By Adekunle Adekoya, General Editor & Hugo Odiogor
IT was afternoon, and the sun beat down with all the anger it could muster. Francis Igbineweka (not real names) held his mobile phone handset against his left ear as he trekked down the street. Beads of sweat formed on his forehead, even as rivulets of the same sweat streamed down the middle of his back.
Unconsciously he swore aloud.
“What kind of country is this?”, he asked no one in particular.
For four days he had been trying to get his mother in the Edo village where he came from, on telephone, to no avail; her number wasn’t going.
Feeling cramps in his left hand, he transferred the handset to his right hand, and dialed again. This time, it rang, and a tentative smile began to form on his face.
“Mama, wetin do your phone now? I don dey try your number since four days but e no dey go. Wetin happen?”
“Sorry my son, I got your message, but we no get light for one week now and the battery of my phone die. Nowhere to charge am!”
“What happened to your generator?”, Francis retorted.
“You know there’s fuel scarcity. I no fit buy the petrol at N200 per litre. I charged my phone now at my neighbour’s place. His son-in-law came to visit and brought some petrol for him. I just switched on the phone.”
“Na waa oh! Which kind country be this? Anyway, Mama……” Francis continued his talk with his mother.
If Igbineweka’s experience with the power situation is impacting on his personal communication, then it could be imagined what Hamzat Sadiku, a middle-aged welder in the Igando area of Lagos is going through.
In his area, electricity is supplied on a one-day on, one-day off basis. Ordinarily that should mean his area is supplied electricity every other day.
“If that were the case, I wouldn’t complain, but on the day we should have supply, we mostly don’t, during the day. Then about midnight, there comes the light. So, I now do most of my welding at night because the light usually goes off anytime between 4a.m. and 6a.m. The problem is that I usually cannot meet up, and my customers take away their jobs,” he lamented.
So, how does he make ends meet?
“I am going to buy a diesel generator that can power my welding machine. That will cost between N180,000 and N250,000. If I don’t, I will have to give up welding and look for other means to survive.”
Ibrahim’s experience was as hilarious as it was pathetic.
It was Sunday evening, and he decided to get a hair cut. So he went to the neighbourhood barber, and soon, it was his turn. Midway into the haircut, light went off. No problem, it seemed, as the barber went out to start his portable gasoline generator, the kind known as “I pass my neighbour.”
After several pulls, the generator refused to start. Fiddling with the plug, the carburettor, and every other part of the generator, it simply refused to start, more than one hour later.
“Wetin I go do now?,”Ibrahim asked his barber.
“I don’t know what went wrong with this generator; it had always started with one pull. Please, let’s walk to my colleague’s shop; I will complete your cut there.
“You mean I should walk the streets with my head in this condition?,”Ibrahim asked, annoyed.
The barber offered him a face cap and they went off.
These scenarios illustrate the nature of Nigeria’s electricity conundrum: That lack of electric power or its epileptic nature has spun a negative multiplier on virtually every facet of life is merely reiterating the obvious, as artisans like welders, iron benders, carpenters, and others who depend on cheap electricity to make a living can no longer do so. Thus, many of them became okada riders, while others who could not get fixed otherwise have resorted to activities which have helped worsen our security situation.
Positive, negative fallouts: A direct fallout of the nation’s inability to constructively manage the power system is the exit from the country of not a few multinationals, especially in the manufacturing sector.
But on the flip side, the nation recorded a landmark telecommunications revolution which saw telephone lines grow from a paltry 400,000 lines in 2001 to more than 110 million lines today. The magic is that the telecoms sector has run almost exclusively on generator power, evidenced by a report that the sector spent no less than N40.2 billion on generator sets and diesel alone in 2012.
This problem is what prompted government to adopt privatization of the power sector as a solution. However, not many Nigerians invest much hope in the privatized power firms, and indeed, caution that the conclusion of privatization of the sector does not imply that Nigerians should expect improved power supply.
Indeed, as almost everyone would testify, power supply seemed to have worsened since last November when unbundled power firms were handed over to new owners.
Aged power apparatus
Femi Owolabi, an engineer who is chief executive of Fembosco Engineering Ltd, a firm that specializes in electrical power systems and controls is of the opinion that it might take about five years to achieve 75% of uninterrupted supply. Why?
“It’s a great thing that power has been privatized in the country. If allowed to work, in the next five years, we should achieve at least 75 per cent of supply without interruption because that period is enough to stabilize the factors, install what is to be installed as well as change, and competition is vital to test abilities of the various companies. In our country presently, the power apparatus is aged and requires complete replacement.”Speaking further, Owolabi said that there is need for massive investment in the infrastructure of distribution, that is, the downstream part of the sector.
