Crazy bills: Electricity consumers trapped in DisCos’ net

“If Nigeria doesn’t kill you, nothing will,” Chuks Okoli, an energy engineer, said in a Twitter message on Wednesday.

This conclusion was inspired by an experience that would have been hilarious if it weren’t so tragic.

“Wow, Ikeja Electric did the most amazing thing. Cut off my light but I’m a prepaid customer,” he tweeted.

Ikeja Electric is one of Nigeria’s 11 electricity distribution companies (DisCos) whose core investors purchased the assets of the defunct Power Holding Company of Nigeria (PHCN) on November 1, 2013, in a privatisation programme once adjudged the fairest in the country but now morphing into an unending nightmare.

Okoli’s sad tale pales into insignificance when compared with the daily gory experiences of millions of Nigerians left to the trying hands of the DisCos.

Ebere Umuakano, a shoemaker in Aba, Abia State, told a story of how he was asked by the Enugu Electricity Distribution Company (EEDC) to pay N21,000 each week. Umuakano had to fight regularly with the officials of the EEDC to bring down the estimated bill to N6,000.

“We are praying for a break with this monopoly,” he says. “We heard Professor Barth Nnaji is coming to power Aba and we hope this comes true.”

Three months ago, the Socio-Economic Rights and Accountability Project (SERAP) sent an open letter to Babatunde Fashola, minister of power, works and housing, requesting him to use his “good offices and leadership position to urgently enforce your directives to DisCos to provide free pre-paid meters to Nigerians, and end the use of patently illegal and inordinate estimated billing across the country”.

But the DisCos have long proven that appeals and moral suasion have little effect. From Ikeja DisCo to Eko, down to Edo and Port Harcourt DisCos, the story is the same.

“In my house, there is no meter but I keep getting huge estimated bills. I went to their office and I was told to write a letter informing them of the situation and requesting meters. I have been writing and writing, yet there is no solution,” a media practitioner in Lagos tells BDSUNDAY.

But while only a few can write complaint letters, even though it hardly brings any solution, there are millions of Nigerians who cannot write or plead their cases, condemned to less than two hours of power supply a week but pay high electricity bills. When they refuse, officials of the electricity companies disconnect their power supply sources. Some part with bribes to officials who connect them back to the grid only to resurface a week later to repeat the exercise.

“I get a bill of N20,000 every month,” says Harriet Emelike, a hair stylist based in Ikeja, Lagos. “The bill does not make sense. I only run one hair dryer and I get less than five hours supply in a week.”

Another small business owner, Elsie Nwadialo, who runs Siwanda Spa in Maryland, Lagos, corroborates the story of ridiculous bills sent by DisCos to small business owners.

“Now it is turning to weekly routine to come and disconnect power,” says Nwadialo, who has now resorted to running mostly on fuel. “We have to generate our own power now most of the times, and fuel gulps up a lot of money every day.”

The Nigerian Electricity Regulatory Commission (NERC) was created to check the excesses of these DisCos. As a regulator, it is mandated to ensure that fair rules are applied in the electricity market and players deliver on their expectations.

However, many industry stakeholders accuse NERC of failing to enforce sanctions on infractions committed by different players in the sector. This has resulted in flagrant abuses including declaration of false information to regulators and operating without due regard to the provisions of the Electric Power Sector Reform Act (EPSRA) 2005.

In the face of glaring incompetence by the industry operators, NERC has resorted to pedestrian actions like begging Nigerians to be patient, issuing threats where sanctions would suffice while the nation remains in darkness. The DisCos can neither produce a financial statement nor are they meeting their ATC&C loss reduction requirement barely 15 months to the deadline given them to meet their sales and performance agreement.

Against the backdrop of stakeholders calling on NERC to enforce a provision of the privatisation rules that ensures customers are fully metered, there is already an instruction from the regulator to ensure that maximum demand customers (heavy energy users, especially industries) are fully metered, otherwise they should stop making payments. Residential customers are also asking the regulator to enforce similar rules.

But Segun Kuti-George, chairman, Nigerian Association of Small-Scale Industrialists (NASSI), is wondering whether NERC wants these consumers to fight the DisCos.

“NERC has the power to enforce the law. It is in its power to ask DisCos to meter everybody. Asking maximum demand consumers not to pay is to bring chaos. If they want to disconnect your line, will you fight them?” Kuti-George queried.

“I think they should work it out among themselves to know why people are not metered. If there’s a breach of contract, they need to fix it themselves,” he said.

The DisCos, on their part, have long called on the regulator to enforce a cost-reflective tariff because the template used in arriving at current prices has since become obsolete. Tariffs were agreed when the dollar exchanged N197/$1, but today, it is above N360 and all the contents that feed into pricing are exchanged in dollars. Worse still, inflation has risen from less than 10 percent to over 17 percent within three years and prices have not changed significantly.

