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  • Fashola unfolds 13-point agenda to revive power sector

    Fashola unfolds 13-point agenda to revive power sector

    The Minister of Power, Works and Housing, Mr Babatunde Fashola, on Monday unfolded a 13-point agenda to drive efforts towards enhancing power supply in the country.

    Fashola said in Abuja during his maiden meeting with power generation, distribution and transmission companies, and other stakeholders that the agenda was drawn up to ensure effective monitoring of the sector.

    The minister said the agenda involves continuous public engagement on tariff collection, debts, power generation, maintenance, ancillary services, dispatch orders and discipline.

    Other areas include gas requirement and constraints, transmission constraints, 33KV load off take, imbalances-locations of excess, overload safety, service quality, new captive and embedded generation, franchising and other issues relevant to the growth of the sector.

    According to Fashola, President Muhammadu Buhari has approved that all stakeholders in the sector should hold monthly meetings on issues concerning the industry.

    He said that the meeting would be rotated among the various GENCOs, DISCOs, TCN and other stakeholders across the country.

    Fashola said that all decisions reached in such meetings would be binding on all the stakeholders.

    In this respect, the minister stated that the various companies and stakeholders would each be represented by a management member with authority to take decision on behalf of their companies.

    He explained that in order to minimise the cost of hosting the meetings, the companies were advised to jointly pull up resources required to hold the meetings.

    The minister further said the meetings would also involve lawyers, engineers, planners and other stakeholders, adding that the ministry would issue a communiqué at the end of each meeting on steps taken to address challenges in the sector.

     

  • How regulatory failure, sabotage, others undermine power sector ( 2)

    How regulatory failure, sabotage, others undermine power sector ( 2)

    In this concluding part of the series on unfair  practices in the power sector, JOSEPH JIBUEZE examines how regulators look the other way as Nigerians pay through their noses for power not used.

    Electricity consumers are at a loss. Reason: there is no justification for tariff increase. Assistant National Secretary, Nigerian Electricity Consumer Advocacy Network, Mr. Obong Eko, said: “We have it on good authority that Nigerian Electricity Regulatory Commission (NERC) is under intense pressure to increase electricity tariffs as it finalises the review of the requests presented by the Distribution Company’s (DISCOs), but this will not work because they have no basis to demand for any increase whatsoever.”

    He argued that DISCOs were not following the parameters set for them by the regulatory body, which was why they always complained of not making enough revenue. According to Eko, one of the parameters is that the DISCOs should meter all their customers. He stressed that only about 30 per cent of electricity consumers nationwide were currently being metered.

    “They were also told to employ enough hands to help them collect bills from a sizable percentage of their customers. But after our analyses and investigations across the country, we discovered that on the average, most DISCOs only collect bills from one out of every five customers. Now, tell me, is that how a business should be run? And if a business is run in such a manner, will it break even, talkless of making a profit soon enough?

    “What they do is to over-bill the few faithful customers and continue complaining that they don’t make profits. They should, as a matter of urgency, carry out adequate customer enumeration. We are tired of hearing that they don’t have money. If you had no money, why did you apply for the acquisition of a power firm?

    “What they are doing now is to bill consumers excessively in order to generate revenue to acquire meters. This, of course, negates the normal principle of investment. You put in money in the business by metering customers, because the meters will ensure that you get what is due to you and it ensures profitability and not the other way round. They must know that no matter the pressure on NERC, consumers are opposed to any form of tariff increase until meters are provided.”

    Eko stated that an increase in tariff would be highly detrimental to the economy. He argued that many small businesses would go bankrupt if NERC should increase the power tariffs, adding that this would push up the unemployment rate in the country.

    He added: “Currently, many Nigerian companies find it tough to effectively compete with their counterparts internationally, not to talk of when bills are hiked. Please, this should not happen. A lot of companies come to us, telling us to interface with NERC and make them see reasons why Nigeria is not ripe for an increase in electricity bill. In fact, many of these companies spend about 30 per cent of their revenue to pay for the electricity. So, if the bill is increased, how much of their revenue will they now pay for electricity alone? The Federal Government must not allow this.”

    Adebiyi said rather than tariff increase, there should be a multiple long-term financing approach, sourced from the banks, capital market, insurance and other sectors to finance the power sector.

    “Poor masses are paying an estimated and indiscriminate bills ranging from N5, 000 to N18, 000, while spending an average of N15, 000 to N20, 000 for fuel to maintain generating set weekly. Businesses have collapsed, industries have closed down and residents cannot sleep comfortably at night due to power outage.

    “Companies and commercial houses are groaning under throat-cutting  bills which they are paying for. Yet, they are not getting the benefits of such payments,” Adebiyi stated.

    He stressed that the proposed tariff increase was coming amidst the tangled web of poor power supply with no reasonable proof of improvement.

    “The situation is self evident. It readily speaks for itself because everyone is suffering from outage. Bringing further increase amidst this tangled web of hardship and without any improvement in power supply will be highly unjustifiable and will be an economic burden on populace. It is totally absurd and not for the good of the people, and therefore must not be allowed,” Adebiyi said.

    Despite the frequent nationwide blackout, NERC announced plans to increase tariff. The first move to hike  was halted by the Federal High Court in Lagos. Justice Mohammed Idris, on May 28, restrained NERC from implementing a new tariff, which would have become effective from June 1. He barred the respondents, including DISCOs, from effecting any increment in electricity tariff until the suit is heard and determined.

    As the suit was pending, NERC announced plans to go ahead with the  increase. But, the House of Representatives, on December 15, halted the plan pending the completion of its committee’s investigation of some stakeholders in the sector. In a letter to NERC, the Babajimi Benson-led House Ad-hoc Committee investigating the activities of DISCOs, told the commission to abide by the directives in a previous letter it wrote urging it to suspend the review of electricity tariff.

    The letter, signed by Benson, reads:  “Our attention has been drawn to various news items published in many newspapers of December 13, 2015 to the effect that your commission has concluded plans to announce new electricity tariff to Nigerians this week. It is our opinion that any plan by your commission to announce new electricity tariff will run contrary to the spirit of the letter under reference and undermine the outcome of the investigative hearing by this committee as it relates to infrastructure and billing by electricity distribution companies. We, hereby, once again, demand that you suspend the announcement and/or implementation of any increase in electricity tariff until (the) above stated issues is concluded.”

