No Dancing At The DisCos

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electricity distribution

For more than a month now, our prepaid meter (I am one of the few lucky Nigerians to have to a prepaid meter) developed fault that makes it impossible for us to load new units on it. We reported to Ikeja DisCo and we were told that the monitor of the prepaid meter needed to be replaced and that it will cost N15,000. We promptly paid the N15,000 but for more than a week now, we have been waiting for Ikeja DisCo to come in and fix the monitor. We called the customer care unit but they could not give us a date when they will come in and fix it.
After failing to get them to come and fix the meter, our units completely ran out last Friday morning. We were wondering what to do when they suddenly showed up that same Friday unannounced. My wife had to turn back on her way to the Island to give them access to the meter to load the new units. The behaviour of Ikeja DisCo reflects one of the saddest part of the privatisation of power assets in the country. This is the fact that little has changed five years after the privatisation took place. Even the basics like improved customer service that was expected with privatisation has not happened. The customer facing Distribution Companies (DisCos) still behave like a public sector company.
Five years after privatisation, the DisCos can still not tell their consumers when the lights will be off and when it will be available. Most of their staff – and perhaps it is largely because they are inherited from the defunct Power Holding Company of Nigeria (PHCN) – still talk and behave like public sector workers. The behaviour that made power consumers dislike the PHCN is still prevalent in the new DisCos. Not surprisingly, many Nigerians also now dislike the DisCos and that is because nothing has changed except management.
What is even more annoying about the DisCos is the estimated billing system which they continue to perpetuate. It is difficult to understand why obtaining an electricity meter is not a routine exercise five years after privatisation. One would have expected that five years after the power sector was privatised, any customer that needs an electricity meter should be able to walk to a DisCo to obtain one without any stress. Sadly, that has not been the case. Instead, electricity meters are scarce and even where available, you need to know someone or bribe your way to get one, despite the fact that you are going to pay for it. The impression has been created that the DisCos are deliberately denying people access to electricity meters so that they can continue the unjust and opaque ‘estimated’ billing system.
The DisCos may have a perverse incentive for estimated billing. The opaqueness of the estimated billing system creates an accountability loophole, since the billing is not based on actual power consumed by a household or actual power sold to a household. This raises the question of who audits the estimated billing system? Which third party ensures that all billing fully reflects power consumed or sold and that actual amounts collected for estimated billings are not understated by the DisCos to the Nigerian Bulk Electricity Trading (NBET) for the purpose of not fully paying for power purchased.
But why DisCos have been largely disappointing since their emergence on the scene, there are also external circumstances, beyond their control, which has made their performance even worse. The elephant in the room remains the current tariff structure imposed on the DisCos by the government. All the assumptions on which the current tariff structure was based on has since been overtaken by events. Even though the Nigeria Electricity Regulation Commission (NERC) claims that it has not abandoned the Multi Year Tariff Order (MYTO) on the basis of which tariffs are supposed to be determined, the commission has left tariffs unchanged despite the fact that the assumptions that determined how tariffs were set have changed over the period.
Under MYTO, the National Electricity Regulation Commission (NERC) was supposed to be reviewing the tariff structure bi-annually based on changes in specific indicators including the rate of inflation, exchange rate, inflation rate in the United States, gas price, and generation capacity. Despite changes in most of these variables, especially in the exchange rates and the inflation rate, the country’s tariff structure has not been reviewed upwards since 2015.
The consequence is that DisCos have been forced to sell power at non-market reflective rates. This has also resulted in the DisCos not being able to pay for the power they are supplied and the consequent build-up of debts in the power sector, now estimated at more than N1 trillion. As far as the power sector is concerned now, the country is in a difficult situation.
The DisCos need higher tariffs to become viable and raise the necessary funds to invest in infrastructure and pay down their accumulated debts. The government is afraid of giving in to higher tariffs because it will be politically unpopular to do so. The people want power but the government is not sincere enough to tell them that the only way you can get stable power is if they are willing to pay a higher rate. Riding on the insincerity in the power sector, power generation continues to deteriorate and the economy continues to suffer.
At the end of the day, both the DisCos and the government, which still owns 40 percent of the power companies, need to sit up and put the long term interest of the country above their short term political ambitions, something that is usually difficult for politicians to do, but which, in this case, is the most sensible thing to do. The government should also fund massive ‘smart metering’ scheme to enable better collection and accountability in the power market. The truth is that most Nigerians are ready to pay up on their bills if they are sure the billing is fair. The few that may want to bypass the meters should not be a justification for poor metering and the consequent estimated billing.

SOURCE: BUSINESS DAY

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