Unfair trade practices are as common as daylight in the power sector. The most widespread is the estimated billing for power consumption. Despite several protests by consumers, regulators oftenlook the other way as consumers pay through their noses for services not rendered. Unprotected by regulators, those who feel robbed have taken their case to court. Experts say the massive fleecing of power consumers in a web of corruption and ineptitude requires urgent government intervention, writes JOSEPH JIBUEZE.
Peter Akinola is a shoemaker in Lagos. There is no heavy duty equipment or electronics in his small shop. All he has is a small machine with which he files the edges of the shoes he produces. A functional power meter is mounted outside his shop. The facility is very accessible. Whenever he was billed based on his meter reading, he received less than N2, 000 per month. Usually, such bills were promptly settled from his meagre profit and he never owed a dime. But things has changed.
For about five months, he received successive estimated bills of between N10, 000 and N15, 000. When he could not offset the ‘crazy bills’, which kept accumulating, his line was disconnected by the electricity distribution company. Before the disconnection, Akinola had complained several times to the marketer in charge, who promised to resolve the problem to no avail. Before his electricity supply could be reconnected, he was forced to offset most of the accumulated bills, using his meagre savings. He also paid a reconnection fee, all due to no fault of his. Akinola felt cheated but he was helpless.
Tales of extortions
Across the country, many consumers are in Akinola’s shoes. Daily, they wonder who would bail them out. Others have embarked on protest marches against crazy bills.
Residents of some communities in Osogbo, the capital of Osun State, protested against what they described as robbery by the Ibadan Electricity Distribution Company (IBEDC). Led by James Adejumo, they said the amount charged consumers who were not using prepaid meters was too high. He urged the Federal Government to go tough on DISCOs, saying many of them rip off consumers despite epileptic power supply. One of the residents, Ade Ponle, said he was getting a bill of N1, 200 per month, but he suddenly started receiving about N7, 500 every month even when there was no power supply for several weeks.
In Lagos State, residents of the Apapa-Iganmu and Ifelodun Local Council Development Areas marched on the Eko Electricity Distribution Company (EEDC) in Ijora-Badia over excessive bills. The residents said their bills were higher than their house rents. They bore placards and sang solidarity songs, demanding an explanation from the authorities on why such bills should be given to them.
One of the residents, Kamoru Wole, said some tenants paid as much as N10, 000, which was higher than their house rent of N1, 500 per month.
He said: “Badia and Amukoko are low-profile populated areas, and we pay as low as N1, 500 for rent. It is a residential area with just a few people engaging in petty commercial activities. Yet, this is an area where residents pay as high as N5, 000 or more as electricity bill. This is day-time robbery by the distribution company servicing or area. Our electricity bills are higher than our house rents. We do not use air conditioners; so how did the company arrive at the high bills?”
On November 17, members of the Youth Alliance for better Nigeria blocked the two entrances to the Lagos State House of Assembly. They bore lanterns and placards to protest against the Ikeja Electricity Distribution Company (IKEDC). They lamented that they were made to pick the bills of electricity they hardly used.
Some of the placards read: “Outrageous bill, oppressive conduct of staff”; “Fashola save Nigerians from darkness”; “Enough exploitation of ten streets on a transformer”; “We need prepaid metres”; “Frustration of government effort to provide employment by not improving the epileptic power supply”; “Buhari must dissolve Nigerian Electricity Regulatory Commission. Please do this for us”; and “When learning stops, liberation stops. We cannot read at night. Don’t kill the youth,” among others.
The protesters lamented that some areas in Alimoso on the outskirts of Lagos had no power supply for over six months, yet they were forced to pay bills. Their leader, Moruf Adegoke, said the group had earlier met with the state government which set up a committee to address their complaints. He, however, alleged that some top management staff of IKEDC frustrated the move for an amicable solution.
“Abule-Odu in Alimoso has not had power supply in more than three months. The IKEDC supplied pre-paid metres to customers but the metres have not been working. The company has now resorted to coded billing system or what you call estimated billing,” he said.
