Even after privatisation, the power sector has remained on life support. It is not living to the expectations of stakeholders. The tripod of generation, transmission and distribution seem to be in disarray. JOHN OFIKHENUA writes on the problems confronting the Nigerian Electricity Supply Industry (NESI).
Customers looking forward to an exit from the epileptic power supply from Nigerian Electricity Supply Industry (NESI) may not have the respite so soon. The recent increase in tariff that should have brought the respite, according to the electricity distribution companies (DisCos), is after all, not cost-reflective. Besides, one month after the hike is too short a time for such a great expectation.
This was the position of the Association of Nigerian Electricity Distributors (ANED), Executive Director, Chief Sunday Oduntan, who spoke with The Nation on phone. Hear him: “For you to know what people should pay for electricity, you have to first of all know the cost of production. What we have not been realistic about all along is to come to terms with the actual cost. When you say they are implementing a cost-reflective tariff that is true. That is just about to happen.”
Unless there is a cost-reflective tariff, investors will not find the electricity market attractive, he said. “When you fix a low price, below the cost of production, no investor will be willing to come and invest,” Oduntan averred.
According to him, what kicked off in October, cannot be expected to give any wonderful result even in December. “It cannot be cured in two months. Everybody is blaming distribution. But you can only distribute what is generated and transmitted to you,” he said.
The position of the DisCos on the issues in the electricity market are fearsome. For instance, he brought the incessant complaint about the dilapidated national grid, which the Transmission Company of Nigeria (TCN) manages, to bear in the conversation. He cited the insufficient energy production from the generation companies (GenCos), urging the Federal Government to also augment its generation with energy mix from coal, solar and the renewable energy. He said: “You cannot be giving 5,000Mw to 200million people. We need to build more power plants and increase generation. We need to have a mixed energy grid. Electricity should not depend on gas alone. We need to have solar, coal and all others.
“We are simply not producing enough, that is the truth. The day we start producing enough and we have a solid national grid, you won’t hear of system collapse. Once more investment is done, we will not have all those problem.”
Oduntan was critical about the ruinous roles of some of the electricity customers that are in the habit of energy theft and unwilling to pay their bills. He did not spare the Ministries, Departments and Agencies (MDAs), which refusal to pay their bills has contributed to the cash constraint in the electricity market.
The ANED spokesman said: “Number two, the government should make sure that the MDAs are also paying their bills because it is only a liquid power that can have money to invest in generation, transmission and distribution.”
However, the decaying transformers, cable and poles of the different DisCos remain an eyesore in the power sector after privatisation. Except a few of the distributors, the investors are not ready to commit more money into the firms they bought with their eyes open. On the other hand, they have not showed any willingness to quit the business for serious players. Instead, they rather trade blame to the consternation of the customers that expect power supply from them.
Oduntan did not spare the Transmission Company of Nigeria (TCN) . “System collapses because of the dilapidated nature of our transmission grid. There is no way you can compare a brand new car with a very old car. But the truth of the matter is trying its best now to invest in it. It inherited it,” he said.
But its Acting Managing Director, Sule Abdulaziz told reporters in Abuja that the company has 8,100Mw wheeling capacity. He said there has not been any generated energy that the company could not evacuate to the DisCos. To him, the TCN is strengthened to play its role in the value chain, were the distributors not weak.
Enumerating the inroad that the company has made recently, he boasted of effective grid management that has led to the all-time peak generation of 5,377Mw recorded in August 2020 at 20:30hours. The TCN, he added: “Recorded yet another all-time national peak of 5,420.30Mw, which was effectively transmitted to load centres.”
He said TCN has developed key projects from the Master Plan that made the Transmission Rehabilitation Expansion Programme (TREP) and established four Project Implementation Units (PIUs) to drive their implementation.
The TCN, he said, has attracted $1.66 billion multilateral donor agencies for implementation of the projects most of which are at various levels of execution. Abdulaziz said the procurement of most of the project is ongoing based on Advanced Procurement system adopted for projects in agreement with donors. He said the TCN has already awarded some of the project contracts, which are already being implemented.
He said there has been an improved enforcement of the Market Rules related to DisCos payment obligations to Market Operator which increased TCN’s revenue collection from about 35 per cent in 2017 to 100 per cent in May, last year till date. He claimed to have facilitated the implementation of the Eligible Customer regulation that attracted additional revenue for the TCN.
In view of the claims of the DisCos, GenCos and TCN and their contradictions, it is obvious that there is a deliberate display of figures to keep up the facade that all is well with the industry. Therefore, the perennial blame game that permeated the electricity market since its privatisation in 2013 continues to plague it. The Federal Government and other stakeholders must roll up their sleeves for solutions to tackle the challenges in the power sector because it can never come by happenstance.
That brings the ambivalence of the Nigerian Electricity Regulatory Commission (NERC) to the fore. As a regulator, the instrument available for whipping the operators into line is the market rules. If it does not lower the bar for anyone, the system can be better off. What has it done about the companies refusal to remit their collections in line with the law? The companies’ refusal, which has become a tradition, savours and thrives on the commission’s complacency.
One of the examples is the First Quarter 2020 Financial Report of the Commission. According to the report, the DisCos failed to remit N124.88 billion to Marketers Operator (MO) in first quarter (Q1) 2020. On Revenue and Collection Efficiency, the Commission said the total revenue collected by 11 DisCos from customers in Q1 of 2020 stood at N114.29billion out of the total bill of N186.82billion. In the period under review, according to the report, the total revenue realised by the Commission was N3.25billion representing an increase of 57.31 per cent from the revenue recorded during Q4 of last year.
“Out of the combined invoices of N185.08billion for energy and administrative services received from NBET and MO, only a total of N60.20billion (representing 32.53 per cent ) of the invoice was settled, creating a total deficit of N124.88billion (including tariff shortfall),” it said.
Thus, if the operators sustain this threshold of financial leakage in the market for a year, how can it ever be liquid? It is incumbent on the DisCos to view their failure to remit their dues as tantamount to energy theft and refusal to pay bills by customers, which has compounded the paucity of fund in the market.
Now that Federal Government has activated its 40 per cent in the DisCos with the release of funding for mass metering, the government has the responsibility of tasking the directors that represent it on the board on transparency and accountability. Should they sustain the ‘not my father’s business posture’ that ruined most public enterprises, there will be little or no gain from the privatisation of the power sector.
In other words, the Federal Government through the National Council on Privatization must overhaul its representation in the DisCos’ boards since there is no justification reinforcing the present team in the Bureau of Public Enterprises, whose action is a replay of the defunct National Electric Power Authority (NEPA) style of service delivery.
Only on November 30 at 11.25am, there was a system collapse due to multiple tripping that plunged some parts of the country Calabar, Ugwuaji, Markurdi, Jos, Gombe, Yola and Maidugiri and others into darkness. In a similar development, vandals of 330/132kV Gwagwalada /Kukwaba line that wheels power to 2 × 60MVA Kukwaba injection substation in Abuja, reportedly disrupted supply to some areas of the Federal Capital Territory (FCT ). The act, according to Abuja Electricity Distribution Company (AEDC), affected power supply to “Kaura District, Galadimawa, Lokogoma, Suncity, Moccido Housing estate, Games Village, Eyes Centre Hospital, National Stadium.; Feeds Milipat Filling Station, part of Indoor Stadium, Kuchingoro, Karamajigi, King Park Estate, Royal Ancor Estate, DSS Quarters, Wilbahi Estate, Wuye, Utako and environs.”
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