- Putting higher tariff before reliable billing is not the solution to regular power supply
Nigerians are again playing audience to another round of power-related conference and communique. At a stakeholders’ interactive forum in Abuja, of generating companies (GENCOs), distributing companies (DISCOs), and an arm of the Transmission Company of Nigeria (TCN), a communique on what the companies see as the solution to the perennial power situation was released.
Highlights of the communique include calls for the following: a) restatement of the capacity of GENCOs to provide 8,500MW of electricity in the event of improvement in transmission and distribution capacity; b) centralisation of market collection and disbursement of funds based on agreed percentages; c) denomination of gas price in Naira and harmonisation of currency for all transactions in the energy market; d) immediate payment of outstanding N504 billion to GENCOs; e) hike in tariff to make consumers of electricity to pay N70 per KW-hour in contrast to current tariff of N25; and f) immediate payment of debts owed by the ministries, departments and parastatals (MDAs) to DISCOs and for provision of subsidy in the market to support purchase of power from GENCOs.
None of the demands in the communique is new to observers of the power situation in the country. There should have been no reason for MDAs to owe DISCOs for services provided for them, more so that MDAs have provision for such payment in each year’s budget, in addition to provision for buying and servicing generators that provide electricity in the many hours of electricity outage. In the interest of development of the power sector, it is imperative for this matter to be settled between MDAs and DISCOs, rather than turning it into a source of perennial distraction. Where such debts are verified, as against the usual estimated billing, the government should ensure the MDAs pay.
Perhaps what is new is lack of description by DISCOs of concrete steps on their part toward improvement of the dismal situation bequeathed by the Power Holding Company of Nigeria (PHCN). For example, the Chief Executive Officer of Association of Electricity Distributors, Azu Obaiya, said towards the end of last year:”Discos are experiencing revenue shortfall on a monthly basis of N38bn. As of June 2016, the MDAs owed the DISCOs N53bn post-privatisation….The books of the DISCOs are so bad that they have no chance anymore to access finance. These books do not reflect the cash flow that is necessary for them to be taken seriously by any lender.”
By insisting that tariff hike should be a pre-condition for provision of pre-paid meters, DISCOs are again putting the cart before the horse. Such call overturns the basic principle of economics: primacy of supply and demand. Citizens as consumers of electricity have complained continually that the billing system inherited by the DISCOs is not reliable and should be replaced with provision of pre-paid meter to each customer. The government has endorsed such demand. Justification for this has been that equitable and transparent billing process is in the interest of both sides of the economic encounter: supplier and consumer. To insist almost four years after privatisation on increase in tariff before provision of a credible billing system is to take customers for granted.
We believe that customers are rational in asking for pre-paid meters before any increase in tariff. We also believe that it is about time for all stakeholders in the power sector, including the Federal Government to stop passing the buck. Citizens, like their counterparts in functioning countries, need adequate and constant supply of electricity. Obsessing over causes of the inadequacy of stakeholders has not been able to solve the problem in the power sector, before and since privatisation.
The energy sector is not the first utility to be privatised in the country. Telecommunications has improved significantly since privatisation. There is no reason why electricity should not be noticeably better than in the regime of PHCN, more than three years after deregulation of the sector. Enough of excuses on the part of stakeholders on this inevitable pre-condition for development. The Federal Government and post-privatisation energy companies must ‘de-jinx’ this crucial sector.
