The Nation Newspaper

Tag: ANED

  • Operators: we’re watching

    The Association of Electricity Distribution Companies (ANED) declined yesterday to react to the proposed plan by the Federal Government to revisit the privatisation of the power sector.

    ANED’s Director of Research & Planning,  Sunday Oduntan, said the body has no comment on the issue when contacted yesterday by The Nation.

    He said the issue would strive generate controversy.

    According to Oduntan, the association had commented on the issue in the past and therefore unwilling to aggravate tension in the industry.

    Oduntan said: “The DisCos, for now, is saying that it has no comment to make on the issue. The issue is controversial and we have responded to it in the past. The response misinterpreted by Nigerians.

    “In view of the controversial nature of the statement credited to the Vice President, Prof Yemi Osinbajo, on the issue of revisiting the privatisation of the sector,the body, with all sense of modesty, cannot comment on it.”

    He said there was nothing to worry about the Federal Government’s remark on the issue of revisiting the privatised power firms, the government does not mean anything harmful.

    Read also: Fate of DisCos shaky as govt plans other options

    “When the government, the vice president, or any other officials of the government is talking about the issue of revisiting the sales of the power firms to the investors, it does not mean that the government wants to sell them to a new set of buyers.

    “Revisiting the issue of privatisation of the power sector may mean that the government wants to correct some errors recorded in the Purchase Agreements (PAs) and not outright reselling of the firms”, Oduntan said.

    At a news conference last year, Power, Works & Housing Minister, Babatunde Fashola advised the electricity distribution companies, otherwise known as DisCos to compete to deliver power to or exit the market for other investors.

    The ANED spokesman had said that the association was not interested in politics.

    He said: “For us, as operators in the sector, we are not really interested in the politics of power supply; we are interested in supplying power. I think the privatisation process was done openly.

    “There was a process; they (government) even went round the world looking for investors. The DisCos investors that I represent paid a sum of $1.4 billion for the entities, and we have always been talking about the challenges in the sector. For us, we will continue to cooperate with the Federal Government to ensure there is an improvement in the sector.

    “If revisiting the privatisation is to make sure that the contracts that were signed by the Federal Government with the investors are fulfilled, then we agree that is should be revisited.

    “But if some people think revisiting it means taking the assets from the current investors, I can tell you that under this same situation that we find ourselves – the tariff mismatch in the sector – if you give the assets to angels, they will fail.”

  • ANED berates Obaseki over row with BEDC

    ASSOCIATION of Nigeria Electricity Distributors (ANED) has berated Edo State Governor Godwin Obaseki for his treatment of Managing Director of the Benin Electricity Distribution Company (BEDC).

    A statement by ANED’s Executive Director for Research and Advocacy, Chief Sunday Oduntan, said the body was displeased with Obaseki for ordering BEDC’s MD out of his office when the House of Representatives Committee on Power visited him.

    Obaseki accused the managing director of “failing to meet obligations to electricity consumers in the state”.

    The statement reads: “What is most unfortunate about the whole episode is that there is a misunderstanding about how the power sector works and this has led to the governor’s unfair expectations from BEDC. I cannot also rule out with the upcoming elections and everyone looking for scapegoats, that local politics may be involved in this case and that is unfortunate.

    ICYMI: Obaseki walks BEDC MD out of his office for throwing state into darkness

    “The state generates over 600MW and as such should not be encountering power supply challenges. However, he needs to understand that the power generated at Azura or any other power plant in the country is first sent to the national grid from where it is redistributed to different DisCos for distribution to customers.

    “Benin DisCo is only entitled to nine per cent of the power sent out from the national grid, so it is clear that the DisCo does not have the power to retain the 600MW generated by Azura.

    “More interestingly is the fact that over 40 per cent of this nine per cent is distributed within Edo State as the host community of the DisCo. The other three states in the franchise area – Delta, Ekiti and Ondo – share the remaining 60 per cent. You can see therefore that Edo State enjoys the lion share of what the DisCo gets already. To allocate more to Edo – which is what the governor is advocating for – will be grossly unfair to the other states.”

    Oduntan also said it was unfair to attack a DisCo on record as having the highest number of prepaid meters in the country all to ensure customers get value for their money as well as end the practice of estimated billing.

