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Vandalism, cable buy-back and associated scams

By Josef Omorotionmwan

WITH the sick baby of the Nigerian economy, the energy sector, no news is good news. This sector can only be in the news for the wrong reasons – because of its abysmal performances, either that the staffers have been beaten up somewhere or that some youths have carried their demonstration to headquarters.

On 1 November 2013, the Power Holding Company of Nigeria, PHCN, as it was then called, was unbundled into 18 separate companies – six generation (Genco), one transmission (Transco) and 11 distribution (Disco) – and privatised, ostensibly for greater efficiency. But since then, things have degenerated incrementally.

At no time did the Federal Government hide its inability to fund the power sector, hence the decision to privatise. But the investors came barely half-prepared: contrary to global best practices where private investors are supposed to raise the money for buying the assets by themselves under equity arrangements, without borrowing, so that they could later borrow to finance the upgrade of the assets, most of the new investors used 100 percent borrowed money to acquire the assets.

The investors paid for the assets around July 2013 but because of the bureaucratic bottleneck in the privatisation process, they did not take possession until November 2013, by which time, amortization of the purchase loan was due.

Consequently, instead of embarking on massive upgrade of the infrastructure and procurement of transparent metering, the new investors were entangled in the process of raising funds to pay their financiers.

Paradoxically, the Federal Government that relinquished the power sector to private hands because of its professed inability to afford the funding is the same Federal Government that now funds the new investors through the back door. We remember the Federal Government intervention fund of N213 billion in October 2014.

It is instructive that under the present arrangement, the power system in Nigeria comprises three tiers – generation, transmission and distribution. Since the distribution company is at the end of the value chain, it is the one that the people see. The only thing of interest to the electricity consumer is that there is light and any deficiency is visited on the distribution company.

You cannot give what you do not have. Yet, the consumer is not interested that the generation company is unable to generate enough megawatts or that the transmission company does not have the wherewithal to transmit the generated power to the distribution point, he wants electricity supply around the clock.

Hear the front-lines: First, the Director, Benin Electricity Distribution Company, BEDC, Mrs. Funke Osibodu: “Anything that happens anywhere, even if it is not your concern, it will be assumed that it is your doing. So, the public believes that the lack of power is because the new owners of the distribution companies don’t know what they are doing. But in reality, it is a GENCO problem….”

Second, the Managing Director/Chief Executive Officer, Kano Distribution Company, Jamili Gwamna: “Our power allocation has been low in recent times. So, how on earth will customers pay me and how will I pay money also? There has not been power and when you threaten to disconnect consumers, they will tell you to hurry up with the disconnection process”.

At Independence in 1960, Nigeria was at par with South Africa and Iran on power generation. But today, those countries generate over 40,000 megawatts, while Nigeria is still struggling at below the 5,000 megawatts level, which ordinarily, is barely adequate for one State!

Enough of this rationalisation of failure. After all, nothing atones for the efforts of the Distribution Companies at cutting corners. Indeed they have numerous entries on the debit side:

Suddenly, there is an outbreak of the vandalisation of transformers. For more reasons than one, these vandalisations simply give away the Discos. Virtually every transformer is vandalised with the cables so neatly and perfectly removed that even the blind can see that they wear the appearance of insiders’ job.

A community that is desperate to have light puts money together to replace the vandalised armoured cable. Discos are reluctant to allow the community to procure the materials. They prefer that you give them money to do the procurement by themselves and there is no telling when they are simply putting back the very cables that were vandalised. This is what we call cable buy-back.

Then, the Discos try to turn the people’s misfortune into their own big advantage by asking the community to get debtors  in the zone to pay their debts before the vandalisation can be fixed, thus holding everybody, including the good customers, to ransom.

The most repugnant aspect of it all is the system of estimated billing, known among consumers as “crazy bills”, which has persisted over the years. Under this scam, Discos are known to have slammed upwards of 1,100 percent increase on consumers, even during periods when such consumers received darkness instead of light. In December 2014, virtually every house became a mortuary of sorts, when Christmas meat got rotten, because of widespread electricity failure, no thanks to the Discos. But that was when people were rewarded with criminally high estimated bills.

Discos have shown themselves as sadists that benefit tremendously from supplying expensive darkness instead of light. It is not uncommon that a consumer buys credit that he estimates would last him for one month but because Discos supply him all darkness and no light, the credit lasts for four months. The implication is that the consumer spends N3,000 daily for diesel to power his generator, plus the nebulous monthly fixed charge of N750 (i.e. N750×4 = N3,000) plus VAT and other sundry hidden charges. Head or tail, the consumer loses.

The Erstwhile Minister of Power, Prof. Chinedu Nebo, spent his last days in office, sermonising on why his tardy arrangements in the power sector must stay. That sermon of darkness must be accepted only by those who want Nigeria dead; and by those who are yet to realise the importance of electricity in the life of a nation.

Honestly, for how long shall we remain this way?

 


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