“With what we have now, power companies generates power, then transmission takes place. These are high voltage and they are properly installed but when it comes to the downstream segment, the consumption level where we have all our overhead cables, you see that many of them have been joined together here and there, and are thus no longer in a condition to carry the required load.
“Out there, there are transformers and feeder pillars and other machines that have been installed and in use for the past 15years to 20years, which are due for replacement. Even the defunct PHCN cannot get spare parts for them, and when they contact the manufactures of these equipment, they are told they are no longer in production.”
While some people are lamenting poor power supply, some others complain of being made to pay for light not supplied. For many years, consumers have paid bills estimated by electricity staff in their offices as marketers no longer visit consumers to read metres. As a way round this, pre-paid metres were introduced, but this is yet to go round the whole country. But Owolabi thumbed down the entire billing system. His words:
“It’s either you set out to make money from the public or measure accordingly what you gave to people in terms of power supplied. When NEPA staff went round to read metres and bill accordingly, it was okay. But the way things are now, for me, we still don’t have a standard measurement for electricity consumption.
“If you have prepaid system, the power companies should test and calibrate the metres before giving them out to consumers, because you can as well do it in a way that set the metres to rip people off their money. In the same manner, the pre-paid metres in use now can be bypassed. So there should be a computerized system in their offices through which they can detect a metre that is bypassed. With that, the investors can achieve their business objectives, so I suggest the present pre-paid meters be scrapped, and opt for computerized metres to stay in business.”
Due diligence issues?
However, indications are emerging that investors in the power sector did not fully appreciate what they were buying, if what some speakers at the recently-concluded Lagos Economic Summit, tagged Ehingbeti 2014 was anything to go by.
At the summit, some chief executives of financial institutions expressed concern over the revenue profile of the power companies, especially the recently privatised electricity distribution companies and called for an increase in the electricity tariff and price of gas to boost the income generating capacity of the companies.
Mrs. Sola David-Borha, Chief Executive Officer, Stanbic Holdings said that the problems bedevilling the power sector will be addressed with appropriate pricing and tariffs. She noted that the distribution companies’ ability to pay back their indebtedness will improve as their ability to generate more cash improves.
She maintained that pricing is key in the power sector as it will help ensure that the numbers add up. She added that if the pricing issue is addressed, everything else will fall in place. “If we really want more investors to come and invest in the power sector, it is necessary that they should be given the right incentives and opportunities. We have to encourage investors by putting more money on the table; by ensuring the right tariffs are in place,” she said.
Mr. Akin Ogunranti, General Manager, Power and Infrastructure, Zenith Bank Plc. also called for an increase in the tariffs, noting that a number of investors are waiting on the sidelines and will not hesitate to come in and invest in the sector once the pricing issue is tackled. He said, “Increasing the tariff will encourage more investors to put in more money. If we do not get the tariff issue right, we will not see the rapid improvement we desire in the power sector”.
Also speaking at the same event as session chairman, Mr. Solomon Adegbie-Quaynor, Country Manager, International Finance Corporation, IFC, pointed to the fact that what the masses are paying via the use of generators is very high. He said the fact is that the masses are paying life cycle power costs of US$0.40 (N64) to $0.50 (N80) per kilo watt hour, with small petrol or diesel generators. He said that this makes it critical for private investors, regulators and the government to come together and discuss key issues that can make the power reforms successful so that the ordinary man and woman do not have to pay such large amounts for power.
The key issues, he noted, include reliability and availability of gas, which will require investment in gas supply and a pipeline network; strengthening and expansion of the power transmission network; investment in the power discos to reduce the Aggregate Technical, Commercial and Collection (ATC&C) losses, that may be as high as 60 per cent in some discos; and rehabilitate and expand the generation companies (Gencos) and the Independent Power Projects (IPPs)”.
They all seem to have corroborated Owolabi’s assertion that there is need for massive investment in the infrastructure of power distribution before we can begin to expect something called uninterrupted power supply.
Now, the question on the lips of many Nigerians regarding the power situation is: After privatisation, just what should we expect, in light of current experience?
Estimatedconsumption, crazy bills
For those Nigerians that get some supply, there are issues with billings and payments.
Mrs. Jennifer Ibonye told Vanguard that she had a case of estimated bill in which her average monthly bill has risen drastically. “Initiaialy the IKEDC said I was being under billed and shut my bill up to N15,700.00. I protested and demanded to know how they came about the bill. The checked their system and discovered that I was being over billed and over charged by as much as 500 units.
