26 August 2017, Sweetcrude, Lagos — Engineer Oladele Amoda has garnered enough experiences in Nigeria’s power sector to sit atop as the 6th Managing Director and Chief Executive Officer of the Eko Electricity Distribution Company, EKEDC.
Having worked in all arms of the sector, Amoda shines as the last man standing among his peers who began their careers in the defunct National Electric Power Authority, NEPA.
Since his career kick started in 1983, he has gone from one state of the country to the other, including to the eastern part, transforming the power sector with his wealth of experience.
SweetcrudeReports’ OpeOluwani Akintayo, took the CEO on various issues in the power sector.
Excerpt:
So what is the difference between privatization and the power sector under government?
The difference is huge. Now, we can take decisions without having to wait for the government’s bureaucratic process. That time, anything we wanted to do, we had to go to Abuja. We had to get approval on any little thing. The procurement process was also rigorous. Sometimes, most companies before they were through with their procurements, it would already be too late to execute the projects and you have to account for the money which will be sent back to the national account.
But now, sometimes, the owners will even mobilise funds to keep us in operation. That’s why you see that the liquidity loss is much in the sector which the government has decided to sort out. The reason is that there is no cost reflective tariff. Our costs of delivering power to the people are well above the tariffs charged. We spend like N100 and we charge like N50, yet the government said we cannot increase tariff. You can see that month after month, we incur debt which has affected our quality of services and we have been unable to raise funds from the banks.
What are the challenges in the sector now?
They are so many now. After hand over, what was handed over was a dilapidated structure and network. More than 70 percent of customers did not have functional meters and services were very poor. We also faced a lot of apathy from customers because what we met on the ground could not survive services to customers. So because all our networks had scattered, and not working, many transformers were out of the circuit so, our investors immediately secured loans from the bank to buy transformers, meters and all the necessary materials we needed to at least bring back the collapsing network.
The federal government said it underestimated the number of households needing meters upon privatisation to 6 million. What was your own calculation after privatisation?
When you say customers, these are the registered ones. There are lots of unregistered customers using the light without paying. So right now, we are doing customers enumeration, going from house to house to see those not on our records.
As at when government estimated, it was 6 million. Now, it is about 8 million registered customers nationwide. Remember I told you that as at that time, we did not get enough funds for anything. Especially in the last year 2013, there was no allocation for the power sector.
EKEDC started with about 300, 000 customers. Now it has increased to about 500, 000, out of which 65% have been metered.
Recently, we heard that NERC will start reviewing the Multi Year Tariff Order, MYTO, monthly or quarterly. Does that mean that tariff will increase monthly?
No. The thing is that we do a review once in a year and minor review every six months. In conjunction with NERC, we look at the economic indices- what has changed? Maybe inflation has gone up or down, generation availability, distribution, and others. Then they decide whether to adjust the tariff up or down.
The last review was two years ago when it was decided that we increase tariff, however, it has not been implemented because the government has not given go-ahead.
Does that mean that nothing good has happened since privatisation?
We are gradually recovering those debt being accrued because government and NERC are now taking cognizance of them. They know that we are incurring debt on monthly basis due to lack of tariff and government is coming up with palliative measures. Like the intervention funds from the CBN, and the power sector assurance programme intervention to gencos. And they are also looking at providing interventions for all the arms of the sector.
Right now, it is close to a trillion naira that we have accrued in terms of debt nationally which government is trying to do something about.
There is an argument that the N701billion first released for the sector did not produce anything meaningful, and that the government has again, approved N39 billion.
The first intervention was N213 billion to the discos for the gaps in operations in the sector from immediately after privatisation up to sometime in 2015. But the money that was due to the disco, was turned into a loan which the repayment plan was spread over 10 years. Right now, out of the N213 billion, only about N60 has been disbursed to beneficiaries because of conditions each Disco need to meet. Those that have not met the conditions are yet to be given. EKEDC has accessed the funds, and we have done a lot with it. We were able to reinforce our network, repair dilapidated Transformers and networks, we bought several transformers, and meters. As I speak, we are metering although not in a very large quantity. Our plan was to cover our customers within three years. And that would have been about 600, 000 customers at the cost of about N50 billion. You can see that if everything had gone the way we planned it, our customers would have been very happy with us because we would have covered everybody that required meters. We received about N5billion. Also, we are investing part of the money on technology. We want to automate our network such that from here, we can monitor all the lines, transformers, meters within our networks.
We also improved on our channels of payment. We made it easy for our customers to pay leisurely without going to the bank or cue up at cash offices. You can pay through your phone, the internet, the internet, POS, and ATMs. They can also recharge their prepaid meters and pay their analogue bills from the comfort of their homes.
How is the company handling the issue of theft and vandalism?