It was a similar story in other parts of Lagos. Tired of living in darkness, residents of Abiodun, Adebiyi, Akanbi, Aderibigbe and Lawani streets in Onitiri, Yaba, on December 16 stormed EKEDC on Marina, to demand a better service. They protested against what they called the “outrageous bills” which they had been receiving while living in darkness for six months.
They bore placards with inscriptions, such as: “Eko Distribution PLC is a cheat”; “EKEDC PLC stop distributing darkness”; “We are tired of outrageous bills”; “Prepaid meter is our right” among others.
The problem is not limited to Lagos. In some parts of Ondo South Senatorial District, residents had no public electricity supply for nearly a year having been disconnected since last December. The development crippled economic and social activities. The residents’ paltry resources went into the purchase of generators and petroleum products for alternative power supply.
Efforts to resolve the issue were futile as the Benin Electricity Distribution Company (BEDC) insisted that debts owed it must be liquidated before it would restore electricity to the area. A due diligence audit committee was raised by the Okitipupa Local Government Area chairman to authenticate the debts, proffer solution on how to settle them and recommend the way out of the logjam.
The committee sat continuously for over two weeks and deliberated over the matter.
It found that BEDC indulged in many unwholesome practices that were unbecoming of a patriotic corporate citizen. The infractions included using constant coding (Code 3) for customers who have functional meters, as well as failure and/or refusal to install meters for customers who have paid for them.
It was also found that communities that had no electricity supply for extended periods of time – in some instances months – were billed for the periods and dubbed as debtors. It was alleged that BEDC took bills and debts from local government areas outside Okitipupa and subsumed them as part of the debt of Okitipupa council area. Some of these locations are in Ondo State. At least one is in Ogun State.
An activist, Jim Daniel, said: “Except for mischief and/or fraud, it is difficult to believe that BEDC does not know the boundary of Okitipupa Local Government Area!”
The committee found that BEDC allegedly refused or failed to settle the bills incurred by its (BEDC’s) offices and sub-stations, but attributed the bills/debts to Okitipupa council area. Another discovery was that BEDC generated bills for up to January this year for many customers when electricity supply had been disconnected about the middle of December, 2014. This is despite the fact that it was BEDC which cut supply from its customers.
In all, consumers in the local government area were said to have owed BEDC N113.6 million, which they contested. As a way out, the committee recommend that BEDC should generate new bills based on the actual debts and that BEDC/Consumers Consultative Committees should be inaugurated at various levels/locations to settle disagreements before they degenerate to crises.
“The privatisation of electricity supply by the Federal Government should not be allowed to turn to a curse to Nigerians. BEDC should not be carried away by the fact of it (BEDC) being a monopoly in the area,” Daniel said.
The DISCOs do not deny the extortion. They admit it. A consumer, who lives in Lagos, Ishola Shodunke, on September 16, wrote IKEDC to complain about an excessive estimated bill of N13, 642.96 he received for August. That month, his meter was not read. His previous bills were as follows: January, N2, 454.09; February, N1, 384.08; March, N2, 229.52; April, N1, 423.71; May, N1, 133.09; June, N1, 542.60 and July: N1, 347.42.
On September 19, IKEDC replied, saying: “In response to your mail regarding your electricity bill for August, 2015, we write to inform you that your bill for the period in focus was generated based on estimation and your complaint has been forwarded to the appropriate unit for further investigation to ascertain why your bill was estimated. Please be assured that it will be attended to and you will be informed as soon as we receive a detailed feedback. We sincerely apologise for any inconvenience caused you, please bear with us.”
As at the time of filing this report mid-December, IKEDC was yet to furnish Mr Shodunke with the outcome of the promised investigation as to why he got an estimated bill for August. While he was waiting for an answer, he received yet another estimated bill.
Consumers beseech courts
Several suits have been filed in Lagos courts this year over excessive billing. The suits accuse DISCOs of extortion and the Nigerian Electricity Regulatory Agency (NERC) of negligence.
