- DISCOs should find a better way of dealing with the new regulation on LPUs
Expectedly, the notice by nine of the 11 electricity distribution companies (DISCOs) to declare force majeure has been rejected by the Bureau of Public Enterprises (BPE) and the Nigerian Electricity Regulatory Commission (NERC). The DISCOs threatened force majeure following the directive of the Minister of Power, Works, and Housing, Mr Babatunde Fashola, that eligible customers are free to purchase power directly from the generating companies (GENCOs).
Force majeure exempts contracting parties from fulfilling their contractual obligations for causes that could not be anticipated and/or are beyond their control.
Interestingly, this is not the first time the idea would be mooted. It is an idea that has been on the cards since May. The aim is to give ‘eligible customers’ or Large Power Users (LPUs) the option of getting electricity directly from operators other than the 11 DISCOs. The only thing is that the minister only approved of the regulation permitting such early this month.
Under this arrangement, each of the four categories of eligible customers has the option of either contracting electricity supply directly from the GENCOs, or demanding robust regime from their DISCOs. The ‘eligible customers’ can opt out of their DISCOs after giving a three-month notice and reconnect following the same process.
We are not surprised that the DISCOs are unhappy with this development, which, according to them, would strip them of the benefits from such heavy customers. They are entitled to this fear. The fact however is that power-hungry Nigerians have watched, with consternation, how the DISCOs have been inundating whoever cares to listen with the challenges they face daily rather than supply power.
Yet, they have continued to saddle electricity consumers with ‘crazy bills’ which they expect them to pay, and indeed still go about disconnecting people based on this indefensible billing system, contrary to government’s directive. No matter how expensive prepaid meters are, it is their responsibility to provide them for their customers. But it is as if the DISCOs have a morbid fear of rolling out the meters because of the rent they are collecting through estimated billing.
Rightly or wrongly, this is the perception of most Nigerians. And they would appear to be right when it is realised that many customers who paid for prepaid meters have waited endlessly to be provided with the meters.
The DISCOs may be right in asking for tariff increase because the present tariff cannot sustain their operations. But then, they cannot ask for this in a vacuum. The increase has to be based on objective billing for what exactly electricity customers consume. This implies that provision of prepaid meters is the right place to start to win the sympathy of Nigerians and smoothen the path for tariff increase.
No responsible government would fold its arms and continue to watch helplessly the direction the power sector is headed. Power is crucial to development; it is pivotal to virtually everything we do.
Governments should however find a way of systematically defraying the verifiable debts it owes the DISCOs. It is gratifying that the defence ministry is doing something in this regard.
We support the new initiative. Migration of the ‘eligible customers’ away from the DISCOs will make more electricity available to other consumers. So, the question of the DISCOs losing revenue may not necessarily arise, and if it does, its impact will be minimal because the consumers that would absorb the power left by the LPUs will not do so for free.
We implore the DISCOs to see the possibilities in the new arrangement rather than its downside. At present, we have over 2,000mw stranded power that the DISCOs cannot absorb. This avoidable waste will stop with the LPUs absorbing the excess, thus boosting investments in the sector.
At any rate, the regulation provides for ‘tariff rebalancing’ with the aim of slightly reviewing tariffs for some classes of customers to protect the DISCOs. What cannot be denied is the fact that the present arrangement has not made any appreciable impact on power supply in the country. It needs to be tinkered with, albeit within the ambits of the law.
Government owes the duty of making electricity available to Nigerians. If we say the time is not ripe for this new arrangement, our fear is that the time will never be ripe. We must take measures that will drive competition in the power sector.
