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Electricity: The high cost of living in darkness

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This is the concluding part of this report which was first published yesterday. In that edition, it was understood that there is no way the country can have power supply without adjusting tariffs because currently the DISCOs are running at a loss


‘SADLY, rather than provide us with prepaid meters, which we gathered from reliable sources are available, EKEDC has continued to harass and intimidate the residents with individual and mass disconnections and has dared the residents by continuously issuing us outrageous monthly bills of between N9,780 to N20,000 for a two bedroom each per month.

“We are aware, through your response to our earlier petition dated July 28, 2017 that you are looking into our petition, but we are constrained to note that EKEDC appears to be doing everything possible not to be accountable to any body and feels that it can through its officials deal with us the way it deems fit, believing that we are helpless. Some time in  August, 2017 a certain EKEDC official, named Mr Falana, repeatedly disconnected the residents, even when the matter is yet to be resolved and he boasted that there was nothing we could do about the matter.

“As it is, we are at the mercy of officials of EKEDC, who impose outrageous bills on us and yet, force us to pay same, even when we complain; the only language they have for us is ‘go and pay first’. We have no option than to still do this follow up, and plead that you save us from these exploiters, who have made our lives miserable. We insist that our meters are working but EKEDC decided not to read them to justify the exorbitant and outrageous bills they give us, which is a criminal offense, that must also be probed and appropriate sanctions imposed on them to serve as deterrence. We insist on pre-paid meter or nothing, as they have for two years, failed to read these meters but prefer to impose estimated bills on us to extort us, which they have done for over three years. We eagerly await your earliest intervention.”

The petition was signed by the chairman and two members of the affected Close in Festac Town.

Refusal to install meter: But Discos and NERC have been consistent in the argument that cost of power must be recovered, while giving the impression that  it does not matter to them how the so-called cost is recovered.  Under the agreement between the Bureau of Public Enterprises, BPE and the investors who took over Discos, specific numbers of meters were to be installed yearly and on an incremental basis.

However, Vanguard INSIGHT investigations have revealed that the Discos are reluctant to deploy meters.  It was discovered that the excuses of funding challenges are being used to continue to rip off consumers across the country.  Reason?  When meters are deployed, Discos lose revenue.  It becomes impossible to issue outrageous bills.  Crazy estimated bills are the new tricks of defrauding consumers and the Discos know that with meters, the game is up.  Consequently, all pranks are being employed to keep meters away from consumers. 

A resident in Abuja who lives in a one-bed room apartment told Vanguard INSIGHT that she was being given an average of N12, 000 monthly until she eventually succeeded obtaining a meter.  She submitted thus: “Would you believe that since the meter was installed in my flat, I now spend about N5, 000 monthly recharging the pre-paid meter.”

Our investigations showed that even while the management and staff of DisCos claim there are no meters, those who allegedly bribe them obtain meters within days.  Several marketing managers in different locations confessed that the managements put extreme pressure on them with very high revenue targets, which must be met, in order to retain their jobs. DisCos claim they suffer significant losses of power in the process of distribution to consumers.  As such those who pay their bills are unfairly made to carry the burden of such losses which are often the result of the inefficiencies of the DisCos themselves.

Discos not investing enough

Vanguard INSIGHT investigations have shown that the privatisation exercise has not brought about the expected massive investments in distribution units, transformers, lines and poles.  Our investigations show that the Discos have not undertaken massive deployment of transformers to areas where they were overwhelmed beyond their carrying capacities, leading to frequent breakdowns.  The practice of rationing of power supply, whereby Discos alternate power supply to residents who depend on the same facilities subsists.

When transformers breakdown, Discos officials don’t respond promptly as would be expected of a private sector business.  In some cases it takes several days to get them to access the problem and find solutions to them.

Frustrated staff

Investigations showed that the staff are very frustrated with their managements’ refusal to invest in the purchase of operational vehicles and other materials necessary for prompt response when maintenance works are required.  In some units, it is as bad as having to rely on commercial motorcycles for maintenance technicians to move around.

A consumer told Vanguard INSIGHT how he had to call the Marketing Officer of his Unit and threatened to mobilise his neighbours for a protest at the headquarters of the affected Disco.  The officer told him to proceed because that could turn out to be to his advantage as all his pleadings for equipment from the headquarters had been ignored for a long period.

Frequent protests

From Abuja, Benin, Ikeja and elsewhere, the headquarters of many Discos across the country have in recent time played unwilling host to several groups of protesting consumers.  The protests centre around poor quality service, outrageous bills and refusal to meter consumers.

Power rejection by DisCos Vs GenCos complaint of unutilised power

Investigations have shown an irony in the current electric power equation between GenCos, Discos and consumers.  While consumers are frustrated that their businesses are collapsing due to inadequate power supply, DisCos are rejecting power generated by the DisCos on the ground that it is too much while counting their losses which runs into billions of Naira in days due to unutilized power.

The Managing Director of Mainstream Energy Solutions, which  runs both Kainji and Jebba Hyro-power plants, Lamu Audu, an engineer, told Vanguard INSIGHT in an interview that: “It is ironical that power generation companies like Mainstream are suffering losses due to unutilized power, while Nigerians have no power to run their businesses and for domestic uses.

“Our system is feeling it.  The problem with generation of electricity is that electrical energy cannot be stored.  You use as produced. So these machines monitor if what is being put on the grid is actually being utilized; if it is not, the frequency will shoot up and the machine will note it and then begins to de-load. If the machine is not designed to de-load on its own it will trip to protect itself from the high frequency.

“By the time our machines trip,  so many sequence of events happen within that machine and it causes a lot of wear and tear and with the aged machines that we have and by the time you go through one, two, three system collapse, the damage is much.”