    An earlier statement by BEDC said the company had completed plans to give out more prepaid meters from the first quarter of 2019 under the Meter Asset Provider (MAP) programme of the Nigerian Electricity Regulatory Commission (NERC) to further accelerate the metering of consumers.

  • Why Nigeria may not have stable power supply in five years, by ANED

    Nigeria may not have stable power supply in the next five years except the challenges confronting the sector are addressed, Association of Nigerian Electricity Distributors (ANED)  Research and Advocacy Executive Director, Mr. Sunday Oduntan, has said.

    He stated this during an interaction with reporters in Lagos.

    According to Oduntan, there are challenges inhibiting power sector’s efficiency. They include liquidity gap of N1.3 trillion, lack of improved generation due to mismatch in electricity pricing, lack of investment in transmission and distribution networks and the rising energy theft.

    “Except these challenges are addressed, we may not have stable power supply in the next five years,” he said.

    Oduntan said the illiquidity in the sector should be prioritised because the sector could not afford to collapse. “If the power sector collapses, many banks will collapse because in 2013 during privatisation, only one electricity distribution company (DisCo) obtained foreign loan, others took loans from local banks in dollars. Privatisation was based on 30 per cent equity and 70 per cent loan, he added.

    “The model was borrowed from New Delhi, India and it is working. If it is successful in India, why is it not working in Nigeria,’’ he added.

    Oduntan decried the prevalent non-reflective tariff and called on the government to prevail on the military, Ministries, Departments and Agencies (MDAs) to pay for energy consumed.

    According to him, MDAs owe about N72 billion and the military has refused to pay since last August, when the Minister of Power, Works and Housing, Babatunde Fashola said the Federal Government would settle all legacy debts by MDAs. Afterwards, nothing has been paid by the military.

    “It is important to also state that the mismatch in electricity pricing has resulted into inability of the Discos to settle their obligations to the Nigerian Bulk Electricity Traders (NBET).

    “What we get from NBET is usually higher than what the Discos charge to consumers because we don’t have control over tariff. Government determines what we charge power consumers.

    “Until we have a review of electricity tariff which ought to have been taken place every six months, there can’t be cost-reflective tariff and without cost reflective tariff, Discos can’t settle their debts to NBET.”

    On the controversies surrounding eligible customers’ policy, Oduntan argued that tariffs for industrial consumers were structured to be subsidised.

    “The eligible customer policy will take the industrial customers off the DisCos’ network and this will affect the revenue of the DisCos.

    “If the policy will take away the industrial customers from the Discos’ network, then, there must be a review of the tariff to guarantee liquidity in the sector,’’ he said.

    He noted that Nigeria’s power sector is bleeding and would not recover so soon as a result of undue political interference and  wilful action against the agreements signed with investors in the sector.

    ‘’Nigerians are yet to witness the requisite dividends of the privatisation of the sector five years after because the government   has not met all of its obligations that were pre-conditions to power distributors’ ability to implement the requirements of their performance agreements,’’ he added.

  • DisCos ‘ll clampdown on fraudulent workers, says ANED

    Electricity distribution companies (DisCos), will not hesitate to clampdown on erring workers as part of efforts to improve efficiency, Executive Director, Research and Advocacy, Association of Energy Distribution Companies (ANED), Mr. Sunday Oduntan, has said.

    He said the firms have put workers on their toes with a view to ensure that they desist from acts capable of eroding consumers’ confidence.

    In an interview with The Nation, Oduntan said ANED, which serves as umbrella body for the eleven DisCos in the country, has started going round the firms to investigate corrupt practices among the employees,  adding that the firms have been directed to sack workers that are found guilty.

    He said the development became necessary in order to rid the DisCos of bad eggs and further give the sub-sector a new image.

    He said there are cases of corrupt workers in many of the firms as evident by the ways and manners they reportedly exploit consumers in the course of connecting their light.

    He said some workers collect monies to buy equipment such as meters, transformers, poles and others, from customers, without getting the consent of their employers.