Residents of Itire/Ijesha Community in Surulere and Mushin Local Government Areas, after a long-standing dispute with EKEDC, filed a suit at the Federal High Court in Lagos.
In the, suit numbered FHC/L/C5/1996/14, they sued for themselves and on behalf of electricity consumers with analogue meters and those without. The plaintiffs – Olufemi Okuyemi, Junaid Fatimat, Abdulrasheed Jimba, Haruna Ogunyomi, Azeem Owe, Ajia Ifeoma and Segun Shonubi sued EEDC, NERC and Attorney-General of the Federation (AGF).
They sought a declaration that EKEDC is negligent in computing their electricity bills. They prayed the court to hold that NERC failed in its duty in regulating EEDC’s operations with respect to computation and issuance of electricity bills. The plaintiffs sought an order directing EKEDC to “scientifically, diligently and accurately” compute their bills according to what they consumed.
The plaintiffs said the problems began with the defunct National Electric Power Authority (NEPA) in 2005 when those of them with meters noticed discrepancies in their bills and their meter readings. Their monthly bills, they said, were far in excess of their consumption. The problem, they said, persisted with the Power Holding Company of Nigeria (PHCN), which succeeded NEPA.
When EKEDC took over, the residents thought their problem would soon be over. But they were wrong. “When EKEDC took over from PHCN, it also operated exactly in the same way and manner as PHCN. EKEDC issued estimated bills to us (far above our consumption and as reflected in our meter readings), and also disconnected us from electricity supply over bills which arose out of the estimated and excessive billings,” the plaintiffs claimed.
The residents said some of them could not afford to pay the bills while other refused to pay to protest what they believed, had no correlation with the watts or level of electric power supplied in a given period and the bills issued them for the period.
To illustrate the excessive billing, Ogunyomi said he received bills of N2, 613.6 on June 5, 2014 and November 4, 2014. But he got N19,008, N9,108 and N9,820 for September, October and November 2014 on the same functional meter.
Lawyer seeks damages
A lawyer, James Ogunyemi, sued IKEDC at the Lagos State High Court for allegedly extorting huge sums of money from Nigerians in the name of estimated electricity bills. He and a consumer, Igiebor Solomon, sought a declaration that it is illegal to issue estimated bills to them when IKEDC confirmed that they had functional meters. According to them, they received estimated bills last year for March, August, September, and December, as well as January and February this year despite having accessible, functional meters as confirmed by IKEDC officials.
Among others, they sought a declaration that the disconnection of electricity supply to Ogunyemi’s apartment last December 22 and March 23 this year in order to extort money/payment from him is contrary to Section 406 of the Criminal Code Act is illegal and criminal.
They also sought an injunction restraining IKEDC from further giving them estimated/coded and any form of fraudulent bills in excess of the actual units of electricity they consumed.
The claimants said the defendant investigated the working condition of their meters and confirmed they are in perfect working condition. Despite the confirmation, the estimated bills did not stop.
“The fraudulent billing with threat of disconnection to extort payment from the claimant and other helpless Nigerians by the officials of the defendant continued till the filing of this suit. The defendant’s officials ignominiously confirmed to the first claimant that the revenue target of the defendant must be met with or without reading of meters or supplies of electricity.
“It is criminal and fraudulent of the defendant to pursue its revenue target to the detriment of innocent and helpless Nigerians, including the first claimant by extorting payment from them for units of electricity neither supplied nor consumed by the claimants and other Nigerians.
“Extortion of payment from the first claimant with threat of disconnection and actual disconnection of electricity supply on December 22, 2014 and March 23, 2015 notwithstanding the unresolved complaint of fraudulent, extortionate and excessive billing amount to obtaining money with menace from the 1st Claimant by the Defendant contrary Section 406 of the Criminal Code Act,” the claimants said.
