In 2013, Sustainable Energy for All (SEforALL) ranked Nigeria as the 165th out of 195 countries in terms of electricity supply. This ranking triggered a wave of reactions from Nigerian citizens and public officials. However, none of the protesters argues that Nigeria’s electricity supply industry is devoid of significant challenges. Indeed, one of the most critical challenges is the liquidity crisis in the market.
Distribution companies (DisCos) have argued that electricity theft is one of the leading causes of the liquidity crisis in Nigeria’s electricity supply market. The DisCos claim that a relatively large number of electricity consumers do not pay for electricity used, resulting in significant financial shortfalls. Nextier Power’s discussions with DisCos reveal that about 10 to 18 percent of the aggregate revenue losses are attributable to power theft.
Stealing Ways
Nigerians, knowingly or unknowingly, defraud the electricity supply market through various practices. Non-payment of electricity bills is one of the significant challenges faced by the electricity distribution companies. Several electricity consumers do not pay their bills in full.
Manipulation of electricity bills is another way of defrauding the system. This practice typically requires the cooperation of utility staff to alter the bill amount. In most cases, the customer induces such action by offering a bribe to the DisCo staff.
Fraudulent customers may tamper with the electricity meters so that it does not accurately record electricity usage. The tweaking could be to make the meter read a different figure from the actual consumption (tampering) or not to read the consumption at all (meter bypass). In discussions with Nextier Power, one of the DisCos disclosed that about 50 percent of meters installed from 2016 to 2018 had been tampered with by mid-2019 .
Illegal connections are another significant challenge. Across the country, electricity consumers openly connect to the national grid without prior consultation or approval of the electricity distribution company. In some cases, consumers defraud the utility through illegal partial connections, where they legally connect smaller loads through the electricity meters, and the larger loads (like air conditioners, refrigerators, etc.) are illegally connected by bypassing the meters.
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Drivers of Power Theft
The long-held assumption is that the lack of prepaid meters was a primary reason for power theft. However, recent trends show an increase in the bypass of prepaid meters. Electricity consumers who are unwilling to pay in full for their consumption constitute a significant percentage of those who steal power in Nigeria. These customers assume that power should be a social service provided by the government and, as such, free of charge
The Nigerian Electricity Regulatory Commission, in its bid to deter power theft, established the “Electricity Theft and Other Related Offenses Regulations” in 2014. The regulation outlines penalties for electricity theft in line with the power consumption or capacity utilisation of the culprit. A residential customer with a single-phase meter caught stealing power will be levied a penalty of N50,000 for the first incident and N75,000 for subsequent incidents. The penalty for a residential customer with a three-phase meter is a fine of N100,000 for the first incident and N150,000 for following incidents.
Effective implementation of regulations and laws is a primary challenge in Nigeria. There is a disconnect between the regulation and its enforcement. On the one hand, many of the customers are not aware of this regulation while, on the other hand, the utilities are unable to work with the law enforcement agencies to implement the rules.
Addressing the Challenge
Relevant stakeholders can address the challenge of power theft in Nigeria through technical and non-technical solutions. Appropriate solutions for curbing electricity theft should consider the potential for returns, proximity and location, effectiveness and management techniques and social orientation of the consumers.
Technical Solutions
Technical solutions include the deployment of smart grid solutions such as smart meters that ensure bi-directional communication between the consumer and the utility. Unlike conventional prepaid meters, smart meters can execute commands both physically and from remote locations. This characteristic allows for proactive and round-the-clock monitoring and control of the appliances. Such infrastructure that enables prompt detection of irregular connections and tampering will encourage consumer discipline.
Deploying smart meter technologies reduces opportunities for the interface between the electricity consumer and the utility employee, making it more difficult for them to conspire to steal electricity. Smart meters can work with varying technologies. Some smart meters are fitted with anti-tampering devices which alert the DisCos whenever tampering occurs. Anti-tampering devices enable remote disconnection and reconnection by the service provider. Researchers have recently discovered the 5 hertz (5 Hz) Distribution System as another technology to curb theft. When included in a smart meter, the 5-Hz signal lies dormant until any form of tampering is performed. Once a meter is tampered with or bypassed, the system modifies the frequency of power distribution and the consumer’s appliances either flicker continuously or stop working.
There is a need for further research and commercialisation of these technologies because they reduce the DisCos’ efforts and required resources for inspection and monitoring.
Implementing the right technology to curb power theft should involve strategic consumer segmentation. Smart meters that detect or prevent tampering are expensive and may not be cost-effective to be deployed to all customers. The utilities have to be strategic in selecting the areas to place the meters.
Direct Transformer (DT) metering would help DisCos ascertain where to prioritise investments in smart meters based on consumption and revenues. Comprehensive customer enumeration is necessary to enable total DT metering across the DisCo franchises. Logically, large volume consumers with higher non-technical loss levels should be prioritised with the installation of smart meters.
Non-Technical Solutions
Non-technical solutions can work effectively to support technical solutions. These solutions can be implemented as primary anti-theft measures in areas of relatively low electricity consumption, where losses from theft do not justify costly infrastructure investments. Proper management, public outreach and education backed by behavioural and social studies, and enforcement of legislation are measures that should be in place to curb electricity theft.
In terms of adequate oversight, utility companies must review their human capital development practices to ensure that their staff do not facilitate power theft by colluding with power consumers. Such procedures should include rigorous recruitment, proper onboarding, training, communication of values and penalties. DisCos can also implement competitive reward systems for high performing staff. The DisCos can institute reward systems for their monitoring and inspection field staff.
Continuous public outreach is essential to educate electricity consumers about the consequences of power theft and its implications for power supply in Africa. As they directly interface with their consumers, DisCos are charged with continuously educating electricity consumers on such issues. Such engagements should be backed by targeted behavioural and social studies of consumers in selected localities to identify high theft-prone communities and ascertain the best channels of communication.
In low-consumption but high-density localities, empowering a group of locals to educate and empower others within their communities can reduce theft and improve collection rates. This approach is different (and probably more effective) than the physical monitoring of the network by the utility staff. This difference is because the locals have a better understanding of their communities, and their pleas will resonate better with their compatriots. This model worked in the Comoros where, in 2019, the World Bank collaborated with their National Electric Company to conduct gender-sensitive poverty and social impact assessment.
The regulator should enforce existing regulations against electricity theft. The non-discriminatory enforcement of existing legislation that criminalises power theft would deter other power consumers from theft. Suppose the regulator, in collaboration with the judiciary, enforce and communicate penalties such as fines and jail time. In that case, other consumers will be inclined to avoid actions that lead to the same penalties.
Conclusion
Power theft contributes considerably to the failure of energy accountability across the value chain. Although there are different ways to steal power, many of them are driven by socio-economic determinants. The predominant factor is the attitude of the consumers and the utility staff. Therefore, the utilities should prioritise efforts to address these attitudes. The point on attitudinal change does not negate the role of technology in addressing the challenges. A combination of technology, the law and behavioural change is required to curb the problem of electricity theft to ensure that investments in the industry will yield the expected increase in electricity supply.