     

    Insight into regulatory failure

     

    The power sector is segmented into three parts – generation, transmission and distribution companies. Generation companies (GENCOs) sell to the DISCOs, who in turn distribute to industrial and domestic users. The transmission line transports the generated power to the various DISCOs. The consumers buy power from the DISCOs from their retail kiosks.

    The generation and distribution segments were privatised by the Federal Government, but there are allegations that the process was heavily compromised and flawed, according to a Senate ad-Hoc Committee on Power.

    At a public hearing on the privatisation of the power sector, committee Chairman Senator Abubakar Kyari alleged that some members of staff of the Bureau for Public Enterprises (BPE) were board members of some of the registered power generation and distribution companies. He alleged that they received exotic jeeps from those companies as privileges. The committee said the development may not be unconnected with the inability of regulatory agencies to carry out their responsibility of diligent supervision.

    A former Minister of Power, Alhaji Bello Suleiman, urged the Federal Government to investigate the privatisation of the power sector carried out by the BPE. The former Managing Director of the defunct NEPA, said: “With all due respect, there is an urgent need for independent scrutiny of the privatisation exercise in the power sector. The perception is that it has not been transparent.

    “The experts should examine whether the companies are capable to financially and technically take the country to the level of the 40,000 megawatts. If we do nothing now to ensure that they are the right persons, at the end of the day we may fail.”

     

     Why power failure persists

     

     

    President Muhammadu Buhari said sabotage and theft of gas were undermining efforts to increase power supply. In a statement by his Senior Special Assistant on Media and Publicity, Garba Shehu, the President said damage of pipeline installations continues to be a problem despite improvement in power in the recent period.

    “Power is a running battle because the saboteurs are still there. We have the potential. We have gas, we have qualified people but we are contending with a lot of saboteurs who go and blow up installations. When gas is pumped to power stations, thieves and saboteurs such as the militants cut those supplies,” he said.

    He noted that the government has a reduced role in the sector due to the privatisation of the institutions under PHCN, in the process of which, he said, the facilities “have been sold to a number of interest groups.” The president said with increased surveillance, power supply will increase. “Supplies will become steady; there will be less sabotage as we secure the pipelines,” he said.

    According to experts, another challenge is the regularity with which power dips. The Federal Ministry of Power disclosed that power supply from the Transmission Company of Nigeria (TCN) dipped to 2,881.56 Mega Watts (MW) on November 18. Earlier on November 15, the ministry’s statistics showed that TCN sent out 3,682.32MW to the distribution firms. In effect, power supply dipped by 800.76MW within a matter of days.

    According to the ministry, energy generation that stood at 3,754.96MW on November 18 also dropped to 2,945.75MW. The Nigerian Electricity Supply Industries (NESI) Highest Peak Generated, which was 4,810.7MW reduced to 4,073.4MW.

    Earlier on October 1, power supply that was 4,008.53MW a week earlier, dipped to 3,619.70MW. Of the 3,704.73MW that the Electricity Generation Companies (GENCOs ) produced, TCN could not evacuate 85.03MW. The power ministry noted that peak generation was 4,307.4MW from 4,405.3MW, indicating a drop of 97.9MW in a space of 10 days.

    According to TCN, the dips are partly caused by damage to transmission lines. It said when Tower No 62, on the Okpai-Onitsha 330KV double circuit transmission line which was evacuating power from the Okpai Power Station in Delta State, was vandalised, it resulted in the reduction of available power to the national grid by about 480MW. TCN said two of the four legs of the transmission tower were cut by vandals, causing the tower to hang precariously and posing a major threat to transmission grid integrity.

    NERC Chairman, Dr. Sam Amadi, attributed one of the dips to a fire at the Kainji Hydro Power Plant. He promised that the Calabar Power Plant would soon come on stream to raise the power generation profile of the market.

     

     Billions sunk into darkness

     

    Since 1999, a total of N2.74 trillion? has been spent on the power sector, Permanent Secretary at the Ministry of Power, Godknows Igali, said. But some analysts said the actual figure is over N5 trillion.

    Igali said: “Since 1999, the sum appropriated is N1,565,638,385,735 and the actual release was N948,212,192,810, including all the value chain and all agencies. What was released under Multi Year Tariff Order (MYTO) from 2009 to 2013 under subsidy is N155,089,910,730 to cushion the shock of the slash in tariff.”

    He added that the Nigeria Integrated Power Project (NIPP) received $8.3 billion (about N1,66 trillion) from Excess Crude Account (ECA) to fund 10 power plants projects during the period, adding that the projects had been completed. Igali said out of 79 generating plants in the country as at 1999, only 19 were functional, generating only 1, 750 megawatts.

    “Despite the effort at investment by government, we have not been able to invest in a consistent manner in the power sector. TCN requested for N147 billion in 2011, but it was allocated only N45 billion, out of which only N30 billion was released and that has been the story,” he said.

    According to industry observers, PHCN and its successor received a chunk of the over N5 trillion.  Funds were also expended on the NIPP, supervised by a special purpose vehicle – the Niger Delta Power Holding Company (NDPHC) Limited. The NDPHC was created to fast-track the attainment of stable power supply when past efforts failed.

    The NIPP programme was conceived in 2004 and the NDPHC was created a year later. In 2007, $16 billion was allocated to the NIPP and used up within four years. The project was engulfed in controversy and litigation because of the alleged unexplained utilisation of the fund.

    According to the BPE, the government sold the 17 companies unbundled from PHCN for over $2.6 billion. The Federal Government also secured funds for the power sector from different international development organisations and companies to tackle the challenges in the generation, transmission and distribution value chain.

    For instance, the development of some projects, such as the Zungeru hydro electric power plant with installed capacity 700MW was funded with such funds. The Federal Government, according to the former Minister of State for Power, Hajiya Zainab Kuchi, spent N162,990,364,379.30 to implement the project in 2012.