“We need to highlight the many challenges we are facing, especially that of energy supply. The inadequate energy given to us has lowered our revenue base. The other thing is the very uncertain tariff regime,” said Sunday Oduntan, executive secretary, Association of Nigerian Electricity Distributors (ANED), in an interview.

“Discos met a lot of challenges. We did not know many of these until we took over properly. We are not complaining, but we are saying that there should be cost-reflective tariff that shows clearly the cost of delivering electricity to the doorsteps of consumers. In the days of PHCN, there was subsidy which helped a lot but since we took over, there is nothing like that,” Oduntan said.

Manufacturers back off

Many manufacturers in the country have already backed off the use of power supply from DisCos. The Manufacturers Association of Nigeria (MAN) recently set up a Power Development Company to ensure steady supply of electricity to industrial clusters.

The power company has signed an agreement with Tower Energy Solution & Systems Limited for the supply of 24-hour electricity to Henry Carr Industrial Cluster in Ikeja and others in Lagos. Tower Energy, a subsidiary of Tower Aluminium Group, is beginning with the supply of 6 megawatts (MW) and will incrementally move up to 10MW as time goes on.

MAN Power Development Company is equally talking with Sahara Energy and solar power firms in the North to supply electricity to various industrial clusters across the country. Manufacturers have taken this step as over 40 percent of their expenditure goes to power supply.

“Power takes up much of our expenditure and we are determined to get more of it to power industries,” said Ibrahim Usman, chairman, MAN Power Development Company Limited.

“One beautiful thing is that Tower is also a manufacturer. So it knows where it pinches most, and the agreement is that they will supply 24/7 power,” Usman said.

Frank Udemba Jacobs, president, MAN, told BDSUNDAY that manufacturers were in court with DisCos over critical issues, including crazy bills.

“And one of our prayers is that manufacturers should be metered,” he said.

Beyond the Power Development Company, many manufacturers are resorting to the use of coal and renewable energy as DisCos fail to supply power.

SMEs lament

Small and Medium Enterprises are the worst hit. Henrietta Ifeoma Lawrence, CEO, Munach Shoes located in Lagos, says as a starter, her major challenge is power supply as she depends solely on a generator, which also supplies power to her home. This, she says, is hurting her locally-made shoes business and depleting her margins.

“Ever since the PHCN was unbundled, power has not improved. I think the Federal Government’s stranglehold on this sector is not helping manufacturers. People who can provide power should be allowed to do so without hindrances. This will reduce cost of production,” says Obong Ikpong O. Umoh, chairman, Cosmetics and Toiletries Group of MAN and managing director, Stellarchem Nigeria Limited, a medium-scale manufacturer of chemical intermediates.

Tolulope Adebukola Ogundokun, founder and chief executive officer, Pawprint Limited, says, “I need electricity to power my machines, and the issue of poor electricity supply has been frustrating. I spend a lot on fuel and this has increased my production cost. I need electricity to put limestones on textiles but this is not happening.”

Intervention funds

Meanwhile, the government has created intervention funds to assist the DisCos. Last year, the Central Bank released N213 billion for the sector but this is yet to make them provide basic meters for their customers.

 In 2013, NERC launched a programme called Credited Advance Payment for Metering Implementation (CAPMI), which allowed electricity consumers to self-finance their meter acquisition and installation, but this programme was discontinued in November last year because the DisCos were unable to promptly deploy meters to customers.

However, many Nigerians believe that the DisCos’ preference for estimated billings removes any motivation to provide prepaid meters. Estimated billings allow the DisCos to recover losses from areas where collections are poor, which makes it a preferred alternative.

Power theft

On the other hand, a lot of Nigerians, including wealthy people, steal power by bypassing their meters and connecting directly to the power source. Others place heavy pieces of equipment that consume more energy directly to the power source while less-energy consuming ones are placed on the meters.

Last year, Eko DisCo said it was losing about 30 percent of its power to thieves.

“One of the largest contributory factors to the commercial losses and liquidity challenges that accrue to the power sector is the theft of electricity, which is illegal and should be given stronger regulatory backing than the current inactive structures in place in the Nigerian Electricity Supply Industry (NESI),” says Ivie Ehanmo, an energy lawyer.

NERC formulated the Electricity Theft and Other Related Offences Regulations in 2013 to deter electricity theft and the destruction of electricity supply infrastructure, but it is “still in its draft form and hence not in full force and effect”, says Ehanmo.

While experts are calling on the government to pass the legislation criminalising energy theft in the country, industry watchers say issues like these are not difficult to manage with smart meters capable of calculating correct energy usage.

ODINAKA ANUDU& ISAAC ANYAOGU