses, while many power stations were non-functional.
Operators explained that the frequency of system collapses in the sector in recent times had resulted in the prolonged blackout in many locations across the country.
Findings by our correspondent had shown that between January 15 and January 19, 2017, the country recorded two cases of total system collapses and three partial ones.
Specifically, the total collapse of the power grid occurred on January 15 and 19, while on January 16 and 18, Nigeria’s electricity generation crashed to 108 megawatts and 49.2MW, respectively. The average electricity generation for Nigeria has always been around 3,500MW.
However, none of the power operators in the country is ready to receive any blame for the abysmal performance of the sector.
The electricity distribution and generation companies, the Transmission Company of Nigeria, the Nigeria Bulk Electricity Trading Plc, operators of the National Integrated Power Projects, gas suppliers and the Nigerian Electricity Regulatory Commission have all passed the blame around as to why power supply in Nigeria is poor.
The Gencos and Discos recently complained that their operations were being stifled as a result of the huge debt of over N400bn being owed them.
While the Gencos’ debt was put at over N300bn, the Discos complained of being owed over N100bn by their various customers.
Aside from the vandalism of gas pipelines and its impact on power generation, the power firms argued that the huge debt being owed them was adversely affecting their operations.
They argued that they lacked the funding required to deliver optimally, including the purchase of equipment, spare parts, as well as the facilities needed by consumers to enjoy power supply.
“The debt is over N300bn that Gencos are being owed. If the situation is not checked, there will (continue to) be blackout… We can’t pay contractors; most of the machines are packing up,” the Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, recently declared.
But other operators blamed the Discos for the drastic illiquidity in the power market as they argued that the distribution companies were not doing enough with respect to revenue collection from power consumers.
This, according to them, has stalled considerable progress in the power sector and has warranted its poor performance.
Meanwhile, officials at NBET stated that regardless of the fact that the organisation was established to support the sector financially, the bulk electricity trader would not use taxpayers’ money to settle the huge debt owed the Gencos by the Discos.
Aside from NBET, the Niger Delta Power Holding Company recently complained of paucity of funds and that this was also affecting its service delivery.
The NDPHC manages Nigeria’s NIPPs and supplies power from the plants to the national electricity grid.
The Managing Director/Chief Executive Officer, NDPHC, Mr. Chiedu Ugbo, stated that the indebtedness to his company by the market was running into hundreds of billions of naira.
He also urged the Discos to make remittances to the NBET so that power producers could pay gas suppliers in order to ensure adequate electricity generation across the country.
He stated that the huge debt to the NDPHC and the power market was primarily because the Discos were not remitting more than 50 per cent of what they should remit to the bulk trader for onward payment to producers of electricity and gas suppliers.
Also, the President, Nigerian Gas Association and Managing Director, Frontier Oil Limited, Mr. Dada Thomas, in an exclusive interview with our correspondent, blamed the Discos for the illiquidity being experienced in the power sector, adding that this was counter-productive to the industry as a whole.
He said the distribution companies were possibly remitting below 30 per cent, a development that had made it impossible for NBET to settle the Gencos, adding that this had hindered the flow of funds to gas producers.
Thomas said, “The sector is not generating enough money. So what we have today is that the Discos are collecting possibly only about 20 per cent of what they should be collecting. And therefore there is nobody coming up to pay the Gencos and the Gencos are not paying the gas operators.”
Still on the issue of poor remittance, the Acting Managing Director, Market Operator, an arm of the TCN, Mr. Moshood Saleeman, told journalists in Abuja that the distribution companies should be disciplined for the power market to thrive beyond its present state.
But the Discos had argued that aside from the fact that the current Multi Year Tariff Order put together by the Nigerian Electricity Regulatory Commission was not cost reflective enough, the refusal of ministries, departments and agencies of government to settle their electricity bills was also hampering their ability to make the required remittances.
The Chief Executive Officer, Association of National Electricity Distributors, the umbrella body for the Discos, Mr. Azu Obiaya, told our correspondent that to avert an increase in electricity tariff payable by residential consumers in the near future, the Federal Government must intervene in the sector.
He said that the government’s intervention was vital in order to address the N809bn revenue shortfall in the industry.
Obiaya insisted that the intervention could come in form of subsidy to consumers, access to foreign exchange by the companies, as well commercially reasonable financing for the Discos.
He said that the Discos were not willing and could not impose any increased tariff on consumers, but maintained that to avoid a situation where the consumers would have to pay as high as N105 per kilowatt-hour as energy charge, the Federal Government must do something.
Currently, the average rate being paid as energy charge by residential consumers across the country is N22.8/KWH, but this may increase if nothing is done to address the N809bn revenue shortfall in the power sector, according to the Discos.
A former President of the Association of National Accountants of Nigeria, Dr. Sam Nzekwe, also called for the intervention of the Federal Government in order to avert an imminent collapse of the power sector.
“With the way things are going right now in the power sector, if the government fails to intervene, the whole system may crash one day,” he said.
But the requests for an intervention by the Federal Government in addressing the about N1tn shortfall in the power industry may not be granted as the Minister of Power, Works and Housing, Babatunde Fashola, has stated that the government will not provide monetary assistance to operators in the sector.
He said the Federal Government had earlier provided N213bn as subsidy to operators in the sector and would not do so again.
Fashola, while speaking at a function in Abuja, explained that the government considered the N213bn Nigeria Electricity Market Stabilisation Fund provided by the Central Bank of Nigeria as enough subsidy for the sector.
He stated that the NEMSF from the CBN was a low-interest loan, which operators who were comfortable with its terms had accessed and used to upgrade their assets and services.
The minister noted that he was unsure about the repeated request by some operators in the market for government subsidy.