    Seventy-five per cent of the funding was from the EXIM Bank of China. The counterpart funding of $309 million came from the Power Ministry. The project was being implemented by a Chinese consortium, CNEEC-Sino Hydro. Besides budgetary allocations, there were interventions from different development organisations. Igali explained that the European Union, JICA and GIZ bankrolled some projects.

    Last month, the former Minister of Power, Prof Chinedu Nebo, confirmed the supports from bilateral partners in form of loans, such as $700 million from the World Bank, $200 million from JICA , $370 million from  African Development Bank (AfDB), $500 million from EXIM China and $1billion from Turkey Projects.

    In the transmission segment, the AfDB also released a loan of $100 million to the Transmission Company of Nigeria (TCN). Last year, it was estimated that the TCN required about $3.7 billion to increase power transmission capacity, make the network more stable and reliable and improve efficiency of electric power transfer by reducing transmission technical losses.

    However, while there was no budget for the PHCN in 2013, N5.2 billion was distributed to generation and distribution companies as well as to TCN. The money was part of the N13 billion intervention fund for critical projects implementation, which was for upgrades and major repairs to bridge the gap created by the zero budget for the companies.

    As at May this year, about $11.1 billion had been committed to NIPP. Of the sum,  N7.1 billion went into the building of the 10 generation plants, $0.5 billion into gas assets, transmission assets got $2 billion and distribution assets received $1.5 billion. The NIPP plants were designed to deliver combined installed capacity of 5,453 MW. Despite the huge investments, there has been little improvement.

    Observers say corruption is also undermining the power section. For instance, the Rural Electrification Agency of Nigeria (REAN), established on March 16, 2006, was mandated by the Federal Government to pursue aggressive rural electrification. But, allegations of corruption soon hampered the effort.

    In 2009, the Federal Government, through the Economic and Financial Crimes Commission (EFCC), initiated a 156-count corruption charge at a Federal Capital Territory (FCT) High Court in Abuja, accusing the then Chairman of the House of Representatives Committee on Power, Ndudi Elumelu, the deputy Chairman, Jibo Mohammed, Senator Nicholas Yahaya Ugbane and seven senior management officials of the agency of corruptly appropriating funds voted for rural electrification project. The EFCC accused them of stealing over N5.2 billion.

    A budget analysis called Statisense, carried out by an organisation called Slideshare, which covered nine years (2006-2014), showed that the power ministry’s budgetary allocation within the period was N872 billion. The analysis was undertaken to know if the budgets met the United Nations Development Programme (UNDP) recommendation, which stipulates that budgetary allocation should be structured 70 per cent for capital expenditure and 30 per cent for recurrent expenditure. Their research showed that the Power Ministry had consistently allocated more funds to capital expenditure even surpassing the UNDP recommendation, but noted that Nigerians have not enjoyed the commensurate benefits of these allocations.

    The report showed that the Ministry of Power got N78 billion, N105 billion, N140 billion and N93 billion as budgetary allocations between 2006 and 2009 while the percentage recurrent and capital expenditures were 4.33 per cent and 95.67 per cent; 3.70 per cent and 96.30 per cent; 18.18 per cent and 81.82 per cent; and 5.31 per cent and 94.69 per cent.

    Also between 2010 and 2014, allocations were N157 billion, N86 billion, N73 billion, N77 billion and N63 billion respectively while the percentages of allocation to recurrent and capital expenditures were 2.28 per cent and 97.72 per cent; 9.45 per cent and 90.55 per cent; 4.25 per cent and 95.75 per cent; 5.43 per cent and 94.57 per cent; and 5.44 per cent and 94.56 per cent respectively.

    The report showed that the least percentage allocation to capital expenditure within the period was 81.82 per cent indicating 11.82 per cent above the UNDP recommendation.

     

    In defence of DISCOs

     

    EKEDC Chief Executive Officer (CEO) Oladele Amoda said the company has over 400,000 customers, close to 300,000 of which do not have functional meters. He said EKEDC has designed a meter roll out plan through which it would supply meters to customers. According to him, local meter manufacturers do not have the capacity to meet the needs of the 11 DISCOs because indigenous manufacturers are not many. He said they were overwhelmed by meter requirements from the DISCOs.

    On how customers without meters are billed, he said: “We put them on estimation category.  The estimation is not arbitrary because we go through scientific methodology as provided by NERC. The method follows a sequential order. First, we look at the feeders in a particular area to know the availability of supply on the feeders in a month.

    “Secondly, we look at the hours of supply on the feeders and transformers.  So, when we are billing customers, we take into considerations the power effects on the feeders and the transformers. Thereafter, we check  the availability of power, on average on the transformers, and on the basis of this, we bill consumers after calculating the volume of energy they have consumed over a period of time, usually a month.

    “The DISCOs are not happy with estimated or crazy bills. We do not even like a situation whereby we charge estimated bills. As a matter of fact, we want our customers to have meters, hence the decision to put in place a meter roll out plan that is in operation now. The roll out plan is such that every customer would be metered. The only snag is that the plan would take some time before it is fully implemented.”

    On estimated billing of those who have meters, Amoda said most meters have outlived their usefulness. He said efforts were being made to create awareness on the use of smart meters, through which the company can monitor power consumption by individuals and determine those who are overbilled.

    According to him, $250 million is needed to ensure their customers have meters. “We have spent close to $50 million on meters. You know money is not easy to come by. EKEDC is not the only firm that is asking for loans from banks. We have 11 DISCOs demanding for one credit or the other from the 21 commercial banks in the country. Apart from giving loans to the power firms, banks have other customers requesting for facilities from them. The banks are overwhelmed with requests for facilities,” he said.

    On the fact that some consumers with functional meters still get estimated bills, Amoda said: “We know that some customers have issues with DISCOs. Those that have issues with EKEDC, we tell them to come with their complaints with a view to seeing what we can do about them. When customers come to us with their complaints, we look at them and handle them properly.

    “We have treated many cases to satisfy our customers because they are kings, and must, therefore, be treated well. When we check our records and discover that customers have been unnecessarily overbilled, we correct the mistake immediately.  We have not fully automated our system, hence, the manual correction of mistakes in our operation. When we are fully automated, the correction would be done electronically.”

