Ibadan Electricity Distribution Company (IBEDC) is one of the distribution firms licensed last year following the unbundling of the power sector by the Federal Government. Its areas of coverage spans Ogun, Oyo, Osun, Ekiti, Kogi, as well as parts of Kwara and Niger states. Its Managing Director, Fortunatus Leynes, says ending vandalism and an upward review of cureent electricity tariff would go a long at improving power supply. He spoke in Lagos with senior journalists, Group Busines Editor, Simeon Ebulu was there.
From your experience in the past, will you say the the decision of the government to deregulate the power sector was right?
Yes, because there has been an improvement in electricity supply in the country in the last one year. The government decided to deregulate the sector because of its desire to have reliable power supply in the country.
With what has happened in the last one year, the country is gradually getting close to achieving that as electricity supply is becoming better. This is something that the country had found difficult to achieve for many years. This has been achieved because of the privatisation of the companies involved in power generation and distribution.
Your view that electricity supply has improved may be personal to you. Some will have a contrary opinion. Do you agree?
The facts on ground speak for themselves. I may not be able to speak for other franchise areas, but in our own franchise area, electricity supply has improved greatly. As I speak with you, the minimum number of hours of supply in most parts of our franchise area is 15. I am not saying that is enough; of course we are working to improve on that but that is the fact. Electricity supply has improved. If there are areas that are getting less than 10 hours of supply, it must be due to a local problem which will be addressed.
What are the challenges you have to confront before coming this far?
The major challenge we have had is insufficient power supply from the national grid. This means that we do not have enough power to distribute to our customers. Unfortunately, many of the customers do not seem to understand the way it goes; they do not realise that we cannot distribute more than we receive from the grid.
We are the ones they blame whenever there is inadequate supply of electricity. But it is pertinent to note that as a distribution company, we are at the tail-end of the electricity supply chain. It is what is delivered to us that we distribute to our customers. However, we understand the way they feel and we are doing our best to address their concern.
Another challenge we face is tariff. I want to tell you that the tariff we take from the customers is too low. The tariff is not enough for us to finance the purchase of transformers, lines, poles, wires and other electrical equipment needed for our operations.
We also have the challenge of vandalism. Very often, members of the public vandalise our equipment and facilities. This has not been helpful to us at all. It has resulted in huge financial losses to our company. The implication of this is that the resources that should have been deployed to increasing capacity would be used to effect repairs. So, downtime will continue to be high for as long as our equipment and installations are vandalised.
We have appealed to all our customers to see our facilities as their property and protect them because it is only when the facilities are allowed to function very well that we can assure them of regular power supply.
We have also called on communities to ensure the security of the facilities for the good of all. The importance of regular supply of electricity cannot be overemphasised, but one way of guaranteeing this is for the people to desist from vandalising our facilities because it is these facilities that will ensure that electricity gets to houses and offices.
What options do you have about increasing the power supplied to you from the national grid?
You know we are not the only one in the business; so there is a limit to what we can receive from the national grid. Until power generation improve, there’s very little we can do because whatever is generated has to be shared among the distribution companies.
However, we are planning to augment our supply through embedded power generation. This is our way of increasing power supply to our network and it will enable us to increase power supply to our customers. We have already communicated our intention to the Nigerian Electricity Regulatory Commission (NERC), and we are awaiting their response. We shall start work on it as soon as we get the go ahead from NERC.
How will the embedded power generation work?
We shall have a number of this in different parts of our franchise areas and add to our network. We shall not add the power so generated to the national grid, it will go straight into our own network. We are taking this step because we owe it a duty to our customers to supply them regular electricity. What they expect from us, is service, not excuses. As far as they are concerned, whenever there is power outage, it is our fault; they do not want to know whether we receive enough power supply from the grid or not, that is not their business. It is our belief that by taking this route to increase power supply, we shall be adding value to them and improving the overall electricity supply in the country.
Are you going to add power generation to your original mandate of power distribution?
No, we are not the ones that will be generating the power. We plan to engage different companies in the embedded power generation scheme, but they know that whatever they are able to generate we shall buy from them. That is part of the beauty of the deregulation of the sector.
So, to answer your question, we shall remain a power distributing company; we have no intention of adding power generation to what we are doing. We are motivated to do this because of our determination to give first class services to our customers.