“They checked and discovered that there are over 35 consumers that are affected and promised to rectify the situation. But till date, they have not done that instead my monthly bill for a residential duplex has remained at N22, 000.00 every month even when we hardly get electricity in my area of Ago, in Okota”. According to her, “I pay my bills regularly even when I do not operate industry in my duplex, I do not use heavy equipment. I pay my bill for being supplied with darkness for 90 per cent of the time. “
She added: “This is not
sustainable and I have to take a legal action to stop this exploitation”. Our investigation reveals that there are little or no pressure on the DISCOs to address the complaints of consumers, no matter how genuine their case may be.
“The distribution companies are not prepared to address it and NERC is just shielding them to exploit the consumers; it is a catch 22 situation for us.”
An Abuja-based water producer, Mr. Friday Dasuma said his monthly electricity bill for a two-phase metre has risen to N350,000 per month since November and no explanation was given. He said most time he runs the generator and spends close to N150,000 every month on diesel.
He wondered whether the new power companies are competing with the generator and diesel market, and if that is the case, “they should leave us to decide whether to use their services or stick to our generating sets. We cannot be making double payment for the same item especially when the one from public supply is inefficient, unreliable and exorbitant.
He added: ”The same government that is telling the world that it wants to encourage small and medium enterprises to grow and create jobs is the one that is punishing them by introducing these unhealthy policies.”
Power sector,undertaker to
SMEs: He said the SMEs that rely on electricity for their businesses have come under heavy burden and unworkable budgets and have had to cut down on costs and overheads.
Recenty, the Minister of Power, Professor Chinedu Nebo told a Power Summit in Lagos that in 1996 there were 47 industrial clusters in Nnewi, Anambra State, but by 2013, there remained only six as others were forced out of business because of electricity. The situation remains the same even today as the power companies are anxious to recover invested funds obtained from banks at high interest rate which is passed on to the consumers.
Electricity consumers in Nigeria are waking up to the realisation that 25% of their income may end up on payments for erratic, unstable and unreliable supply of electricity as the new owners of power companies grapple with the old problems in the power sector.
In fact, the new power companies fleece consumers with arbitrary and unexplained increase of tariffs for the low income consumers in the R1 and R2 category. Some people have complained of having been forced to pay between N25,000 to N50,000 monthly ,on electricity bill in the face of erratic and unstable supply of electricity.
DISCOs opt for PHCN’s business model
Vanguard can report authoritatively that the new electricity companies have gradually returned to using the old business model of defunct Power Holding Company of Nigeria(PHCN).
The privatization exercise of November 1, 2014, covered 60 per cent of the companies in generation and distribution sector while the federal government is still holding on to the 40% in the transmission sector.
But the ordeal of consumers is not helped by the disposition of the Nigerian Electricity Regulatory Commission (NERC) whose primary concern has shifted to ensuring that the new owners and licensed investors into the NESI are protected “to recover their investments at the shortest possible time frame.”
Equally troubling, is the surreptitious use of market forces to determine and bill consumers which is the rationale behind the Multi Year Tariff Order, MYTO, which is presently at the second review known as MYTO2.
In fact, the new distribution companies have suspended issuance of pre-paid metres which NERC said was a precondition for the privatisation exercise.
Today the DISCOs have become a cartel that arbitrarily manipulates electricity bills, even though NERC claims “that there is now upward review of electricity tariff.”
Engr. Lanre Badejo, who
retired from the services of PHCN before the privatisation programme told Vanguard that “the the goal of the new power cartel is to drive the tariff on electricity to at least 3,000 per cent from what consumers were paying before now”. This means that consumers would have to spend at least 25% of their annual income on electricity as government and the distribution companies argue that Nigerians pay the least tariff on electricity, when compared with some countries in Africa.
Engr. Badejo said: “One fact that the government has conveniently ignored in their calculation is that government institutions, public officers, military establishments hardly pay for the electricity that they consume”.
According to him “the rationale of using free market forces as envisaged in the introduction of MYTO system is that the macro-economic management by government, is efficient and that policies are reliable, predictable and realisable.”
He said “it is the duty of government to manage the rate of inflation, the exchange rate and interest rate. It is also the duty of government to manage security of critical national assets such as the oil and gas pipelines as well as electricity transmission lines, where there are failures and inefficiencies on the part of government to control these forces, that influence market behaviour, the consequences would reflect in the cost of electricity generation and distribution and the consumer would bear the brunt.”
To be continued