    Oduntan said: “It is a normal thing to blame the problems in the nation’s electricity sector on the three critical value chains namely the generation, transmission and distribution. Of course, each of the segments has its own problems. But what we are saying is that the distribution segment, which comprises of eleven firms, should as a matter of fact, solve their own problem first.

    “Firstly, the DisCos must rid themselves of criminally-minded people to be able to win the confidence of customers. Secondly, they need funds to ensure seamless operation. Thirdly, rules need to be enforced in the firms to ensure discipline, honesty and further provide corporate governance standards.  When these have been provided, the distribution sector will operate optimally.”

    He said activities in the DisCos would pick up once they are able to get enough allocation or supply from the power generation companies (GenCos).

    The DisCos, Oduntan said, require sufficient power supply from the GenCos to operate well, stressing that failure to get enough electricity supply has impacted negatively on their operation.

    According to him, the bottlenecks hindering operation of power generation companies must be removed by the stakeholders, including the Federal Government in order to get the best services from them.

    He said the problems include shortage of gas, funds and collocation, which according to him, means   site gas pipelines in areas where they can be easily accessed by the GenCos.

    He urged the Federal Government and other stakeholders in the value chain to work together to ensure that DisCos meet the five-year deadline given them by the government to meter their customers, among providing other infrastructural facilities.

  • Notice to BPE not declaration of force majeure – DisCos

    Notice to BPE not declaration of force majeure – DisCos

    The Electricity Distribution Companies ( DisCos ) on Thursday explained that the notice they jointly sent to the Bureau of Public Enterprises ( BPE ) was not a declaration of force majeure.

    A statement that the Association of Nigeria Electricity Distributor (ANED) Executive Director, Research and Advocacy, Barrister Sunday Oduntan issued in Abuja yesterday , described the notice as a standard commercial agreement.

    According to the statement, the notice is based on the concerns that the DisCos that are already near bankruptcy, will further be tied to meeting the obligations of their performance agreement with BPE.

    Odutun said that : “Indeed, the notice of Force Majeure submitted by the DisCos, in itself, is not a declaration of Force Majeure, is standard to any commercial agreement, and is predicated on the concern that the DisCos, already on the verge of bankruptcy, will be further constrained in meeting the obligations of their Performance Agreements with BPE – no difference from a previous situation in which the regulator, arbitrarily, removed Collection Losses from the DisCos’ tariff in April 2015, a contributor to the current market shortfall.

    “Unless we begin to see a consistency of sector governance, a critical requirement for the viability and sustainability of the Nigerian Electricity Supply Industry (NESI), it is unlikely that we will achieve the objective of 24/7 power supply, an outcome that all Nigerians deserve.”

    The statement which was a sort of rejoinder, said that clarification followed recent notice of force majeure that were submitted to BPE by the DisCos as a result of the eligible customer regulation by the Nigerian Electricity Regulatory Commission) (NERC).

    ANED said that the Eligible Customer regulation allows for certain customers who consume more than 2 MWhr of electricity per month to leave the DisCo network and contract directly with power generators for the supply of power.

    It added that the primary objectives of this arrangement are to promote competition and increase the supply of power.
    Continuing, he said that “As DisCos, we believe that these are laudable objectives and are nothing less than that which we seek, as we strive to inject the efficiency into our operations that will improve the power supply experience for our customers.

    “While we do not question the legitimacy of the Honourable Minister of Power, Works and Housing’s right to declare Eligible Customers, we believe that the declaration is premature and is inconsistent with the pre-conditions established under the Electric Power Sector Reform Act (EPSRA), 2005.

    In particular, the level of competition envisaged for such declaration, that should be in tandem with sufficiency of power supply, does not currently exist. Nor has there been an implementation of the Competition Transition Charge that is specified under the Act.

    “Why is the issue of Competition Transition Charge important? Eligible Customers are the premium customers that cross subsidize the cost of providing electricity to the residential class of customers. Such cross subsidization, for some DisCos, is based on a ratio of N10/kWh of Eligible Customer consumption to N1/kWh of residential class consumption. The same class of Eligible Customers also contribute an average of 60 percent to DisCo revenues.