The claimants aver that IKEDC is determined to continue to use its fraudulently estimated/coded bills to extort monthly payment from its helpless customers, who have no alternative supplier of electricity.
Ogunyemi and Solomon are seeking N5 million damages for unlawful disconnection of electricity supply to the lawyer’s apartment and fraudulent extortion of money/payment from him.
The claimants, who live on the same street in Agege, Lagos, said in August, 2014, IKEDC was motivated by avaricious revenue drive to abandon the reading of the meter to pave the way for fraudulent billing and extortion of payment from consumers with threat of disconnection.
According to them, before they stated receiving estimated bills, they always made oughtright payment of the total amount represented by the bills when their meters were read.
But, things changed when IKEDC served on Ogunyemi a bill reflecting 530E units of electricity in the total sum of N7, 990.91, which shows that the claimants, whose electricity meter was working, was billed on estimation.
Despite several complaints to the marketer in charge, the problem persisted. They wrote to IKEDC, which said the complaint was “being investigated and the resolution will be communicated….”
“While awaiting the rectification of the fraudulently estimated bills for the months of August, 2014 and September, 2014, the defendant’s officials disconnected the electricity supply of the first claimant on Monday 22nd December, 2014 to compel payment of the extortionate bills.
“The first claimant paid N11, 500 (Eleven thousand five hundred Naira) on the 23rd December, 2014 on the bill for November, 2014 and was consequently reconnected with threat to further disconnect the first claimant until complete settlement of the fraudulent bills.
“The claimants’ bills for the month of October, 2014 and November, 2014 respectively reflects 108 units and 206 units of electricity consumed by the first claimant in the sum of N2, 285.83 and N3, 644.82 respectively, with the meter service charge and VAT. Notwithstanding the perfect working condition of the meter, the defendant resumed the fraudulently estimated and coded billing in December, 2014 and continue till the filing of this suit and thereafter,” the claimants said.
According to them, the estimated bills has continued. “The last straw was the statement of the top management official of the defendant at Alausa, Ikeja, on March 24 to the first claimant that if the customers are to be billed on the actual units of electricity consumed, the defendant will not able to meet its revenue targets.
Ogunyemi said the meter reflecting the actual units of electricity he consumes is fixed outside his apartment, readily accessible to the defendant’s officials.
“It is fraudulent, illegal and criminal of the defendant to use estimated/coded bills with threat of/actual disconnection to oppressively extort payment/money from me despite the fact that I am being compelled to spend over N30, 000.00 on premium motor spirit (PMS) monthly to supply electricity to my apartment as a direct result of epileptic/total lack of power supply for my use,” he added.
Defendants react
EKEDC, NERC and IKEDC filed notices of preliminary objection to the suits. EKEDC said the court lacks jurisdiction to adjudicate or determine the reliefs sought because electricity is not contained under Section 351 of the 1999 Constitution (as amended). It added that the suit discloses no reasonable cause of action against the defendants, and that the plaintiffs “are bereft of the requisite locus standi (legal right) to initiate the action.” EKEDC said it was also a “non-juristic” person and therefore cannot be sued.
NERC prayed the court to strike out the suit for lack of jurisdiction. It said the plaintiffs did not follow the procedure for filing complaints before it. According to it, a complaint must first be lodged with the DISCO’s customer unit. And if the unit fails to address the problem, the matter can be referred to a NERC forum, and where the forum fails to rectify the problem, an appeal from the forum’s decision is then presented to NERC as a last resort.
IKEDC, in its objection dated August 5, also challenged the court’s jurisdiction. The objection is on the ground that the name “Ikeja Electricity Distribution Company” is neither that of a natural person nor an incorporated company and therefore lacks the capacity to sue or be sued. The defendant said its name is actually Ikeja Electricity Distribution Plc (IKEDP).
“An action against a Nigerian company must be brought in the incorporated name of the company as registered with the Corporate Affairs Commission (CAC). The fefendant ‘Ikeja Electricity Distribution Company’ is not a juristic person recognised by law. The suit is incompetent, having been initiated against, and in the name of a non-juristic person. This honourable court lacks the jurisdiction to entertain this suit,” the defendant said.
