Since the unbundling of the Power Holding Company of Nigeria (PHCN ) through privitisation in 2013, the single most pressing challenge bedeviling the sector according to operators is the issue of unrealistic tariff regime.
In the past few years after the process of privitisation, challenges such as poor power generation, quality of power supplied, energy theft, vandalism, fluctuating forex rates among others have in no small ways hampered the growth of the sector.
In the opinion of industry operators, these unresolved issues continue to be unaccounted for in the Multi-Year Tariff Order, and this has resulted in mounting losses for all stakeholders in the value chain.
They observed that tackling this problem is where the change must begin from. There are other challenges too from the distribution end such as customers’ apathy to bill payment, fuelled by many years of the average Nigerian being used to culture of free electricity.
“We pay for the energy we supply and unfortunately, we can barely recoup enough revenue to settle our energy bill alone. As matter of fact, no distribution company has been able to do that” says John Donnachie, MD/CEO, Ibadan Electricity Distribution Company.
He pointed out that weak legislation to prosecute energy related crimes, unrecoverable bad debts from Ministries and Departmental Agencies and Manufacturers Association of Nigeria and meter bypass are some of the other pertinent issues.
Donnachie in a recent interview was quoted to have said that the most important development for the electricity sector in general is that of the privatisation exercise itself; it brought about a different attitude to the industry in Nigeria.
Despite the several issues that persist, the unbundling into generation, transmission and distribution and subsequent privatisation has yielded a transformational leap that had hitherto not been experienced in the preceding years. It was the right step in the right direction.
“I have mentioned most of them previously. The challenges are huge and it does not help that the DISCOs seem to be the whipping boy for industry stakeholders and customers”. He said.
Industry close watchers opines that asides the substantial multi-billion-dollar investments required to overhaul the obsolete infrastructure inherited, there is no way this investment can be recouped according to the present tariff structure.
“Electricity distribution is a business and this tariff constraint puts a huge limit on the effort we can make. Despite this, we have continued to invest heavily in infrastructure upgrade (substations, customer care centres), metering (metered all our MD customers), new billing systems, health and safety improvements, empowered and competent human resources and improved customer service delivery. We believe in the industry and will continue to do our best”. Donnachie said.
Analysts insist that from an investor’s perspective, a lot of work needs to be done in the sector to ensure viability and return-on-investment so that we can attract more investors. Critical areas such as the legal framework of the entire industry, sanctity of contracts, cost-reflective tariff, customer orientation to bill payment etc. need to be addressed. The power sector is one of the most lucrative globally and we believe in the long run, every investment will be profitable.
KELECHI EWUZIE
