Contradictory positions of the Federal Government on the operations of the electricity distribution companies call for concern. The government had unbundled the Power Holding Company of Nigeria, in order to radically transform the power sector. Unfortunately, the outcome belies the effort. Abuja’s fresh desire to inject $350 billion into the sector for facilities upgrade over a 15-year period and the predilection for making excuses for non-performance of the electricity distribution companies expose the underbelly of the power privatisation scheme.
At a town hall meeting in Abuja recently, where the Minister of Power, Chinedu Nebo, expressed the government plan, he also said one million prepaid meters would be provided to consumers’ as part of its equity investment, with the hope that it would contribute to narrowing the metering gap, said to be in the region of 50 per cent. The government ought to have realised by now that many of the DisCos are not willing to operate in line with their contractual obligations.
“It is so painful that people are not paying and that is why government has decided that since the DisCos are overburdened with all kinds of other things, the President has approved the funding to give over one million meters to Nigerians to reduce the gap; and then allow the DisCos to fix the time that all Nigerians will get meters,” Nebo said.
If the DisCos are encumbered to the point of not being able to provide meters for electricity consumers; rejecting electricity loads allocated to them, having warehouses that are bereft of equipment needed to respond to customers’ demands, increasingly suffering power theft (which they don’t have any mechanism to handle) as the minister recently stated, then we wonder what value they are adding to the system.
Repeatedly, the firms have ignored the Nigerian Electricity Regulatory Commission’s directives to provide customers with prepaid meters to ensure that they only pay for what they consume, instead of the corrupt regime of estimated billing. The government is creating the impression that the DisCos cannot discharge their fundamental obligation because of financial imperatives. This is barefaced falsehood. It is not cash crunch that influenced the DisCos’ refusal to distribute the prepaid meters they inherited from the PHCN, which the Federal Government had procured with N2.9 billion. Many consumers had paid for them since 2011.
The 45-day compliance deadline given to these errant DisCos in October to meter this set of consumers has lapsed without any of them being sanctioned. Instead, what is now in vogue is to “allow the DisCos to fix the time” when they would provide Nigerians with meters. Nebo’s charge to these firms on the consequences of non-performance on November 24, 2014 is instructive: any culprit would be sanctioned “or its licence withdrawn.” For a privatisation programme to achieve its set objectives, fidelity to agreed principles is critical. But this is not what Nigerians are witnessing.
We don’t believe that the government carried out proper due diligence on the DisCos that bought the 11 unbundled PHCN distribution firms. Most of them were, in fact, “special purpose vehicles” – companies hurriedly registered just to corner public assets – without the financial and technical expertise to deliver. To allow this debilitating regime to reign means giving credence to the widely held belief that the powers-that-be sold these assets to their “friends and families.”
In the 10 years to 2012, the country had sunk $35 billion into the power sector, according to Nebo. Nobody has been held to account for this huge expenditure even when there is no result to show for it. This is most shameful. Statistics from the Ministry of Power show that peak generation as of January 25, 2015 was 4,291 megawatts, while energy consumed or sent out was 3,791MW. The highest peak generated was 4,517.6MW in December 2012. Definitely, this output does not exemplify progress, or justify the investment made so far.
The patchwork in the power sector being encouraged by government in the guise of its botched privatisation will not end the country’s nightmare. What is required, therefore, is a critical review of the extant contractual agreements to allow foreign investors with the technical, managerial and financial capacity to key into the power reform programme.
Nigeria missed its way on the power privatisation road when foreign firms with pedigree were schemed out due to corruption and vested interests. It also explains why the well known Canadian firm, Manitoba Hydro International, with a management contract for the Transmission Company of Nigeria, has not had it easy.
More should be done to get our transmission right by subjecting it to a transparent privatisation. The TCN’s critical role in a successful power reform is underpinned by the fact that out of 4,291MW generated as of January 25, 2015, only 3,791.66MW was sent out. Thus, independent providers such as ALSCON with 100MW; Ajaokuta Steel Company 85MW; Lafarge Cement 40MW; Obajana Cement Plc, 35MW; Kaduna Refinery 33.5MW; Geometric in Aba 22MW; and NESCO, 26MW, have not yet been linked to the national grid.
Both Nebo and Sam Amadi, the chairman of NERC, must make the DisCos perform. The six-month moratorium on the implementation of the new Multi-Year Tariff Order to private electricity consumers is just a veneer response to a gargantuan problem. Only the adoption of global best practices in the privatisation scheme will do.