The Mainstream boss challenged the TCN to tell Nigerians why there has been consistent high frequency of above 50.  The frequency is determined by the  measure of the quantity of electricity that can be loaded on the National Grid at any given time.

“I think TCN should answer because they are the ones taking the energy from us and giving to the DisCos but if the DisCos are not utilizing it they will know better than anybody else. The DisCos can deny but TCN should have the records to tell us what is happening to the energy that we are generating. Simple question:  Why has the frequency been high? Even from the system collapse, it shows from the broadcast 51.48 instead of 50 which means that someone is not taking the power we are producing.  (There had been a system collapse in the morning of the interview).

“It has been observed recently that the frequency has been on the high side. Why? They should tell Nigerians why? Because if you should ask the DisCos he would deny it, (that there is power rejection).  He will tell you there is no generation,” he said.

GenCos present 7-point demand to FG

Call for end to electricity rejection by NCC

Re-denomination of Concession Fees

Further to their response to the prevailing situation, the GenCos presented a seven-point demand to the Federal Government with the request for an immediate end to electricity rejection by the National Control Centre, NCC, Osogbo, Osun State, in collaboration with the DisCos.

The GenCos have also demanded a re-denomination of the Annual Concession Fees from the US Dollar to Naira, the nation’s currency, citing difficulty in accessing foreign exchange rate. A highly competent source told Vanguard INSIGHT that the demand of the electricity generation companies was presented to the Vice President, Prof. Yemi Osinbajo, at a meeting in Abuja, shortly before President Muhammadu Buhari’s return from his medical vacation in London.

It was gathered that the GenCos meeting became necessary to arrest the debilitating state of the nation’s electricity sector which fortunes have nosedived, lately. “Operators of the GenCos”, our source disclosed, “lamented that their efforts were being frustrated by the practice of electricity rejection coordinated by the NCC, following persistent refusal of DisCos to take power.

“Available power is 6,000 MW, while evacuation is merely about 4, 000 MW.  The case is very bad because it has grave consequences for the industry and national security. Asking GenCos to ramp down (reduce) power generation means that the companies suffer loss on their investments.

“According to the Concession Agreement with the Federal Government, GenCos are supposed to be paid for every power they generate.  But that is not the case. When they are asked to reduce the power being put on the National Grid, what happens is that the unutilized power becomes a loss to the GenCos. We are not paid for that power. Nigerians may be complaining that there is no power but this is the real situation.  What we have available is not been utilised as at today.”

The GenCos also warned the Federal Government that persistent requests to ramp down power generation by the NCC could lead to flooding , especially as the hydropower plants would be expecting a very high volume of water from the Futa Jalon Mountains in Senegal, the source of River Niger on which both Kainji and Jebba Dams were built.

“If the water is not utilized in power generation, it could lead to massive flooding.  The water spillage through the Spillway Way Gate could have attendant consequences for the communities along the river. The ramp down is neither in the interest of the generating companies nor in national interest because the nation needs power and cannot afford flooding, especially in the coming months of September and October.”

Our source equally disclosed that the failure to settle GenCos’ invoices even for the power that was utilized by the Discos constitutes a major impediment to their operations. According to him, Vice President Osinbajo was told in clear terms that the GenCos could not continue to operate when their invoices are not being paid. Currently, they are being owed about N600 billion.

The group also asked that the balance payment of about N213 billion of the Power Sector Special Intervention Fund still held by the Central Bank of Nigeria, CBN, be released to boost liquidity in the sector.

As gathered, the GenCos also urged the Federal Government to release in full, the N701 billion recently approved for the Power Sector Payment Assurance Fund to clear the five-month backlog of unpaid invoices.  About 20 per cent of that fund is said yet to be released.

Faced with the scarcity of foreign exchange for the purchase of their equipment, the GenCos have demanded a review of the Concession Fees with a view to making the payments in Naira, rather than in US Dollars, as contained in the agreement.

According to our source: “The position of the GenCos was that the CBN has failed to make any speciation provision for them in terms of foreign exchange allocation, as has been done in respect of several other sectors.

The argument is that even when they have Naira to place orders for their operational items from abroad, they are hardly able to obtain enough foreign exchange to meet their needs.

Intermittent gas pipeline vandalism

“In that light, payment of concession fees in foreign exchange further compounds their problems and they have told the Acting President that it is in the best interest of the economy to review that provision of the agreement and re-denominate the fees.”

Vanguard INSIGHT understands that intermittent gas pipeline vandalism has continued to affect the operations of the GenCos, especially the thermal plants which rely on gas to generate electricity.

The Operators made a demand on the Federal Government to take necessary steps to ensure an uninterrupted gas supply to the plants to enable them take full advantage of the large market in the country, as consumers currently remain unsatisfied with the level of power supply.

The GenCos also told Prof. Osinbajo that the permanent solution to the liquidity problem in the power sector remained cost-reflective tariff and targeted subsidies.

It was learned that the strategy would be for high net worth consumers and commercial concerns to pay cost-reflective tariff, while low income earners, especially the rural poor and their counterparts in city slums  who require minimal consumption to enjoy government subsidy.

Remittances from International Consumers was one of the issues for which the GenCos also asked for a review.  Since the international consumers pay in foreign exchange, they are demanding that the receipts for power consumption from that category should be passed to them in foreign exchange, rather than in Naira, as that could assist in their foreign market operations.

Nigeria exports electricity to some neighbouring countries, including Benin Republic. Prof. Osinabjo was said to have assured that the current administration would take every necessary step towards scaling up electricity supply, noting that it remained the single factor for massive industrialisation of the nation.


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