In response, Ogunyemi said IKEDC is the name on the bills he received. He said the “false representation made by the defendant itself to all Nigerians through its electricity bills and letters does not divest this Honourable Court of the cherished jurisdiction to entertain the suit. This is more so when it is evidently clear that the defendant took advantage of the name (IKEDC) on the bills to collect money,” Ogunyemi added.
Controversy over fixed charges
The fixed charge is a component of the customer’s electricity bill. It varies from region to region, depending on the DISCO. The monthly fixed charge is different from the energy charge which is the true representation of the amount of power consumed. The fixed charge is paid by the analog meter as well as the prepaid meter owners.
It is an amount the customer is compelled to pay whether energy is consumed or not. Prepaid meter users are compelled to pay any backlogs of fixed charges before buying units. To observers, the fixed charge is free money for the DISCOs as it represents no goods or service rendered. The charge is collected whether energy is supplied to customers or not.
An Edo State-based activist, Osazee Edigin, who has been campaigning for the removal of the fixed charges and an end to unfair trade practices in the power sector, said the charge is different from service charge or maintenance fees.
“The maintenance fees have been abolished since December 2011. This fixed charge was smuggled in to replace the maintenance fees or service charge. Even while we had the maintenance fees or service charge, the customers still did the maintenance themselves; they bought their transformers, poles, meters, strings.
“When the power sector was still under the defunct NEPA, there were neither maintenance fees nor service charge. What a customer consumed was calculated at the end of the month and actual bills were issued. At what point was this fraudulent fixed charge added to our bill? Why would the people be compelled to pay a fixed charge to privately owned entities whether they are rendered services or not?
“It is on good record that these DISCOs were actually transferred to family and friends of the powers that be. The BEDC rakes in to N3.5 billion naira monthly from fixed charges alone, yet a private liability company that makes so much will not bother to improve its sevices ,” Edigin said.
A lawyer, Toluwani Adebiyi, in a suit he filed at the Federal High Court in Lagos, is challenging, among others, the fixed charge and a bid to increase tariff. While NERC justified the fixed charge by saying that such money “is to service or maintain permanent investments like poles, cables and transformers,” Adebiyi said most communities have been funding such maintenance through their personal contributions.
“Of what use then, is the N750 fixed charge which consumers pay? The DISCOs collect the money but do not use it for any maintenance. This is nothing but fraud, just like estimated bills. This is why the fixed charge must be abolished,” he said.
Mr. Yusuf Babalola, who lives in Isale Ijebu in Ajah, Lagos, said the transformer in his area had been in a state of disuse for over three years. Throughout the period, they were receiving electricity bills, with fixed charges embed in them.
His words: “I live in Isale-Ijebu, Ajah community where a transformer has been abandoned for over three years. Yet, the Eko Distribution Company keeps collecting a fixed charge of N750 from us which is supposed to be meant for purposes like this. The company’s officials told us that we should contribute money so that they can install our transforming. In fact, the community has already raised money to buy some items needed to get the transformer working.”
Babalola is not alone. Mr. George Ibizugbe, who lives in Oka community in Sokponba, Benin City, recalled that in November 2013, the transformer servicing their community broke down. The residents contributed money to the tune of N325, 000. 00 to enable BEDC fix the transformer. Four months later, BEDC returned the repaired transformer and installed it, using the money the community raised.
Having exhausted the 18 units left in his prepaid meter within two days, Ibizugbe sought to buy N1,000 recharge voucher from a BEDC sales centre. He was shocked when BEDC officials told him to first pay N3, 000, which represents N750 monthly fixed charge being arrears for the fourmonths there was no functional transformer in the community. It was not until Ibizugbe paid the money that he was allowed to buy the N1,000 recharge voucher.
