Exploitative DISCOs and ambiguous national grid By Yusuf An-Nuphawi

  By Yusuf An-Nuphawi

While it requires lots of investments and efforts to generate power from various sources, transmission and distribution could be very challenging due to inadequate cutting edge technologies, state of infrastructure and administration.

Recently, the Permanent Secretary, Federal Ministry of Power, Ambassador Godknows Igali told President Muhammadu Buhari that Nigeria currently generates 4,600megawatts of electricity for over 170 million citizens, something that is by far poor when compared to its close rival, South Africa that generates over 40,000 megawatts for only 55 million population. However, some analysts have argued that Nigerian economy does not need as much as 40,000MW or more for the economy to develop, considering that it is not industrialized when compared to nations like Germany that has

178,000MW with a steady need of about 80,000,000MW.

The Nigerian economy is largely dominated by the informal sector with farming, artisans, traders and service being characterising constituting major areas of concentration. These business and other domestic energy consumers require less power.

Several policies have been evolved by successive administrations to tackle epileptic power supply with the administration of former President Goodluck Jonathan succeeded in privatizing the power sector with the purpose of significantly improving power generation by 2014 and beyond. Handing over of successor companies Power of the Holding Company of Nigeria (PHCN) on November 1, 2013 to successor companies and private investors was a noble decision received with cautious optimism in view of the successes of the privatized telecommunication sector.

The privatization process took off in the form of the unbundling of the poorly performing PHCN from which some electricity distribution companies (DISCOs) had emerged. A key component of the unbundling exercise was the issuance of licenses to generation companies otherwise known as GENCOs that met the stipulated criteria. Under the arrangement supervised by the Nigerian Electricity Regulatory Commission (NERC) the GENCOs were supposed to generate the power to be transmitted to the end users by the DISCOs. The policy projected to make initial generation of 5,000MW, which was expected to rise to 14,300MW by December 2013. It was also believed that when these companies came fully on stream, the country stood a chance of generating 10,000MW—20,000MW between 2013 and 2015.

It is four years now, the moribund economy is still labouring to meet the initial 5000MW target as GENECOs failed to meet the citizens’ expectations. Worst still, DISCOs have, in pursuance of undue capitalist quests, frustrated and exploited individual power consumers through arbitrary coded and inflated electricity bills, with which they intimidated consumers to pay mostly for electricity neither supplied nor consumed. Some observers opined that such unfair treatment of the consumers is aided by NERC’s Multi-Year Tariff Order (MYTO), which supports annual increases of power tariff, with scant emphasis on the supply corridor and consumer-satisfaction.

Although there has been noticeable improvement in electricity supply in the country in recent time, this however, cannot obscure the fact that the power generation and supply targets envisaged under the privatization arrangement has not been met. The private firms handling the business are more concerned about profit making at expense of the State and citizens’ comfort. Majority of power consumers have been denied pre-paid meters, which would have compelled electricity providers to earn income based strictly on the quantum of power supplied. The electricity regulatory agency also approved a monthly fixed charge of N750 which consumers with or without prepaid meters are forced to cough up, purportedly for the purpose of assisting DisCos recoup their investments. Nigerians have massively protested against the arbitrary tariffs. Many consumers have simply refused to pay these arbitrary charges.

Such revolts have began to yield success in favour of the citizens as NERC slammed a sanction on the Abuja Distribution company (AEDC) on April 16 after it investigated and confirmed complaints of overbilling electricity customers within the Disco’s franchise area of Kogi, Abuja, Niger and Nasarawa states. Consequently, according to a report, AEDC has credited 32,229 electricity customers who were overestimated from October 2014 to May 2015, amounting to over N50million collected in seven months. It was reported that the lowest refund was N1, 000 with some getting refund of N15, 000.

Analysts commend NERC for its resolution to closely monitor undue exploitative tendencies of the DISCOs. There should be supplying of electricity regularly and provision of meters to assure customers that they are paying for services truly rendered. NERC, as the regulator in tandem with the federal government, should address the problems militating against the attainment of the objectives of privatization and, if need be, chart a new direction altogether for the power sector.

An-Nuphawi was published via Economic Confidential

Ref: http://www.peoplesdailyng.com/exploitative-discos-and-ambiguous-national-grid/