Vandalism has been one of the issues we are battling. People go to our substations and vandalise cables, damage transformers, looking for transformer oil. In some cases, those illiterate ones think there is mercury in the transformer and destroy it, and we are losing a lot of money. Just yesterday, somebody was electrocuted while trying to vandalise our cable. Last week, a Yaba court jailed another vandal for six months.
Apart from vandals, we have bypasses. When you look at all these losses, the cost is enormous. What we lose every month in terms of vandalism and theft is more than N100million.
We learned that ANED is about to declare force majeure on the eligible customer recently declared by Fashola. Does it mean that the Discos are not happy with the declaration?
During the privatization, there was an agreement that the discos will have exclusivity in service to generate revenue and pay the cost of energy we receive from the grid. Now if part of the exclusivity is being taken off then, there will be a problem. However, an arrangement is being worked out on how it will benefit both the disco and those that will benefit from the eligible customer regime. The eligible customer regime was declared because we are not able to get enough power from the grid to meet our demands here. Our demand is about 2000 megawatts but we get just 300-400MW. So they are looking for ways of generating their own power to sell to people that need them. It is a complex thing and we are working out something. The government meant well so that we can have incremental power. But in Eko, I am not sure we don’t have issues surrounding that because, in some areas like Lekki, Ikoyi, Surulere, they already get 24 hours supply once we have supply from the grid. Once the government is able to maintain the capacity to wheel power from the grid then people will have more light. Even the 6,600MW now wheeled is not enough because what generation companies can produce now is up to 12, 000 MW. If they can generate up to 12, 000MW and we have enough capacity to wheel the power then, the company will get enough allocations to go round.
What about Govt’s 2016 fast power scheme?
Those ones still need gas to power them. It can be moved to areas with enough access to gas. Here, what we do is a source of embedded power where we encourage private people to generate their power so that we can boost our power. We have about 10 companies ready to do that and we will commission it soon. I will say that both government, regulators, and operators are working together to find a lasting solution to power problems. Very soon you will see the effect of these collaborations and our customers will be happy for it.
Recently, we heard customers will start paying for meters after NERC had made us believe we were not supposed to pay for them. How do we merge these controversies?
Initially, customers are not supposed to pay for it but due to liquidity, CAPMI was introduced for customers that cannot wait for the discos plan. There is no way we can meter everybody at once. We have our metering plan spread within three years. So customers unable to wait could pay for meters which will be installed immediately. Disco will then pay back to customers on monthly basis. But some disco collect money and did not meter customers who complained directly to the minister. It was then directed that the scheme is stopped.
But because of the issue of liquidity that has slowed down the disco from raising enough capital to buy meters, they said we can go back to the scheme but it must be done in such a way that whenever customers pay for meters, they must get them within an agreed time. But the modality is being worked out by the NERC. It’s likely that we will get a third party that will supply the meter and the customers will pay to the third party in agreement with the Disco. It will be a three-way agreement. This is to ensure that when money is taken, the meter gets installed.
So it is coming back but the modality is being worked out so that anybody that pays for meters will get it within 30 days or even less. Assuming there is a cost reflexive tariff, customers will get free meters. That is not to say there are no more free meters. We are still metering for free. Go to places like Yaba, Festac Town, Ajijegidun in Ikate, Dolphin estate, we are giving free meters, but customers that cannot wait should apply for CAPMI.
There was a recent controversy in Festac town between your workers and a particular block at 312 Road. Then we heard NERC asked that you meter all the flats in that block. Have you metered them?
I don‘t know about it. We merely read the news on pages of newspapers. We did not receive any memo from NERC to meter them. But we are metering Festac already. You know Festac is large- it includes satellite and others and we can’t meter everybody at once. There was an area who barred us from coming to them until we meter all of them and guarantee 24 hours supply. It pays us when people have meters because we go through a rigorous process to apportion the bills monthly. We use a whole day looking at the availability of supply in location, feeders, transformers before we bill. And in an attempt not to overbill customers, we under bill them in most cases yet, they will still complain even if you give them zero Naira to pay.
How true is the accusation of over-invoicing by discos against gencos?
It is the billing system between Genco and gas producers. We deal directly with Nigerian Bulk Electricity Trading, NBET and not directly with gencos. Part of our transactions is dollar-denominated. So their bills fluctuate with the prevailing foreign exchange rates. They charge us based on N305 official rate but we still charge our customers based on N197 old rate. So you can see the difference. If you convert the money to naira, the difference is much. They use the foreign exchange figure to sell to us while we sell with fixed exchange which was N197. So while the bill is coming to us, we are not able to collect the totality of the bill from customers. That’s why the complaints came up. It’s not like they are inflating but it is what is in their contract with NBET. But the regulator will look into the matter. That’s why part of the power sector’s assurance programme that brought the N701 billion will go to the gencos to take care of some of the liquidity issues they have. You will see that they are no more castigating the government. We are all trying to find a solution and very soon, customers will be smiling. We are lucky to have such a Minister as Fashola. He is very passionate about solving the challenges in the sector.