    “With the removal of Eligible Customers from the DisCo network, the huge revenue gap that is left is expected to be imposed on the residential class of customers by an increase in their tariffs, under the Competition Transition Charge. An initial analysis of the impact of the Eligible Customer regulation indicates the need for a minimum tariff increase of N4 per kWh on the residential class customers. In other words, residential customers, some of whom are already dealing with issues of affordability, will have to bear the burden of the premature implementation of the Eligible Customer regulation.

    “While there may be policy announcements that try to counter this fact by stating that such increases will not be imposed on the consumers, the question must be, “How will the gap be addressed?” If the answer is via a subsidy, it is then important to highlight that the current market shortfall of N892 billion (through August 2017) is a product of similar commitments that have not been met – a) Debt free books; b) Cost reflective tariff; c) Payment of N100 billion of subsidy; d) Payment of MDA debt; and e) Commitment to return of; and return on investment for the investors.

    Unfortunately, the Eligible Customer regulation will further contribute to the DisCos’ inability to recover the revenues that will enable them to make the capital investment that is critical to injecting efficiency into the supply of electricity to their customers.”

  • DisCos not paid N25b, says ANED

    The N25billion which the Federal Goverment said it has paid to the eleven lectricity distribution companies (DisCos), is yet to get to them, it was learnt. The government claimed it has paid N25billion out of the money owed DisCos by the Ministries, Departments and Agencies (MDAs) of government.

    Director of Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Dr. Sunday Oduntan, said it was untrue that the money had been paid.

    In an interview with The Nation, Oduntan said the firms have not received any money either from the Federal Government or through the MDAs, adding that  the government paid the N25billion to Nigeria Bulk Electricity Trading Plc (NBET), and not the DisCos.

    Oduntan said: “What the Federal Government has done was to net off the MDAs debts. The government has used the debts owed the energy distribution companies to pay NBET, which is the company  buying electricity from the firms. “How can you explain a situation, whereby your debtor paid the debt it owes you to another company, and yet claims it has paid part of the debt that it owes you? This is wrong, hence the decision by the Association to let Nigerians know that the distribution companies have not received anything from the government,”he said.

    According to him, the government and its agencies are yet to fulfill their obligations of paying their debts either in full or in part.

    “The debts owed the power firms by the MDAs are still intact. The government is not precise on when the debts would be paid. The inability of the Federal Government to pay the debts accumulated over the years from unpaid electricity bills, is affecting the operation of the companies. However, we are not complaining. We only want to put the record straight that we have not been paid,” he added.

    The firms, he said, are facing two critical problems in the industry because they are unable to service their debts while at the same time finding it difficult to shop for funds for operation.

    The development, Oduntan said, is making it difficult for the firms to purchase equipment needed for their growth. He observed that many of the DisCos are using obsolete equipment such as transformers, meters, and others, adding that the issue is affecting service delivery in the sector.

    He said the firms’ inability to garner enough funds for operation has resulted in poor skills and job losses, adding that many firms are sacking workers, rationing equipment and recording debts due to the problems in the power sector. He said the country would have improved electricity supply to its citizens if the firms have got enough money for adequate operation.

  • How to make power sector work, by ANED

    The Federal Government’s efforts to improve power generation and supply may remain an illusion until it puts in place a consistent regulatory framework and effective tariff mechanism, the Director, Research and Planning, Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan, has said.

    Speaking on a national television programme in Lagos, he said the Power, Works and Housing Minister, Babatunde Fashola, was pushing for incremental power generation in the sector, but expressed worry that the idea would face tariff and regulatory problems.

    He said the increase in tariffs by the government was causing problems, adding that there would even be more problems when the government implemented its incremental power from other sources of power generation, such as solar because it would be difficult to fix the tariff.

    Oduntan said: “The problem is not how and what method was used in generating electricity but the regulatory inconsistency.  If we look at solar energy as a source of generating power, and the tariff imposed on consumers is not right, there would be problem. It is the people that are making policies that made power supply impossible. The Ministries, Departments and Agencies(MDAs) have not paid debts owed power firms because there is no strong regulatory programme in place.’’

    He said the inability of the Federal Government to fully privatise the power was the major problem facing the industry and not shortage of gas.

    He said though the sector is experiencing gas shortage, which has resulted in poor generation and supply of electricity, its major problem is faulty privatisation in which a segment of the industry was sold to the private investors while another segment was left unsold.

