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Tuesday, 7 March 2017

Electricity: Broken agreement impedes performance

By Sebastine Obasi, Michael Eboh & Ediri Ejoh

Nigeria’s quest for regular power supply may not be achieved in the nearest future as the distribution companies, DISCOs, still battle to cope with several failed expectations from the underlying agreement behind the electricity industry performance milestones. Meanwhile most consumers that are not part of this agreement are forced to carry the burden of the industry failures as services level deteriorates.

The DISCOs have now heightened their clamour for “cost reflective tariff”, a euphemism for graduated increase in the tariff paid by consumers, but they have refused to disclose the average cost per unit of electricity delivered to consumers. They have not addressed the contentious issue of estimated billing system which gives them the latitude to impose exorbitant bills on consumers.

Many electricity consumers are still without meters. In fact,  Sweetcrude learnt that out of a total of 6,159,775 customer accounts in the Nigerian Electricity Supply Industry (NESI), only 3,206,599 customers, or 52 per cent, have so far been provided meters, leaving a gap of 2,953,176 unmetered customers.

Though none of the DISCOs contacted by Sweetcrude  (Ikeja Electric, Ibadan Electric, Enugu Electric) was willing to talk on the cost of delivering electricity to consumers, the Head Corporate Communications, Abuja Electricity Distribution Company, Mr. Oyebode Fadipe, stated that the cost of electricity charged by the DISCOs was actually determined by the Nigerian Electricity Regulation Commission, NERC, as it is not within the powers of the DISCOs to determine.

He said the cost of a kilowatt of electricity is an aggregation of a number of factors, from the side of the generation companies, transmission companies and DISCOs. Fadipe said he could not give the accurate cost of a kilowatt per hour of electricity because it varies from region to region and from DISCOs to DISCO. He did not disclose the cost as it affects Abuja DISCO either.

He said, “We do not have the power to fix the cost of energy. The determination of the tariff from a unit of electricity is a function of NERC. If there is any need for an upward review of the cost, DISCOs meet and we later approach NERC to inform them of the need for a review.

“If the NERC sees reason with the DISCOs for an upward review, it goes ahead and makes the review and also announces it.”

However, Interim President, Nigerian Electricity Consumers Advocacy Network, NECAN, Mr. Tomi Akingbogun, believes that the DISCOs, in connivance with NERC, have been manipulating the system to rip-off consumers.

He stated: “The DISCOs have us in their pockets courtesy of Nigerian Electricity Regulatory Commission, NERC. They claim they are covered under one of so many Multi-Year-Tariff-Orders, MYTOs, that has been modified to the comfort of the DISCOs.

“The only way out is for the public to challenge the MYTOs in court like MAN did. But MAN has funds, while NECAN, the voice of the public has none. Until then, we will be taken for granted,” he said.

Efforts made to get the reaction of NERC were not successful as Mr. Mike Faloseyi, Head Corporate Communications who promised to send the organisation’s reaction could not get back to Sweetcrude as at the time of going to press. DISCOs have been lobbying for increment in the charges imposed on consumers even with favourable nine-year MYTO (2015 to 2024) which varies from one region to the other.

Abuja DISCO, for example is expected to charge N24.30 in 2016 and 2017 for consumers classified under residential 2 (R2), while residential 3, (R3), are expected to pay N46.23 and N47.09, per kilowatt hour, Kwh, respectively within the period under review. Also, consumers classified as commercial (C1) are expected to pay N36.65 and N37.39 in 2016 and 2017 respectively, while C2 are charged N46.23 and N47 within the period under review.

For Benin DISCO, R2, consumers are expected to pay N24.08 and N31.27 in 2016 and 2017, respectively, while those in the R3 category are expected to pay N38.56 and N40.46 in 2016 and 2017, respectively. C1 consumers are expected to pay N33.87 and N34.90 respectively, while C2 consumers are expected to pay N40.67 and N38.11, within the period under review.

R2 consumers under the jurisdiction of Enugu DISCO are meant to pay N27.13 and N34.28 in 2016 and 2017 respectively, while R3 consumers are meant to pay N45.10 and N48.12 respectively within the period under review. C1 consumers are meant to pay N32.13 and N34.28 respectively, while C2 consumers are meant to pay N42.40 and N45.24 within the period under review.

For Ibadan DISCO, consumers in the R2 category are meant to pay N23.09 and N24.97 in 2016 and 2017 respectively, while R3 consumers are meant to pay N41.31 and N44.66, respectively within the period under review. Also, consumers in the category of C1 are meant to pay N27.66 and N29.91 respectively, while the C2 class are meant tom pay N38,87 and N42,03 respectively.

The DISCOs have blamed their call for increased charges on “difficult operating environment, unavailability of fund, as well as the inability of generation companies, GENCOs, to generate enough electricity due to shortage of gas. However, the Nigerian National Petroleum Corporation, NNPC, debunked this claim, as it accused DISCOs and the Transmission Company of Nigeria, TCN, of frustrating stable power supply in the country, stating that the country currently has enough gas to generate up to 4,800 megawatts (MW) of electricity and 6,000 megawatts by the second quarter of 2017.

According to the Group Managing Director of the NNPC, Mr. Maikanti Baru, Nigeria is currently producing an average of 8.0 billion Standard Cubic Feet per day of gas (SCFD), out of which 1.3 billion scfd is utilised for domestic consumption; 3.5 billion scfd for export, 2.5 billion scfd for re-injection/fuel gas use, while about 700 million scfd is flared.

He stated: “As we speak today (Thursday, March 02, 2017) there is enough gas to generate about 4800MW and 6000MW by second quarter 2017 based on our gas supply plan, but the power sector is presently struggling to evacuate 4500MW power due to DISCOs incessant rejection of allocated load and transmission line constraints.”

Baru explained that despite the difficult environment in which it operates, the NNPC was committed to ensuring adequate gas supply to meet the Nigerian industrial growth.

The DISCOs have also alleged that the government is yet to fulfill its own side of the bargain following the performance agreement they reached at the inception of the privatization process.

According to them, it was agreed that full losses should be recognized in tariffs, but they said the situation on ground is that real losses are higher than what is contained in tariffs due to indebtedness by MDAs and a large number of consumers, widespread electricity theft and non – implementation of the tariff review.

The post Electricity: Broken agreement impedes performance appeared first on Vanguard News.

Vía Vanguard News

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