    According to him, EKEDC distributes between 400 and 450 megawatts of electricity. “Though it is not that it is stable, but it is better than what we were getting before. But, it is a far cry from what we actually require. Today, if we get 700 megawatts, we would manage it because there are so many suppressed loads right now.

    “The demand keeps increasing; if we see 700 megawatts today, we would be comfortable with it. The target is 2000MW and we hope to meet that target. After meeting this, we would increase our target to 6,000MW. We are working towards achieving that target in the next few years,” he said.

    Regional Communication Officer, IBEDC, Kike Owoeye, attributed the problem of estimated billing to antiquated meters. “Estimation billing might not be too perfect and that is why we have been asking those with complaints to come. Their complaints would be looked into. There are some meters in existence since 1955; these meters are already very old and they can no longer function very well. This is probably one of the reasons for some errors.”

     

     The way forward

     

    Analysts say Power Minister Babatunde Fashola has his tasks cut out for him. In his inaugural speech, President Muhammadu Buhari said the nation’s economic woes were traceable to poor power supply. “No single cause can be identified to explain Nigeria’s poor economic performance over the years than the power situation. It is a national shame that an economy of 180 million generates only 4,000MW, and distributes even less.

    “Continuous tinkering with the structures of power supply and distribution and close on $20 billion expended since 1999 has only brought darkness, frustration, misery and resignation among Nigerians. We will not allow this to go on,” he said.

    Experts have called for an expansion of the energy mix to include other sources such as solar, wind and biomass. They also said there was the need to get existing projects, such as the 10  megawatts (MW) Katsina Wind Farm, working.

    President, Nigerian Association of Energy Economists (NAEE), Prof. Wumi Iledare urged the government to unlock the country’s huge potentials in solar, hydro and wind energy.

    According to him, endemic corruption, poor assets maintenance, inadequate gas supply to thermal generation plants, transmission infrastructure challenges, and inconsistent government policies have all contributed to the poor state of electricity in Nigeria.

    “Until we are able to resolve the huge electricity deficit of the country, huge potentials of the economy would remain untapped and unavailable to current and future generations,” Iledara said.

    On power distribution and gas challenges, an energy expert, Dan Kunle, said: “The new minister of power should try to get to the root of the issue of gas production and appropriate pricing and delivery of gas to all the power plants in the country, and then the transmission infrastructure of the country. That is electricity transmission infrastructure of Nigeria.”

    Analysts say uninterrupted power supply will guarantee investments, employments for teeming unemployed graduates and reduce poverty level.

    A lawyer and energy consultant, Andrew Obinna Onyearu, said Nigeria is experiencing its worst energy crisis with the shortage of petroleum products and shortage of gas affecting upstream and downstream activities across the entire energy space. According to him, the persisting supply disruptions to an already severely limited generation output must be arrested. The vast majority of the functioning generation capacity is old, worn out, damaged and in need of urgent refurbishment or replacement, he said.

    He noted that average annual per capita power consumption in Nigeria which is at about 155 kWh is in the bracket of the lowest in the world, being seven per cent of Brazil’s and three per cent of South Africa’s.

    Onyearu said over 50 per cent of Nigeria‘s households have no connection whatsoever to the grid, while 60 per cent of those who are to be supplied have no meters, so there is no accurate measurement of what is supplied.

    On the way forward, he said short-term measures must start from capacity recovery to restore existing operational capacity to full functionality.  This, he said, will require expedited operation and maintenance action involving urgent deployment of human and financial resources, probably out of procurement and management cycles.

    “Urgent attention must be given to pipeline vandalism. This problem is man-made and deliberate, which means that its solution will entail short and long term answers.  Critically, community-based intervention to reduce and control their occurrence; phased enhancement and escalation of technology; the formulation and implementation of specifically targeted intervention including, perhaps, the establishment of a designated agency with this specific responsibility are all immediately desirable responses,” he said.

    Onyearu believes given the limited quantity of electricity generated, load shedding must be better organised, even possibly publicised so that expectations can be managed differently, while the problems with the availability of gas must be addressed, head on.

    He said: “Gas availability, generally determined by commitments by gas producers and their attitudes, must be engaged differently with defined target objectives.”

    He canvassed the comletion of the NIPP as a medium-term measures, noting that several power plants have, from an engineering perspective, been completed but cannot be brought on stream because of gas unavailability, while others have been deliberately stalled for the same reasons.

    The lawyer believes stricter regulation will address the unfair trade practices.

    “Post-privatisation issues with the unbundled entities appear hydra-headed and continue to grow in geometric proportions.  Existing challenges mean that generation levels upon which commercial stability was based at bid and acquisition stage have never been met. This has led to visible non-compliance with the business plans upon which new owners successfully acquired the assets.

    “Metering has become distorted and has led them, unhappily, to abandon agreed plans for comprehensive metering as well as other plans to enhance accountability of supply and other measures to reduce loss.  NERC now appears to be responding with measures to cap revenue from estimated billing, a development, sound in conception but bound to create even further but seemingly unavoidable friction,” he said.

    On long-term solutions, Onyearu said power sector’s potential is huge with no doubt as to its capacity to fulfill the country’s energy needs, provided there is specific, compartmentalised focus.

    “There must be further, contemporary review of the roadmap for power and this exercise must be on going.  The gas sector must be completely reformed, much in the same way that power was. Continuing to administer and develop gas as an adjunct product with oil remains an infuriating mistake, this being a persisting reflection of the posture even in the levitating Petroleum Industry (PIB) Bill.

    “The entire structure midwifing Independent Power Producers appears to have derailed investor confidence in the sector and is endangering the much-touted private sector involvement especially in generation and distribution,” he said.

    To him, the regulatory environment must be stabilised and clarified, while large projects that are expected to boost grid electricity deserve focused attention as well as specific, well-organised responses.  The country, he said, also needs to diversify its energy sources.

    “As a country, we need to affirm serious interest in other forms of energy and limit the pretended interest in coal, hydro and renewables.  The longer these remain academic sources of energy, the farther away we are from genuinely producing adequate power.  The NIPP Phase II presents an ideal opportunity to proceed decisively in this direction.