“I was forced to pay for something I did not use. Was it my fault the transformer broke down? Even when it broke down, I contributed money towards repairing the transformer despite all the fixed charges I had paid previously. This is highly unfair and very exploitative. And the worse is that our government is doing nothing about the rip off,” lamented.
Is regulation dead?
NERC is the primary regulatory agency for the power sector. Its functions include protection of the industry players and customers. To some analysts, the commission has not lived up to expectations.
“NERC has not been able to coordinate and call to order these DISCOs going by the way and manner they exploit their customers. As matter of fact, NERC, through its Multi-Year Tariff Order (MYTO), has empowered these DISCOs to collect fixed charges from customers.
“What that means is that, whether these DISCOs have energy to distribute to customers or not, they smile to the banks on daily basis while the people and businesses groan in darkness. Why would a Federal Government commission that is expected to protect the people against exploitation be the one colluding with capitalists in ‘strangulating’ the people? This has given room for questions begging for answers.
“Until the people start paying for energy consumed and the fixed charge regime abolished, and the DISCOs are compelled to give meters to customers who have been placed on arbitrary estimated bills, Nigerians should not expect steady power supply,” Edigin said.
Case for tariff increment
The Federal Government and DISCOs have justified the need to increase tariff. Despite being substantially privately controlled, the power sector remains problematic across the value chain of generation, transmission and distribution. The DISCOs, which feed the entire value chain financially, are facing funding deficit, a challenge that has affected the generation and transmission segments. The two legs depend on revenues collected by the distribution companies.
According to operators in the power sector, the transmission network is the weakest link in the chain. The transmission company can at its peak, wheel 5, 300 megawatts (MW). Therefore, even if the generation companies can pool 10, 000MW, customers can only get 5100MW because 200MW may be kept as spinning reserve to balance emergencies.
The distribution companies take at best 60 per cent of what they are supposed to get. No thanks to technical and commercial challenges. Power is lost in transit due to poor equipment. DISCOS were said to be owed over N32 billion, the bulk of which was in the hands of Federal Government Ministries, Departments and Agencies (MDAs), and the military.
Vice President Yemi Osinbajo (SAN), speaking at the Annual General Meeting of the Manufacturers Association of Nigeria (MAN), said: “At this point, if we wanted to have a cost-effective tariff, the only way is to service that core value chain. The only way is to ensure that we are paying and compensating the value chain – from generation down to distribution – a cost effective tariff.
“At the moment, when you compare how much it costs to produce power, and the amount of power that is generated, the losses on account of distribution are significant. In some cases, you have up to 40 per cent losses in distribution, and of course, it is the DISCOs that have to take that burden.
“The generating companies are producing power but they expect to be paid for all the power that they produce. Now, if 40 per cent of this is lost, it means the DISCOs cannot collect 40 per cent, but they have to pay for it somehow. So, the government has to come in and play some kind of role in order to ensure that the whole value chain is paid for.
“But, I think that we must be ready to accept that for a while, until things stabilise somewhat, tariffs cannot remain at the levels at which they are today, they cannot remain at that level, and that just simply is the truth of the matter. It certainly means that there may be higher costs, but I don’t think that the option of not having power is really what we want.
“The real issue of course is that at the end of the day, some of the cost goes to the consumer, but a cost reflective tariff is an absolute necessity, otherwise, privatisation and all of that simply doesn’t make sense.”
Executive Director, Association of National Electricity Distributors, Mr. Sunday Oduntan, said current electricity tariffs were not cost-reflective. This, he said, had impacted negatively on the operations of the DISCOs across the country and had continued to drag down their revenues.
“All we want are cost-reflective tariffs. Our people should realise that we need cost-reflective tariffs or else, this industry will die. It is not primarily about tariff increase, but all we are saying is that the tariffs should be cost-reflective or else this industry will collapse,” Oduntan said.
According to the Chairman, Egbin Power Generation Plc., Mr. Kola Adesina, the company is owed N39 billion by the Federal Government, which accumulated from when they took over the asset in November 1, 2013 to October this year.
