Sunday Oduntan, director, research and advocacy of the Association of Nigerian Electricity Distributors (ANED), a group of 11 Electricity Distribution Companies (DISCOs) in the country, spoke exclusively with RAZAQ AYINLA on the challenges of all DISCOs, including huge debts owed by the military, para-military, police, ministries, departments and agencies (MDAs) at various levels of government and why it could not be possible to meter all Nigerians by October, 2016 as announced by the Nigerian Electricity Regulatory Commission (NERC). Excerpts:
Huge debts, poor service, metering problem, weak transmission lines, among others have been serious issues in electricity distribution in the country. Could you please share some of the problems with us?
The issue I want you to understand is that we need to look at the value chain of electricity. We need to understand we are three layers, we the DISCOs are the one below. We have the GENCOs, that is generation companies; we have transmission company of Nigeria (TCN) which is still owned by the Federal Government and then the DISCOs, distribution companies. Now, the GENCOs will generate electricity, sell to the Federal Government through TCN, who will then sell to us which means all the money we collect from distributing electricity to the public, we retain less than 25percent of that money as our own, and all the remaining goes to the other stakeholders. The problem now is that when you buy electricity, you supply out, you now have commercial and collection losses- losses due to non-payment and losses due to energy theft. In the case of non-payment, the greatest problem we have today is Nigerian military and I will give you the figures. Under the DISCOs or wherever you see military formations, they are owing huge electricity debts and the problem we have is that most of these military formations have refused to pay and they are owing so much. I will just give you some of the examples, under Ibadan DISCO, military owes N3.9 billion; in Kaduna DISCO, the Nigerian military owes N6.3 billion and owes N263 million under Kano DISCO. Our records also show that the military and MDAs are owing Abuja DISCO about N7billion, just as the military and para-military debts under Eko DISCO stand at N1.9 billion.
In Benin DISCO, the military and ministries, departments and agencies of government owe us N3.8 billion and so on. I am aware that military and ministries, departments and agencies (MDAs) of various levels of government are owing the largest debts in all other DISCOs across the country and people are complaining about our services, with these mind-boggling debts, we can’t invest in metering, we can’t invest in transformers and I’m worried that the system may collapse. Now, the military are fond of not paying for electricity used and each time we try to collect the money, they beat us up. So, it is a big problem and we are calling on President Buhari, he has brought change, he should let the change extend to the military and security agencies, they should all pay their debts. We are aware that there are provisions in their budgets for payment of utilities. What has been happening to the money? It means that they have been diverting the money over the years. Well, I want to believe that we have changed, a new government is in place, and I don’t think that any military will disobey the Presidency. We know what we can do, it doesn’t take us much to disconnect them and put them in darkness and then resort to diesel if that is cheaper, but we don’t want to do that, we are responsible set of companies that believe in rule of law and new government with change mantra they have brought.
Now, we are finding it very difficult to pay for the electricity, we are finding it difficult to invest in metering, we are finding it difficult to invest in transformers. So, the effect is that the system would collapse. The only way we can save the system is for the people to pay their debts and we are saying that government needs to play its part. Let’s give the examples of the state level, the governors are going in the convoy of 11-13 cars, they ride N30-40million bullet-proof cars, yet, they cannot pay electricity bills and we think it is time to sit down and know that it is responsible act to pay their bills. I will talk briefly about tariff, what we have in Nigeria is no-cost reflective tariff. If you are selling a bottle of coke, the basic thing for a businessman is the cost of coca-cola before your profit, up to the cost of producing coca-cola, it should reflect the cost. Nigeria has the third lowest tariff in Africa. Those who are able to give good electricity in Africa, people pay for it. So, there is need for us to increase the tariff, Nigeria should brace up to pay more in order to get good services. So, I don’t think about what will they do? All I want to say is that they need to pay their bills. I can continue to give the service, but if you don’t pay your bills, I will stop the service. Once, I take charge of transformers, you will not get any light. I don’t need to enter your premises, that is the last resort, but we will not like to do that, that is why we are appealing, we are appealing to the Federal Government to wade in and let these people pay their debts.
Due to poor metering system and inaccurate billings in the country, the Nigerian Electricity Regulatory Commission (NERC) has given the DISCOs October, 2016 deadline to meter all Nigerians; how realistic is that?