    “The tardiness that has attended the implementation of the National Renewable Energy and Energy Efficiency Policy must be reversed.  All these must encompass the review of the rural electrification programme. Finally, there must be a permanent solution to pipeline security, otherwise most of these measures will be irretrievably endangered,” he said.

    Solving the power problem, the expert said, will require political will. He suggested that the President could assume personal, direct control as it happened under the last administration through the Presidential Action Committee on Power (PACP), with the Presidential Task Force on Power (PTFP) as its Secretariat.

    Besides,  he said authorities administering various aspects of the industry must be clarified and re-aligned because there are too many overlapping lines of operation resulting in spheres of operation becoming blurred.

    Concluded.

     

     

     

  • How regulatory failure, sabotage, others undermine power sector ( 1)

    How regulatory failure, sabotage, others undermine power sector ( 1)

    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.

     

    • To be continued

  • Power sector: Emerging options for rapid development, sustainability

    Recent events in Nigeria have thrown great lights on the true nature of the perennial power challenges being faced by Nigerians and the Nigerian economy.

    Barely six months into the current dispensation of political leadership, most Nigerians can attest to a nominal increase in power availability (which some Nigerians adduce to presidential body language) without any significant additional investment into the power generation equation.

    Rather, there has been a decrease in investment represented by the cancellation of the (Protection Racket) provided by militant groups and other “area landlords” saving the country several billions of naira in the process. So, what do we get in return? Appreciable increase in gas availability leading to a boost in power generation, the result of which all Nigerians are beginning to enjoy.

    With the above scenario, it’s quite clear that the problem all the while had been the negative economics of corruption, whereby a few privileged individuals have been holding the country to ransom. Now that power generation has gained some traction, there is the need to sustain the momentum by systematically boosting generation and transmission in line with the anticipated geometric growth in national productivity and population. The relevant matrices are generation cost per kilowatt, kilowatt generated per thousand, retail price per kilowatt distributed and power stability measurable by the average number of hours supplied per day. The power regulators need to benchmark this with commensurate economics within the BRICS and the MINT nations as well as the top ten economics of the world.

    It’s a good thing that government has provided N230 billion package through the Central Bank to the Distribution Companies for rapid deployment of pre-paid meters and resolution of other distribution challenges. It’s also note worthy that adequate attention is being paid to transmission, especially with the review of the Manitoba Contract. We believe this should resolve transmission capacity issues to a large extent, leaving us with generation.

    The problem with generation goes well beyond investment to logistics. The components of the logistics problem include appropriate citing of projects, the logistics of fuel delivery (gas, hydro, coal, EPFO and possibly nuclear), safety within the value chain and most importantly, total cost of ownership, TCO, vis-avis end user pricing – a key indicator of sustainability.

    At this juncture where the policy thrust of this administration is being articulated, the following issues must be carefully addressed to provide adequate enabling environment for sustainable power generation for the country:

    • The PIB – To the extent that it facilitates regular supply and smooth delivery of the required petrochemicals and gas to the IPPs.
    • The security infrastructure – such as will provide a secured operating environment.
    • The land use Act – such as will facilitate easy acquisition of required collateral without alienating the indigenous land owners.
    • Research and development ecosystem – such as will encourage rapid internalisation of emerging technologies in key components of generation, transmission and distribution.
    • Establishment of a national power research and development centre – such as will be responsible for coordinating activities of research institutes and the Ivory Towers in the development of applicable local technologies for alterative and green energy sources. For example, there is no solar and wind map of Nigeria of which infrastructure is necessary for taking full advantage of our abundant wind and solar resources.

    These policies will not only take care of the industrial growth objectives but will as well ensure additional power availability within the rural communities thereby providing the required quick change and sustainable development in the power sector.

    • Aibangbe, a Media and Energy Consultant, wrote from Lagos.
  • NLC: extend probe to power sector

    NLC: extend probe to power sector

    The Nigeria Labour Congress (NLC) yesterday urged the Federal Government to revisit the power sector reform which it said has delivered only darkness to Nigerians in spite of billions of dollars spent over the years.

    NLC President Ayuba Wabba told reporters yesterday that given the startling revelations in the arms purchase deal, the congress is not convinced that the privatisation and all the reforms in the sector were transparently done.

    Wabba alleged that the privatization of the power sector was done secretly, adding that with over $40 billion dollars spent in the sector without power supply, something must have gone wrong. He said they must not be swept under the carpet.

    He lamented that monumental fraud was committed with the arms purchase, saying it had vindicated the congress’ unqualified support for the fight against corruption.

    He promised that the NLC would work work  with other civil society organisations to present a bill to the National Assembly to bring to effect its call for capital punishment for corruption.

    “The revelations by former National Security Adviser and his erstwhile Director of Finance  which we believe are just a tip of the iceberg are mind boggling and justify as well as reinforce our call for capital punishment in cases of corruption in public office.

    Comrade Wabba urged  President Buhari not go relent in his war against corruption adding that the NLC will not allow any attempt to politicise the anti corruption efforts of the government. He urged all anti corruption agencies to follow due process in the course of their duties.

  • Experts seek holistic power sector reforms

    Experts in the power sector have called for  total overhaul in the systems of generation, sustainability and distribution of power in the country.

    In a lecture at  the Emmanuel Edozien Hall,  Bells University of Technology (BELLSTECH), Ota, Ogun State, with the theme: ‘Seminal findings on sustainable power supply reliability in Nigeria,’ a Professor of Electrical and Electronics Engineering of the University of Lagos (UNILAG), Akoka, Lagos State, Frank Okafor, called for a complete reshuffling of membership of Nigerian Electricity Regulatory Commission (NERC), to accommodate more engineers in the field than administrators.

    He decried the fact that only one engineer is among the NERC board suggesting that the Nigerian Electricity Supply Industry (NESI) issue more licenses to its participants to build power plants, rather than import.