Is achieving uninterrupted electricity supply in this country such a tall dream?
Honestly, the way to get that is what the government has embarked upon and that is deregulating the sector so that private people with requisite experience and technical know-how can come into the sector. At the risk of sounding immodest, I want to say that in the last one year, our company has been able to improve power supply in our franchise areas.
One thing Nigerians should realise is that investment and appropriate technology follow liberalisation and deregulation of critical sectors. With the deregulation of the sector, investments will come from far and near and so will latest technology. These are two critical factors for having uninterrupted power supply.
For instance, apart from the initial investment that our company made in this business, we are currently discussing with a consortium of banks to raise $160million which we want to inject into the business. This money will be used to improve facilities in our network.
Why are we able to do this? It is because we are a private business. If it were a government business, the bureaucracy involved will make it difficult. By the time the money is released, the technology for which it is meant would have become out-dated.
Private businesses are result-oriented, they want to get the result that will make their businesses sustainable. This can only be assured when they deliver quality services to their customers and the only way to deliver quality services is by continuous investment in the business. That has been the secret of the improvement in electricity supply in the last one year.
I know that Nigerians are justifiably impatient about having regular electricity supply, but they should just give us some time. Now, I speak for our company because I don’t know what others are doing. We are trying to attract the right people and inculcate in them the right attitude. We are also investing in the right technology to drive the network. With all that we are doing, in the next two to three years, our company will make the difference. I can assure you.
How close are you to achieving your set objectives?
I will be honest with you, it has not been easy because when our business plan was developed, it was based on some parameters- such as customer count and amount of power available. But when we got into the business, the reality on ground was different from what we were told. This has largely affected our operations. We have had to review our targets in line with the reality on ground.
So, to be factual, we have not achieved all that we thought we would achieve in one year. But altogether, it has been a good year and we are looking forward to a better outing next year.
What are your views on the regulation of the power sector in Nigeria?
I will say the power sector in the country is a highly regulated one and at this stage of the sector, I think it is necessary. The regulator of the sector, the NERC, is very strict about compliance. Non-compliance with laid down rules attracts serious sanctions. This has been helpful to both the operators and our customers as it keeps us on our toes, knowing that an agency is watching. What we all want is regular supply of electricity for the improvement of our lives and businesses.We, as an organisation, play by the rules. So, we do not have any problem with the regulators.
How were you able to manage the transformation from a publicly owned agency to a private one?
One of the good things that the government did with the privatisation is the decision to pay the terminal benefit of all staff of the legacy company. That means we could start on a fresh note. It gave us the freedom to pick the best hands in the legacy company and blend with the best hands from outside and the combination has been wonderful. As our customers will attest, power supply has improved greatly. Some areas enjoy 22 hours of electricity supply, some 18, some 15. These are by no means the best, but considering where the power sector was, it is a huge improvement.
Talking about how we were able to achieve this, efficient management of resources, regular training of our workforce, deployment of world class technology and prompt responses to complaints, were key, and still are.
I give you an example. The substation at Akanran/Olorunsogo in Ibadan was destroyed by some irate youths in January, 2012. Nothing was done about that for about three years. The people were left in darkness for almost three years. Of course this had a negative effect on businesses in that area and it also meant a loss of revenue for the company.
As a private business that is not dependent on subvention from government, we knew we had to do something about it, especially because our mission is distributing power, transforming lives.
We spent about N150 million to renovate the substation. The people are happy with us for putting an end to their pains; we are happy with ourselves for transforming the lives of our customers.
You said the tariff you charge is too low. What in your view would be the ideal tariff?
I cannot give you a figure because it is NERC that announces the tariffs and it depends on some parameters to arrive at these. We just think that considering what goes into the business, the tariff should be a bit higher. But then the final say lies with NERC, there is no point second-guessing the Commission.
So what should be your customers’ expectation as you start your second year?
Our customers should expect improved services as we put in more money to buy transformers and rehabilitate our electrical facilities. We have the plan to replace all obsolete equipment we inherited from PHCN, but they should know that this will definitely take some time.
As part of our first anniversary activities, we are upgrading transformers to various communities across the franchise area. Thi s is targeted at improving power supply to them.
