Wednesday, August 14, 2013

Why should Nigerians pay more for darkness?


On Saturday, August 10 Special Assistant on Media and Communication to the Honourable Minister of Power, Ms. Kande Daniel issued a press statement on behalf of her boss to the effect that the total amount of electricity generated in Nigeria as at 6am on that day was 2,628.6 megawatts. This indicates a sharp drop from the peak of 4,517.6MW generated power as at December 23, 2012. The drop in generated electricity, according to the Minister of Power, Prof. Chinedu Nebo, is as a result of severe leaks in the supply of gas to some strategic power plants across the country. These leakages were ascribed to activities of pipeline vandals. The minister went further to state that low head water elevation was also limiting generation at Kainji and Jebba hydro stations to one unit each.

I want to thank the honourable minister for coming out clean to Nigerians on the parlous state of our electricity generation. If there is an albatross that the current administration of President Jonathan inherited, it is the power sector. The sector in spite of many years of reform and millions of dollars in investment has not been where it should. Nigeria is in her 53 years of independence from colonial rule and few months shy of centennial celebration of her 1914 amalgamation of Northern and Southern protectorates. Not even the much touted opening of new power generating plants across the country is heart-warming to Nigerians as these new thermal plants may face the extant problems of lack of gas and/or system collapse which have largely reversed the recent gains in power generation.

I am not ignorant of the various reform measures going on in the power sector but the annoying thing for me is lack of sustainable progress in power generation, transmission and distribution. These three are still fraught with a lot of challenges. Not only has the power generation dipped due to the aforementioned problems; the transmission lines themselves are weak and cannot transmit the generated power. By far the most problematic aspect of the entire power reform exercise is the distribution companies (DISCOS) who market powers transmitted.

Initially, Nigerian Electricity Regulatory Commission told all who cared to listen that pre-paid meters will be given out ‘free’ to electricity consumers while the cost of that will be deducted from the customers every month. Later, due to scarcity (artificial and natural), NERC later came up with Credited Advance Payment for Metering Implementation - CAPMI Scheme under which NERC on May 14, 2013 registered 61 vendors and installers. According to NERC website, “CAPMI was a response by the regulator to address the lingering issue of non-issuance of meters by the electricity companies. CAPMI allows for any interested and willing customer to advance money to their electricity distribution company and in return will be given electricity credit until the cost of the meter has been recovered by the customer.”

My inquiry from a couple of these registered vendors shows that the cost of single phase is N25,000 and three phase N50,000. However, Power Holding Company of Nigeria staff has been asking me for between N37,000 and N40,000 for a single phase pre-paid meter. One vendor I spoke with said his company does not sell directly to individuals but to utility company which is PHCN who now sells to individual members of the public. Now, one is at the mercy of corrupt PHCN officials who deliberately makes these meters scarce and tried to force the old analogue meters on electricity consumers.

The greatest challenge is that with the scarcity of pre-paid meters which would have ensured that electricity consumers pay for only what they consume, PHCN marketers, due to revenue target given to them, indulge in issuing estimative bills better known as ‘crazy bills’ on hapless consumers still using the analogue meters. Even in areas where electricity cables have turned to clothing lines and electricity transformers are mere relics due to unavailability of light, exorbitant bills are still given to consumers. What can be more exploitative?

NERC, according to information on its website said “It can be recalled that in 2011, a N2.9billion metering intervention fund was made available to the companies with a view to closing the unacceptable metering gap. One year after, no appreciable progress was made by the companies, and this compelled NERC to demand for performance reports from the DISCOs. Eight of the twelve DISCOs submitted reports that fell far short of the requirements of NERC. The rest did not submit any report of how they spent the money.”

In a letter dated July 19, 2013 NERC issued a 14-day ultimatum to electricity distribution companies that are in violation of its order to submit a list of all customers who paid for meters since January 2011, and commence metering them with immediate effect. The Commission expressed its utter dismay that all DISCOs have been in complete violation of the order as it relates to customers who have made payments within the given time frame, and have not been identified for immediate metering “

According to NERC Chairman/CEO, Dr. Sam Amadi, “Any DISCO that does not comply with this new directive will be barred from collecting the new electricity tariff.” In addition, NERC threatened that failure to comply with the 14-day ultimatum could make it  institute enforcement procedures that may result in the removal of a Chief Executive Officer of defaulting electricity distribution company. This ultimatum has elapsed, it remains to be seen if NERC will wield the big stick on the erring DISCOS who currently operate with impunity; reaping where they did not sow and frittering away the nation’s resources; a whopping N2.9b metering intervention fund.

Unfortunately, while the issue of metering remain largely unresolved, the Multi-Year Tariff Order for this year came into effect on June 1 thereby activating another increase in electricity tariff. The regulatory agency said “In 2012, NERC published the MYTO – a tariff plan that sets both wholesale and retail tariffs for the industry over a five year period. This means that tariffs have already been set for every year starting from 2012 through to 2016. Effective June 1 of every year, a new tariff is to take effect.” In essence, whether there is electricity supplied or not, from 2012 to 2016 you and I will continue to pay more for electricity or darkness depending on the situation. This is the height of mistreatment!  NERC may have set the MYTO to ensure that there is private sector attraction to invest in the power sector (cost recovery) but this should have been tied to improved productivity and accessibility of power to electricity consumers.

The consequence of deplorable public electricity is here with us. Nigeria has been tagged the country with highest consumption of power generators in Africa, nay the world. The import of this is that much needed foreign exchange is spent importing these contraptions since they are not locally manufactured. The need for private power generators has also caused considerable increase in the cost of doing business in Nigeria. There is an associated health hazards with these due to noise and wider environmental pollution that these power generators caused. Carbon-dioxide fumes emitted from these generators has also caused many deaths to persons and families that do not know how to use these devices. The pollution from the generator emissions has also been contributing to ozone layer depletion and concomitantly, climate change. Should we continue this way, our attainment of 2015 Millennium Development Goals and Vision 20:2020 will be a mirage.