    “It is abominable that when you import raw materials for power components, you pay duty but when you import finished goods, it is duty free. We must encourage local content in power components and devices. Countries should be attracted to set up their factories in customer countries, like Nigeria, so that government expenditure would benefit citizens optimally. This way, there is competition, you grow the power demand and then you have economy of scale,” Okafor said.

    The professor, who was guest lecturer at the ceremony, held as part of activities to commemorate Bellstech’s 10th anniversary and seventh convocation ceremony, also said distribution companies should be made to provide expansion master plan for the short, medium and long term. He added that diversification should be explored with investment focus on coal, wind and fossil fuels.

    He lamented non-payment of electricity bills by customers, fraudulent workers and expensive electricity equipment as factors hindering power sustainability in Nigeria and suggested that  NERC be made to enjoy autonomy from the political class and be empowered to  take informed decisions.

    Also speaking, Professor of Biomedical engineering of the University, Chuba Okoye stressed the need to encourage local production of power equipment.

    Prof Isola Salawu, also of Bellstech’s College of Engineering said: “Our problem in this country is soft infrastructure, not hard infrastructure.

  • Nigeria power sector gulps N2.740 trillion in 16 years

    Nigeria power sector gulps N2.740 trillion in 16 years

    A total of N2.740 trillion was spent on the country’s epileptic power sector between 1999 and 2015, the Senate was told Tuesday.

    This was the submission of the Permanent Secretary, Ministry of Power, Ambassador Godknows Igali, at the Senate two day investigative hearing on Power Sector.

    The investigative hearing was inaugurated by the upper chamber to unearth alleged unwholesome practices in the power sector between 1999 to 2015.

    The Senate mandated an ad-hoc committee on the Power Sector headed by Senator Abubakar Kyari (Borno North) to conduct a comprehensive hearing to expose corrupt practices and establish how much the Federal Government has spent on the sector between 1999 and 2015.

    Igali told the committee that out of a total appropriation of N1.6 trillion since 1999, the sum of N948 billion was actually released to the Ministry of Power and its agencies within the period.

    The Permanent Secretary added that sum of N155 billion was also released to the ministry to cushion the effects of the shortfalls in expenditure for the power sector within the same period.

    He noted that power sector is at the centre of the country’s development insisting that everything must be done to get the sector right.

    Igali said that at the inception of democracy in 1999, the government inherited a sector where everything was dormant with no new generating units built except the one built in the 60s.

    He stressed the need for consistent investment in the sector.

    He noted that for over 100 years when the first electric power came to Lagos, power remained in the hand of government because there was no law allowing individuals to invest in the sector.

    He said, “It is a heavy capital intensive industry but if you get it right people are ready to pay.We have not been consistent with our investment. From 1999, despite the interest of government to infuse money in the sector, government has not been able to meet what the sector requires.”

    Igali also told the committee that the country’s electricity generation had risen to about 4600 megawatts from 3500 megawatts in 2013.

    He attributed the rise in generation capacity to the reduction in the degree of vandalisation of power equipment in parts of the country.

    The permanent Secretary also said that the NIPP is currently the greatest contributor of power to the National Grid.

    He noted that post privatization era, vandalism of power equipment has gone down.

    Igali said that from his evaluation “things will be better in the sector very soon.”

    On the disengaged staff of the Power Holding Company of Nigeria (PHCN) Igali said that only 2000 had not been verified and paid their severance allowances.

    He explained that most of those involved who claimed to be former staff of PHCN have no valid document to back up their claim.

    He however said that final verification would soon be conducted to determine the veracity of the claimants.

    The Permanent Secretary told the committee that proceeds of privatisation was used to settle labour claims of over 46000 workers by the Bureau for Public Enterprises (BPE) through the office of the Accountant General of the Federation and Pension Commission.

    ‎The Managing Director of the Niger Delta Power Holding Company, Mr. James Olotu, on his part told the committee that the National Independent Power Projects (NIPP) received $8.23 billion.

    The $8.23 billion which came from the excess crude account translates to about N1.640 trillion the NIPP used for its activities.

    The committee wondered why the local government tier of government was not represented in the governing board of the NIPP even when the tier is one of the sponsors of the NIPP projects.

    Olotu explained that the framers of the NIPP law might have thought the bringing in local government chairmen as board members of the NIPP would make the board unwieldy considering the number of local governments in the country.

    He said that governors in the board are representing local governments in their geo-political zones.

    The committee also mandated Igali to submit audited accounts of the ministry of power and its agencies to it.

    Chairman of the committee said that audited account of the Ministry of Power and its agencies would enable the committee to know what was actually released to the ministry.

    The committee was also not comfortable with what a member described as notable contradictions and discrepancies in the presentations and submissions of those who appeared before the committee.

     

  • What is the trouble with the power sector?

    What is the trouble with the power sector?

    Despite the fact that a whopping $20 million had been sunk into the power sector in the past 16 years, electricity supplies reamin expensive as many businesses and homes rely on self-help. In fact, the Lagos Chamber of Commerce and Industry says only small-scale industrial concerns have 40 per cent dependent on public supply from the National Grid. The multi-nationals depend 100 per cent on private power generation. But, a senate committee will today launch a probe into the problems even as the National Electricity Regulatory (NERC) has  raised a 14-member task force to shore up supply, write  Onyedi Ojiabor and John Ofikhenua.

    National Integrated Power Project (NIPP)
    •Alaoji Generation Company (Abia State)
    •Benin Generation Company, Ihovbor, (Edo State)
    •Egbema Generation Company (Imo State)
    •Gbarain Generation Company (Bayelsa State)
    •Calabar Generation Company (Cross River)
    •Geregu Generation Company (Kogi State)
    •Omotosho Generation Company (Ondo State)
    •Ogorode Generation Company, Sapele, (Delta State),
    •Omoku Generation Company (Rivers State)
    •Olorunsogo Generation Company (Ogun State).
    •They have a combined installed generation capacity of 5,453 megawatts (Mw) but currently injecting less than 2,000Mw into the National Grid.

