Wednesday, February 10, 2016

Between electricity providers and Nigerian consumers

On Monday, February 8, 2016, the Nigeria Labour Congress, Trade Union Congress and some civil society organisations picketed the offices of electricity distribution companies nationwide. This was done while they protested against the 45 per cent hike in electricity tariff which took effect on February 1, 2015. The NLC president, Comrade Ayuba Wabba, “called on President Muhammadu Buhari to revisit the privatisation of the power sector as it was marred by corruption”, lamenting that the current increase would make it the fifth time the tariffs would go up since the privatisation exercise was concluded. Among other things, labour leaders accused government of acting in bad faith by taking sides with the private investors in the power sector against the suffering masses.
Some other complaints include the lack of transparency in the affairs of the electricity generating, transmitting and distributing companies. The protesters said these private investors had refused to publish their financial statements. Furthermore, they averred that most consumers were not metered in line with the signed Memorandum of Understanding of November 1, 2013, which stipulated that within 18 months, all consumers must be metered. Labour union officials equally complained that there were no consultations before the coming into effect of the new tariff.
However, the Nigerian Electricity Regulatory Commission in a statement signed by its Head of Public Affairs Department, Dr. Usman Arabi, said that the existing electricity tariff order was carried out after a wide consultation with different shades of opinion, and in strict compliance with extant rules and judicial pronouncements. Arabi stated further that the Electric Power Sector Reform Act 2005 empowers any party aggrieved or dissatisfied by the decision of the Commission to appeal to it within 60 days from the date of the decision, adding that it was still open to further consultation.
The Minister of Power, Works and Housing, Babatunde Fashola, described the electricity tariff increase as “a painful pill” and appealed to consumers to “swallow” it. He, however, said the new tariffs were cheaper than using diesel or petrol-fired generators or inverters.

Truth be told, the Nigerian government should be held responsible for the parlous state of our electricity situation. I do not blame the GENCOs, DISCOs or Transmission Commission of Nigeria for wanting to have a cost recovery tariff. They are not charity organisations but are in business to make profit. More so, the government signed an agreement with these private investors and breaches could make it liable to litigation. The right questions to ask by Nigerians are: What happened to over $16bn supposedly spent by past administrations on power sector. What evidence do we have that the Buhari administration is sincere and will not follow the ruinous path of its predecessor?
The Ndudi Elumelu House of Representatives committee which probed the power sector investment from 1999 – 2007 unearthed mind-boggling fraud in its management. The committee came up with 88 recommendations out of which only four were approved by the House of Representatives for implementation. The committee discovered that a sum of $13.2bn was spent on power sector between 1999 and 2007, what has the country to show for these trillions of naira investment if not pitch darkness?
Nigerians, I must state, are not unwilling to pay cost reflective tariff but want value for money. We are not ready to pay for darkness. The first step to ensuring that consumers are protected and not cheated by the shylock private investors in the sector is to first address the issue of inadequate metering. Without meters, what electricity consumers will get is estimated billing which more often than not is outrageous. Power distribution companies popularly called DISCOs give targets to their marketers and as such, even in homes where there are analogue post-paid meters, they do not bother to read them but come up with crazy bills at month end. Not only that, even when there are faults either with transformers or power lines, consumers are also billed officially and unofficially for the repairs. This is unfair!
I am not unmindful of the challenge of energy theft (the immediate past Minister of Power, Prof. Chinedu Nebo, reportedly said that Nigeria had the highest per capita electricity theft in the world). I am also not unaware of other sundry problems faced by investors in the power sector such as vandalism of gas pipelines, pilfering of meters, electricity cables, among others. Nonetheless, some of the challenges are either orchestrated or aided by unscrupulous elements working for these GENCOs, DISCOs and the TCN. The knotty issue of dearth of pre-paid meters is central to resolving the ongoing faceoff between the electricity providers and consumers.
If every house or office has a pre-paid meter, it will help solve the challenge of non-payment of bills. Government at all levels, including their Ministries, Department and Agencies are the worst culprit in defaulting to pay electricity bills. It will be recalled that Nebo on December 15, 2014 announced that ex-President Goodluck Jonathan had approved funds for provision of one million pre-paid meters. Where are they? Have the funds been diverted to electioneering as is the case with the Dasukigate where part of funds meant for arms purchase was used for the 2015 campaigns?
Another pertinent question is: Why are electricity distribution companies refusing to patronise locally made pre-paid meters?
According to a news report in Vanguard of January 26, 2015, two indigenous pre-paid meter manufacturers both appealed to the Federal Government to prevail on the electricity distribution companies to promote locally manufactured pre-paid meters. According to one of the promoters, “Government needs to encourage local meter manufacturers and stop the importation of meters. There is no reason for government or the companies to go outside the shores of the country to get a product that is readily available locally.” In her own view, another stakeholder noted that, “The story of poor patronage is still the same in meter manufacturing where foreign firms are better patronised and recognised by electricity companies.”
In view of the paucity of foreign exchange, I enjoin DISCOs to patronise the locally fabricated pre-paid meters if they are of equal standard with the foreign ones. That is the best way to demonstrate government commitment to backward integration and buying of “Made in Nigeria” goods.
It is commendable that NERC as a regulatory body has removed the N750 fixed charge under the new tariff regime. It must also live up to its promise of effectively monitoring and enforcing all service delivery agreements in the new tariff order which is inclusive of ensuring that electricity distribution companies fully meter their consumers and eliminate “crazy” billing within one year.
On the part of Ministry of Power, Works and Housing, it must ensure that it sources the needed funds to complete 22 of the 142 transmission projects estimated at over N40bn in this year. As has been identified, our weak transmission lines cannot carry the generated power at present. In addition, the issue of oil and gas pipeline vandalism needs to be tackled head-on by the various tiers of government.