    He said the Federal Government through the Bureau of Public Enterprises (BPE) unbundled and sold assets of Power Holding Company of Nigeria (PHCN) to private investors and left the transmission arm of the power sector unprivatised.

    Oduntan said privatisation has created problems in the sector because it was not holistic. He said problems, such as obsolete transmission equipment and its attendant collapse of the national grid would not have arisen if the Transmission Company of Nigeria (TCN) was privatised.

    He said when the power generation companies (GenCos) generate power,TCN was confronted with the problem of evacuating power to the areas where it is needed.

    Oduntan said the inability of the Federal Government to invest in TCN over the years, has resulted in   equipment decay and the consequent collapse of the national grid.

    He said Sagamu and Ayobo in Ogun and Lagos states were facing transmission problems because of obsolete equipment, adding that the Sagamu Transmission Station built in 1979 is unable to transmit power to Sagamu and other towns around it.

    ‘’If the government had invested in TCN and also allowed it to be privatised, the story would have been different in the sector. Now, the government wants to centrally control the account of the power distribution companies (DisCos). When the government has put private enterprises in place and still wants to control the account of the entities it privatised or left a critical segment like transmission unprivatised, that is what you get. I cannot imagine the Central Bank of Nigeria (CBN) controlling account of a branch of FirstBank of Nigeria Plc in Enugu.

    He said operators at the generation, distribution and transmission, the three key value chain, and the Nigerian Bulk Electricity Trading (NBET) need to work together to promote the growth of the power sector.

    Oduntan said the privatisation  of the telecom and the power sector is not the same because they do not follow the same process. He said the telecom industry was able to record speedy growth, because it does not have infrastructural problems unlike the power sector.

  • Fed Govt’s MDAs owe distribution companies N32b

    The Federal Government’s ministries, departments and agencies (MDAs) and the military owe the 11 electricity distribution companies (Discos) across the country N32 billion, it was learnt.

    The Executive Director, Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan told The Nation that the Discos have challenges in collection and the worst customers are Federal Government’s MDAs.

    He said: “N32 billion is still outstanding as Federal Government’s MDAs debt. It has not been paid till now. That N32 billion means a lot to us. If we have that money, we can buy meters and share to our customers.

    “Before I started shouting in the mass media, we had serious issue with MDAs. The military especially felt it is their right not to pay for the power they consume forgetting that the current power sector is under the private sector. In the budget, they actually have allowances for utility bills’ payment.  These military formations especially in Ikeja and Eko Electricity Distribution Companies, and even across the country are metered; therefore, it is not that they are on estimated billing or over-billed, and don’t have reasons not to pay.

    “We had a meeting with the Federal Government presided over by Vice President Prof Yemi Osinbajo, and he listened to all sides (all the stakeholders) including the Nigerian Electricity Regulatory Commission (NERC), Market Operators (MO), Nigerian Bulk Electricity Trading (NBET), generating, and distribution companies.

    “We all tabled our problems and the government has started looking at those issues; he promised us that the MDAs will pay the debts. I can assure that this government seems to be very serious, determined and sincere to provide electricity.”

    Oduntan said the commercial losses are very high citing a Disco that bought electricity worth of N3.2 billion and after preparing the billing, it got N2.6 billion leaving it with a deficit of N600 million. Out of the N2.6 billion bills it prepared, it would not be able to collect all of them due to non-payment as some customers aren’t willing to pay. This happens because some big men, welders and battery chargers, among others, bypass their meters. Out of the N2.6 million bills you prepare, you would not be able to collect all of them due to non-payment as some customers aren’t will to pay, he added.

    The Chief Executive Officer, Eko Electricity Distribution Company (EKEDC), Dr. Oladele Amoda, also stated that his company will remove payment of fixed charges by customers in the network. Amoda told The Nation at EKEDC stakeholders’ meeting/consultation in Lagos that once the customers approve the company’s proposed new tariff and NERC endorses it; the management will remove the fixed charges paid by the customers.

    The management of EKEDC has had several of such meetings where the customers agreed it should scale up the tariff but there must be commensurate power supply. The last meeting was to let the customers see and deliberate on the proposed tariff.