    PHCN successor companies
    Some of the Electricity Distribution Companies DISCOS
    Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kano, Port Harcourt, Yola and Kaduna
    Some of the Electricity Generation Companies (GENCOS) •Afam Power Plc
    •Egbin Power Plc
    •Kainji Hydro Electric Plc
    •Sapele Power Plc
    •Shiroro Hydro Electric Plc
    •Ughelli Power Plc
    •Geregu Phase I
    •Olorunsogo Phase I,

     

    NNPC JV
    •Okpai Power Plant (AGIP) operational

    •Afam VI Power Plant (Shell) operational

    •Agura Power Plant (Chevron) in the pipeline

    •Qua Iboe Power Plant (ExxonMobil) ongoing

    Independent Power Projects (IPP)
    •Omoku (Rivers)
    •Mabon (Gombe)
    •Wempco (Ogun)
    •AES (Lagos)
    •Trans Amadi (Rivers)
    •Notore (Rivers)
    •Ibom Power (Akwa Ibom)
    •Geometric (Abia)

    THE COMMITTEE’S TERMS OF REFERENCE

    • Examine the entire power value chain (generation, transmission & distribution)

    •Abysmal performance of generation segment •Turn Around Maintenance (TAM)

    •Gas pipeline vandalism •Deteriorating infrastructure

    •Explanations of Transmission Company of Nigeria (TCN)

    •Pre-privatisation states of power plants.

    • Sucessor companies’ investments so far (including metering)

    •Motive behind request for bailout/loan by successor companies.

    SENATORS will today begin investigation into alleged unwholesome practices in the power sector.

    A statement by the Clerk of the Senate Ad-hoc Committee on Power, Cletus A. Ojabo, said that the power sector probe will be in form of investigative hearing and interactive session.

    Ojabo said that the investigation will centre on funds appropriated for the power sector since 1999 and the unbundling of the Power Holding Company of Nigeria (PHCN).

    The statement was, however, silent on those that have been invited to appear before the probe panel.

    It is expected that all those who played key roles in the power sector since 1999, including ministers and heads of government departments and parastatals, will appear before the panel.

    Senate President Bukola Saraki inaugurated the ad-hoc committee to conduct a comprehensive probe of allegations of questionable practices in the power sector.

    The committee, headed by Senator Abubakar Kyari (Borno North), is to examine the entire power value chain, including generation, transmission and distribution with a view to identifying the sector’s problems in the sector are.

    At the committee’s inauguration three weeks ago, Saraki noted that the task before the panel is huge, as he frowned at the irregular supply of electricity, despite the huge investments in the sector.

    Kyari, in his remarks, detailed the nature of the investigation his committee is saddled with.

    He said: “A close look at the entire power value chain (generation, transmission and distribution) calls for review of our policies in order to obtain optimum performances across the board.

    “The abysmal performance of the generation segment is no longer news in view of the current deteriorating power supply which hovers around 4,600 megawatt (MW) for a population of over 170 million people, despite the huge resources committed into the sector.

    “This compared with our contemporaries it is highly regrettable. No wonder so many companies have relocated from the shores of this nation, due to increasing cost of production.

    “The issue of turnaround maintenance and gas pipeline vandalism,just to mention a few, are some of the teething problems bedeviling the sector.

    “We must address it now in order to stem this destructive tide. The committee will beam its searchlight in this direction to put things in proper perspectives.”

    Kyari added: “Having realised that the transmission segment is the major linkage between the generation and distribution fronts, increasing our capacity in this direction is also very necessary, since power produced must be utilised immediately.

    “Deteriorating infrastructures in this segment must be addressed forthwith. The Committee attaches great importance to this and would work assiduously in ensuring that all these leakages or slippages in this area are brought to the front burner and dealt with.

    “It is in line with this objective that the committee would be seeking explanations from the management of Transmission Company of Nigeria (TCN) on the terms of their management contract with the Federal Government as it relates to assets inherited, funds injected into the Company so far and the achievement recorded.”

    On distribution, Kyari noted that the committee is desirous of ascertaining the level of funds committed into it before privatisation since the segment is currently solely private sector driven.

    He said: “It calls for vigilance as successor companies are expected to bring in investments to improve the quality of services in terms with the agreement.

    “Signals emanating from their activities show that excessive profiteering has been the major determinant of their decisions.

    “It is on record that some of the distribution companies rejected power load allocations to reduce cost.

    “Their metering system calls for fundamental review, since the emphasis has been on estimated billings and imposition of fixed charges for services not rendered.

    “There have been a lot of unwholesome practices by some of these companies and the committee has to get down to the root of these problems especially where provisions have been made in the past through appropriation, prior to privatisation and funds were not properly utilised.

    “We must find out what has brought us to this sorry state. The National Integrated Power Project (NIPP) was designed to fast-track the improvement of electricity supply nationwide, hence it was involved in project implementation across the gamut of the power chain.

    “However, some of the power plants built have not been able to contribute meaningfully to the power generation through the National Grid.

    “The resources committed to these projects are enormous and the committee, in keeping with its mandate, will be seeking for answers in order to chart the way forward.

    “The Federal Ministry of Power, its departments and agencies and other key players within the power sector will be appearing before the committee to provide needed information in order to achieve our laudable objectives”.

    He added: “The second arm of the committee’s mandate is in respect of the unbundling of the power sector, which was midwife by the Bureau of Public Enterprises (BPE).

    “The committee will be seeking inputs from the establishment on the process of privatisation as it relates to funds committed to the privatisation process, funds generated, the settlement of laid-off employees of the Power Holding Company of Nigeria (PHCN) and successful bidders (companies) financial profile.

    “Of importance is the need to verify why these companies are already asking for bail out/loan facilities from the Central Bank of Nigeria (CBN).”

    Kyari however noted that “this committee is not out to witchhunt any person or organisation. We are on a fact-finding mission and would pursue our mandate objectively”.

    NERC raises task force for attainment of 5,000MW

    DETERMINED to raise power generation to 5,000megawatts for the Nigerian Electricity Supply Industry (NESI) by the end of the month, the Nigerian Electricity Regulatory Commission (NERC) yesterday inaugurated a 14-man task force.

    It is part of plans to end the year with the attainment of the 6,000 megawatts mark.

