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Fashola, power firms, as constituted, cannot deliver

Nigerian News Update » Nigerian Newspapers
Punch Newspaper
WITH next to no pressure whatsoever coming from the relevant authorities to force an attitudinal change out of the pampered and incompetent power firms, it is evident that the woes of electricity consumers in Nigeria are not about to end soon. On the contrary, the lot of the consumers is expected to get worse in the face of an imminent government-backed upward tariff review, even as the controversial practice of estimated billing and the usual recourse to mass disconnection of presumed debtors persist.

One of the binding constraints to Nigeria’s economic growth is unreliable and inadequate supply of electricity. It is rather unfortunate that since the ownership of the erstwhile inept and corrupt public utility, the Power Holding Company of Nigeria, was transferred to private investors almost four years ago, inefficiency and sharp practices have hallmarked the operations of the successor firms. Yet, rather than embark on measures to address the noticeable shortcomings militating against efficient service delivery, the distribution companies have become overly concerned about tariff increase.

At the receiving end of the shambolic power sector performance are the longsuffering consumers, both corporate and individual, whose rights are blatantly and regularly abused. Until recently when the Nigerian Electricity Regulatory Commission exempted maximum demand customers from further payment of bills if they were not metered, every customer was forced to pay exorbitant and arbitrary bills that had no bearing on the quantity of power supplied or consumed. It is not surprising that the latest plans to raise the current, citing the need for a cost-reflective tariff regime, have provoked a national outcry.

Curiously, the Minister of Power, Works and Housing, Babatunde Fashola, whose directives are routinely flouted by these electricity firms, has emerged as one of their most strident supporters, urging Nigerians to embrace them, warts and all. “We must stop going to court – I know some lawyers don’t like this – to get injunction to stop tariff reviews; it puts us in the news for the wrong reasons,” he argued.

Fashola, in his seeming support for the power firms, even went to the ridiculous extent of citing Singapore as one of the countries where tariff reviews were effectively applied in every utility. He, however, failed to tell Nigerians if bills paid on services by such utilities in that country were estimated; neither did he explain whether, in Singapore, power outage is experienced with the same frequency as is witnessed in Nigeria.

Granted that the DisCos have their way now – which they often do – and the tariff increase comes into force, the burning issue still remains how to measure or track the quantity of electricity consumption of each customer, when less than 50 per cent of consumers are currently metered. Indeed, figures from NERC indicate that only 3.39 million of the 7.74 million customers in the country were provided with prepaid meters as of December 2016. So any talk of a cost-reflective tariff increase without a corresponding enthusiasm to provide prepaid meters to customers is but a classic case of putting the cart before the horse; it will not work.

Very few would have bothered if the tariff review had been complemented by improvement in electricity supply. This has however not been the case. Just last week, the Transmission Company of Nigeria said that power generation dropped by 2,841 megawatts in one week, where daily generation was barely above 3,000MW. Even at that, the DisCos were unable to distribute the limited supply efficiently. This makes a mockery of the power situation in Nigeria, Africa’s economic powerhouse with a population estimated at 180 million, when South Africa, her main rival with a population less than a third of Nigeria’s, boasts a capacity to generate over 45,000MW. According to the Department of Energy, South African Energy Sector, the country needs 40,000MW new generation capacity by 2025.

Nigeria’s folly is accentuated by the fact that even a war-torn country like Iraq with 37 million people generates 8,000MW, according to the United Nations Inter-Agency Information and Analysis Unit, despite the lack of investment and damaged infrastructure occasioned by the ongoing war against the Islamic State of Iraq and Syria. Figures from the Department of Statistics Singapore, which the minister alluded to, show that the country with a population of 5.61 million people has a total licensed generation capacity of 12,889MW as of April, 2015. Ghana, with a population of 27 million, generates more than 2,000MW electricity daily.

Indeed, Nigeria’s case is pathetic. Its power sector is blighted by a welter of problems, chief of which is inadequate funding. A shortfall of N1tr is said to have been identified in the sector. Fashola himself mentioned some of the afflictions as “political interference, liquidity, metering, debts, governance, technical capacity of operators and political dishonesty….” Yet, he believes that, based on what happened in countries such as Brazil, Mexico, India and China, “reliable electricity will happen in Nigeria.” The question is: when?

But the country cannot just fold its arms and allow the power firms to muddle along. Both the economy and the people are suffering; there is no way a country can become an economic or technological power without an efficient and functional power sector. It is obvious that the country has remained so long in a recession because there is no electricity to power the factories. Many businesses have either closed down or relocated for this same reason. It is time for action.

As we have consistently argued, at the root of the mess is a privatisation that went awry. The Goodluck Jonathan administration committed the fatal error of handing over the firms to neophytes with no wherewithal to embark on a venture of that magnitude. So, if Fashola believes the government cannot reverse the sale of the firms, then there is the need to review it. There is nothing wrong in persuading the firms to cede a significant part of their interests to capable foreign firms in the field. This will attract the much needed capital to the sector.

While the DisCos are perceived as the weakest link in the chain, the mediocrity that has left the country practically groping in the dark cuts across the whole gamut of the power sector – generation, transmission and distribution. There is no way that the power firms can depend on unverifiable debts that they claim to be owed to fund the sector. What is needed is massive foreign investment.

Also, it has often been argued that providing every customer with prepaid meters will solve a lot of problems in the industry. The DisCos should find a way of metering consumers so that they would no longer be owed. Attempting to swindle the customers with estimated billing will backfire when people start showing resistance.
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