We are interested in metering, it’s in our interest to meter our customers but the issues should be looked at in a more robust way. Number one, may I refer to the Shared Service Agreement (SSA) that we had at the point of entry, it is that the Discos should be rolling out per annum, 100,000 (hundred thousand) meters over a 5-year period to meet the 500,000 meters, we are working towards achieving that but say we should meter all customers in Nigeria by October 2016 is not only un-realistic, it is also at variance with the provisions of SSA that was agreed at the point of takeover. May I say again that providing meter is not just about me coming to the house and put the meter there, it involves a lot of things, I have to capture your data, you have to have database, we have to link that meter with the particular database, we have to be able to know the addresses correctly; we all know, apart from Abuja and few cities, most places you go to in Nigeria, there are no good street naming and address system. What we are trying to do is customer enumeration- to know our customers. For instance, under Ibadan DISCOS, what NEPA, PHCN left on paper is that they have 1.3 million customers in four states of Ogun, Oyo, Osun and Kwara states. In Oyo State, Ibadan being the largest city in West Africa, how can somebody tell me that we have only 1.3 million customers in all those states; it means that we have not captured all the customers and we are doing our best to capture more customers as soon as possible, that is why we say it’s not possible, the issue of October, 2016 deadline, metering all Nigerians, we will like to do that, but we need to be realistic.
Does it mean that local meter producers lack the capacity to adequately feed the DISCOs or the 11 DISCOs have no capacities to meter all Nigerians?
We have been patronising local manufacturers of meters or those who assemble meters in Nigeria. We have a project called CAPMI; in the CAPMI, we use local manufacturers, but the truth of the matter is that the meter gap we use today, they don’t have the capacity; they can’t supply such a large number. Not only that it costs a lot to do it and they, themselves, don’t have the financial capacity to give us what we call vendor-finance. So, that is one issue. The other issue is that their meters are also expensive; if you want to sell a product you cannot force me to buy it, what you can do is to talk for me to agree and buy your product. But if you don’t want to sell to me at a reasonable price, I can go back to the same source where you also purchase your own. Because, it’s only the plastic they use in covering the meters that is manufactured in Nigeria, I stand to be corrected, when people are talking about manufacturing, it is different from assembling, we also know that they purchase the thing abroad, they also need to make profit and we are ready to patronise them but they, themselves know that if you put them altogether, they don’t have the capacity to supply the need of Nigerians for now. In terms of their own meters, they want cash-and-carry and we cannot do that, if we have manufacturers who can finance meters, it only make business safe for us to go there. Again, we want to work with local manufacturers, we are ready to partner with them but they should not be calling on Federal Government and NERC to compel us, it is a waste of time, this is private sector. Some of them also said that they are in business in order to be patriotic. I say no, they are in business to make profit. So, one should not say I like Nigeria more than Nigerians.
Although, there has been appreciable level of power stability in the country with the new government, it is however, said that electricity production in Nigeria is far below requirement; what is the role of DISCOs in this regard?
There has been improvement, the truth is that the generation has increased from what we had couple of months ago and what we have now, with the new government let’s say the truth that the incident of pipeline vandalism has gone down; if that has gone down there is more gas, so the gas suppliers to the Generation Companies (GENCOs) are making gas available to GENCOS, I can assure you by December, it’s going to increase. Now, it’s over 4,000, I can see it getting to 5,000 by December. That means something about good governance, when there is good governance, every other thing in the country, public and private sectors will all work and I am telling you that we will continue to have improvement in the sector. I can only appeal to the Federal Government because they are the owner of Transmission Company of Nigeria (TCN), I’m making the noise clear that they should invest in TCN, the transmission grid is very weak, out of the three layers in the value chain- Generation, Transmission and Distribution, generation is private, distribution is private, transmission is public, the TCN is the weakest link and if they don’t have the capacity to transmit electricity to all distribution companies, we cannot distribute anything. If you generate like 7,000 – 8,000MW and they cannot transmit, it is useless; so, they are the one that needs to work on, in my opinion; they should even privatise it as soon as possible.
How does energy theft affect power distribution in the country and who are those behind this?
The issue of energy theft is a huge problem. Let me tell you this, every street wherever you live, on your street, somebody is stealing electricity. I have seen this all over the country. I have gone round and I know for a fact, even some rich people who have 10 air-conditioners, they will only connect two to their meters, they will bypass eight, that results to what we call collection losses, the aggregate commercial and collection losses. Let me give you an example, now assuming we buy electricity worth N3.2 billion and we are to do our billing, at the end of our billing, we now arrive at N2.6 billion, what that tells you is N600 million worth of electricity has been stolen. Now, one of the problems we have in Nigeria is that people don’t report crimes in their neighbourhood. If you are living in a neighbourhood and there is a welder who bypasses meters, you are paying for it on estimated billing, so it’s in your interest as Nigerians to report such person to the security services; we also want to tell the security agencies not to receive bribes from the culprits and free them; if they are doing that, they are not doing the country any good. It’s not about us alone, it’s not because of us alone, it’s about everybody because if they continue to steal electricity, we can’t have light.