    A peak capacity generation of 4,800 megawatts was achieved few weeks ago on account of stringent regulatory measures applied by the NERC with the cooperation of operators in the power sector.

    It was also the operators’ response to the Federal Government renewed commitment to improve power supply.

    NERC Chairman Sam Amadi constituted the 14-man industry-wide taskforce with the terms of reference to ensure recovery of stranded 1,800 megawatts within the network; articulate measures for effective delivery of the stranded power to consumers; and initiate actions to continuously ramp-up generation.

    Challenging the commission’s employees on the 6000 megawatts target, Dr. Amadi said: “We are witnessing increase of gas supply to power plants. This has resulted in the historic 4,800mw generation a few weeks ago. From the report of the System Operator, it is clear that we could have reached 5,000mw if we did not have load rejection by distribution companies and some frequency control issues as gas supply improved.”

    He said that the present administration has “ensured discipline and zero tolerance for corruption has created a political environment that is aligned to NERC’s transparent, accountable and effective regulatory approach.”

    The NERC chief noted further: “But, the success we have recorded is still precarious and fragile. We have genuine fear that unless we continuously monitor the network and focus on proactively solving small problems.”

    He listed such problems as as load rejection by electricity distribution companies with attendant shrinkage in gas supply that could damage the long-term prospect of capacity growth in the market.

    Reminding the workers on the task ahead, Amadi said the commission has solved the commercial reason for load rejection by abolishing the imbalance trading in electricity and has subsequently remove the disincentive for rejection of power.

    “Therefore, we need to deal with the technical reasons which include poor network management by the electricity distribution companies and poor frequency control by the generation companies and Transmission Company of Nigeria (TCN).”

    He told the employees that the challenges ahead of them will entail increased enforcement activities as well as ensure the implementation of regulatory regimes that incentivised sustainable investment and efficient management of the network.

    He said: “In order to ensure that we are able to effectively deliver 5,000mw daily by the end of the month and 6000mw by the end of the year, I constitute a task force that will remove any obstacle to achieving the mandate.”

    The task force is headed by the NERC Commissioner in charge of Engineering Standards and Safety, Dr. Abba Ibrahim, with representation from National Control Centre/System Operator; Transmission System Provider; Market Operator; National Integrated Power Project; a representative each of distribution and generation companies.

     

     

  • Ex-NERC chair advises Buhari to sustain power sector reform

    The pioneer chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Ransome Owan has advised President Muhammadu Buhari to sustain the reform in power sector instead of trying to re-invent the wheel.

    He said sustaining the reform process and making adjustment where and when would bring the country into the club of industrialised nations.

    Owan is the Group Managing Director, Aiteo Power Limited. He spoke to The Nation at the weekend.

    He said he doesn’t subscribe to the reversion of the privatisation of the sector, saying that doing so would be unhealthy for both local and international investors. “Let us not turn back the clock because it will send the wrong signal to the domestic environment and it will send the wrong signal foreign investors,” he warned.

    He said the enabling environment has been provided by the Federal Government and people have responded in kind, investors have come adding that the way forward is to consolidate on the success story.

    He said: “Usually, when there is change, there is huge expectation but I think we should look back at the progress that have been made and programmed. The first aspect is to transit this sector to the private sector and now each distribution company, for example, has a five-year turnaround business plan. That plan in terms of performance, actually started in January, this year.

    “Nigerians are suffering from lack of power, and I am quite sympathetic about that but still I can give the investors 60 months to implement their business turnaround plans. Oftentimes, we have to make sure that our long term planning also matches our resources because there is disconnect between what is expected in terms of gas supply and power output for example.

    “The distribution companies cannot have the power they need to supply to consumers because the price is not correct, the gas suppliers are a bit reluctant to give us the maximum fuel we need.  Also because the transmission is not as capable, so our intended or installed capacity is a little bit less than what we actually supply.

    “I think for all of us, we should appreciate the fact that efforts are being made daily to make sure that the business model for generation, transmission, and distribution is perfected to the benefit of Nigerians.”

    Owan said because the country does not have a choice in terms of steady power, it is understood that power is important to economic development.

    “I am of the firm view that over the next three to five days when the power sector fully stabilises, the economy will even be much bigger than it is now and we will be comparing Nigeria with the industrialised economies of the world,” he added.

    He stressed the essence of planning, saying it is the key to making progress even if it is marginal. He said if the country had progressed from four hours supply daily to 10, 20, and 24 hours, that would be progress.

  • Senate begins power sector probe

    Senate begins power sector probe

    The Senate on Friday commenced investigation into alleged unwholesome practices in the power sector.

    The upper chamber inaugurated ad-hoc panel to conduct comprehensive probe of allegations of questionable practices in the sector.

    The panel headed by Senator Abubakar Kyari, (Borno North) is charged with the task of looking into the entire power value chain including generation, transmission and distribution with a view to identifying what the problems in the sector are.

    Senate President Abubakar Bukola Saraki, who inaugurated the committee, said the task before the committee is huge

    Saraki frowned at the continued irregular power supply in the country despite the huge investments in the sector.

    Kyari, in his remarks, detailed the nature of the investigation his committee is saddled with.

    He said: “A close look at the entire power value chain (generation, transmission and distribution) calls for review of our policies in order to obtain optimum performances across the board.

    “The abysmal performance of the generation segment is no longer news in view of the current deteriorating power supply which hovers around 4,600MW for a population of over 170million people, despite the huge resources committed into it.

    “This compared with our contemporaries is highly regrettable. No wonder so many companies have relocated from the shores of this nation, due to increasing cost of production.

    “The turnaround maintenance, gas pipeline and vandalisation, just to mention a few are some of the teething problems bedeviling the sector.

    “We must address it now in order to stem this destructive tide. The committee will beam its searchlight in this direction to put things in proper perspectives. ”

    Kyari added: “Having realised that the transmission segment is the major linkage between the generation and distribution fronts, increasing our capacity in this direction is also very necessary, since power produced must be utilised immediately.

    “Deteriorating infrastructures in this segment must be addressed forthwith. The committee attaches great importance to this and would work assiduously in ensuring that all these leakages or slippages in this area are brought to the front burner and dealt with. “