The price of sabotage

Nigeria’s 11 electricity distribution companies lose about N174billion yearly to power theft through meter by-pass and fraudulent manipulation of meters, the reason you should worry is because they may be passing the bill to you, writes ISAAC ANYAOGU

Thirty-seven year old Saheed Momodu was charged to court last year for tapping electricity from a neighbour after he was disconnected for skipping a year’s worth of electricity bills.

He ran out of luck. That day, the neighbour’s generator was turned on and he was not quick enough to switch off his appliances before anyone noticed. Momodu, got his day in court.

From career criminals, artisans, factory operators and even respected members of communities, different cadres of the Nigerian society have little scruples stealing power.

Power theft it seems has become somewhat of a chivalrous crime, akin to the myth of Robin Hood – stealing from the rich to pay the poor.

Nigerians cite the perennial power outages coupled with the electricity distribution company’s (Discos) proclivity to bill them by a toss of the dice to justify this economic sabotage.

But power theft is having bruising consequences. Nigeria’s electricity distribution companies lose over N174billion yearly to people who bypass meters and steal electricity and this is increasingly making it difficult for them to pay staff, run offices and repair or replace broken electricity infrastructure.

Port Harcourt disco is the worst affected where electricity consumers steal N30billion worth of electricity yearly. Enugu and Ikeja disco follow with yearly loss of about N24billion with Enugu disco reporting that about 70 per cent of their meters are bypassed.

Investigation revealed that while customers across Nigeria’s six geopolitical zones are involved in this practice, the discos are passing the bill to customers especially those without meters and those with old meters that are not often read.

 

Discos	Monthly losses (N)	Yearly losses (N)
Abuja	1.5billion	18billion
Benin	1.5billion	18billion
Ibadan	1 billion	12billion
Enugu	2 billion	24billion
Eko	1 billion	12billion
Ikeja	2 billion	24billion
Kaduna	1.5billion	18billion
Kano	500million	6billion
Jos	500million	6billion
Port Harcourt	2.5billion	30billion
Yola	500million	6billion
Total	N14.5billion	N174billion

 

Discos’ yearly losses to electricity theft

 

But electricity theft is not entirely a Nigerian problem. According to the annual Emerging Markets Smart Grid: Outlook 2015 study by the Northeast Group, LLC, the world loses US$89.3 billion annually to electricity theft.

 

The highest losses were in India ($16.2 billion), followed by Brazil ($10.5 billion) and Russia ($5.1 billion

“India loses more money to theft than any other country in the world. The state of Maharashtra—which includes Mumbai—alone loses $2.8 billion per year, more than all but eight countries in the world. Nationally, total transmission and distribution losses approach 23% and some states’ losses exceed 50%,” Ben Gardner, President of Northeast Group stated in the report.

Unintended consequences

Electricity customers complain of crazy billing by the discos, a term used to describe the art of inflicting electricity consumers a bill based on a brutal exercise of discretion yet power theft is a major cause.

“The unfortunate thing about energy theft is that some innocent electricity consumers are made to pay for all this energy loss,” Okechukwu Okeke, a technical executive with Ikeja Electric comments in a post on the issue.

“Because we presently have meters in all interface points – generation, transmission and distribution – thus this stolen energy is paid by somebody. What most Discos do is to simple subtract the energy used by the metered customers and then distribute all other energy to customers on estimation or code.”

The power value chain in Nigeria is constructed in such a way that the discos pay everyone up the chain – electricity generation companies (GENCOS) Transmission Company of Nigeria (TCN) and even gas suppliers. The discos only keep 25 per cent of the bill customers pay.

Now the discos already challenged by illiquidity in the sector, vandalism of power assets, huge debts by government ministries and departments, and armed forces especially the army further have to contend with rampant power theft.

A tale of loses

Three major types of losses are encountered in the utility business: technical, commercial and collection losses.

A methodology used for assessing the overall health of a utility, is termed the Aggregate Technical, Commercial and Collection Loss (ATC&C).

Technical losses arise from the physical equipment used in the transmission and distribution of electricity. Industry watchers say that though this type of energy loss is not abnormal but it becomes problematic when values recorded are above prescribed thresholds. It is attributed to ageing or sub-standard equipment.

Commercial losses stem from sub-optimal billing process which fails to capture or account for all billable energy. This could be due to incorrect assessment of the energy consumed, human errors, theft or internal collusion.

Collection losses occur when utilities fail to collect revenue in consonance with billed quantities. Accounting errors are also frequent and complaints of crazy billings do not inspire confidence of consumers.

In Nigeria, commercial losses are largely due to pilferage. Fraudulent individuals have devised nifty methods of tampering with electricity meters. Some insert needle pins into holes in the meter box slowing down the recording wheel, give a flash reading or even zero usage.

Small magnets have also been reportedly attached outside the meter casing which will stop the meter from registering or slow it down.

Meters are sometimes bypassed and power is sourced illegally from underground cables and overhead wires.

In the middle of the night, artisans like welders hang their wires on conductors and rig the connections to use power without paying.

Common in largely populated areas in Lagos are houses where though only a connection is visibly from the meter to electric poles, several other connections are attached some concealed inside the walls.

Many electricity customers in Nigeria are not sufficiently convinced they should pay for power. This attitude feeds off a sense of entitlement that surrounds consumption of electricity in Nigeria as it is viewed as a social function of government.

“We found that customers are diverting loads from their meters,” said Temitope Borisade deputy managing director of Enugu disco, “Some of them divert consumptions from their heavy equipment.”

He stated that there are syndicates that clone meters and sell to customers who are eventually not on their customer base.

“We have an ATC&C loss figure that is upwards of 40 per cent and the large part of this is due to energy theft,” Borisade said.

An attempt at remediation

The discos are carrying out enlightenment campaigns warning people who are culpable to desist from the act and in some cases threatening litigation.

Jos Electricity Distribution Company (Jos Disco) recently said it will soon commence the prosecution of customers who through by-pass of meters or illegal connections try to evade electricity metering.

Oladele Amoda, managing director and chief executive of Eko disco at  press briefing to mark the 3rd anniversary of the company in their Marina office in Lagos on November 3, said “We have now decided to take measures including creating awareness and naming and shaming the perpetrators of this practice.”

He was astonished that a recent raid in highbrow Lekki area in Lagos yielded several houses where meters have been by-passed by highly placed individuals.

Using channels such as social media pages, the company’s websites and adverts in major newspapers, the company is warning the public against the action which it said is compounding their problems.

However the odds of a successive power theft will be greatly reduced if the Discos improve in metering their customers. But in the interim, the opportunity to recover losses through unmetered customers does not do much for incentive to meter customers.

According to a document obtained from Bureau for Public Enterprise (BPE), between January and October 2016, discos in Nigeria have met only 10 per cent of their meter commitment to their customers.

It showed that the  discos  made a commitment of  metering  about 1,640,411 customers  but  only  161,640  customers have so far been metered  between  January and October 2016.

Discos’ 2016 meter commitment submitted to BPE

Discos	Commitment	Delivered	Shortfall
Abuja	96,000	23,000	73,000
Benin	100,000	20,244	79,756
Ibadan	100,000	50,730	49,270
Enugu	264,000	1,400	262,600
Eko	204,000	21,132	182,868
Ikeja	252,000	27,286	224,714
Kaduna	48,000	1,207	46,793
Kano	337,611	2421	335,190
Yola	51,600	2,525	49,075
Port Harcourt	187,200	11,695	175,505
Jos	–	–	–
Total	1,640, 411	161, 640	1,478,771

 

A weak naira has been blamed for the sky rocking cost of procuring smart meters as local capacity is still not sufficient to meet demand. Within a year, the naira has moved from being exchanged at N199/$ to N305/$1 at official rates. The rate in the parallel market is anyone’s guess these days.

“The lack of foreign exchange is affecting all and sundry. The single phase meter that we are buying for N40,000 is now more than N100,000 while the money is not coming from consumers,” said Anthony Youdeowei, chief executive officer Ikeja Electric.

India with a massive power theft problem, combated the problem with the use of smart meters. Smart meters are used to measure electricity, remotely switch the customer’s power supply off and/or individual appliances based on demand response. It can remotely control electricity consumption to maximise energy efficiency and load balancing.

Strengthening laws and regulations presents another opportunity. According to Ivie Ehanmo, energy lawyer and consultant, Nigerian laws and regulations frown against electricity theft and impose stiff penalties for offenders although the applicable regulation as formulated by the Nigerian Electricity Regulatory Commission (NERC) is still in its draft form and hence not in full force and effect.

However, the Miscellaneous Offences Act (MOA) contain provisions that impose penalties ranging from life imprisonment to 21 years in jail for theft and vandalisation of power assets.

“Although the EPSRA by S.94 (3) supersedes all other law(s), nothing stops the courts from using its discretionary powers to enforce the MOA which contains stiffer penalties for electricity theft offences.

“However, the regulatory instrument which would give stronger credence to the weight of the offence of electricity theft has not been given the force of law to augment the existing laws currently available at the disposal of the courts,” avers Ehanmo.

The huge losses recorded by these electricity distribution companies should be the major driver to speedily making the Electricity Theft and Other Related Offences Regulations, formulated by NERC in 2013 law.

It provides that any person who wilfully and unlawfully taps, tampers with a meter, installs or uses a tampered meter, receives electricity supply by by-passing a meter, or uses any other device or method which results in diversion in a manner whereby electricity is stolen or wasted, damages or destroys an electric meter, or causes or allows any of them to be so damaged or destroyed as to interfere with the proper or accurate metering of electricity, to abstract or consume electricity or knowingly use or receive the direct benefit of electric service through any of the acts mentioned in the regulation or uses electricity for the purpose other than for which the usage of electricity was authorised, so as to abstract or consume or use electricity shall be guilty of an offence under Sections 383 and 400 of the Criminal Code, Sections 286(2) of the Penal Code and Section 1 of the Regulation.

The offences are punishable with terms of imprisonment as applicable under Sections 390 of the Criminal Code, Section 287 of the Penal Code or with imprisonment for a term of three years under the regulation or with fine or with both fine and imprisonment.