Acceptable and sustainable electricity tariff structure has continued to elude the Nigeria’s fragile electricity industry, which on one hand has set consumers on a collision with Distribution companies, Discos.
The operators yet at their 14th monthly meeting in Osogbo, Osun state alongside the federal government continued the dialogue on the issue as both parties expressing their commitment to tariffs that would ensure a self-sustaining power sector and supporting the Nigerian Electricity Regulatory Commission in applying sanctions where appropriate to ensure operators comply with the rules.
In a Communiqué after the Meeting hosted by the Transmission Company of Nigeria (TCN) at the National Control Centre, Osogbo, the Vice Chairman, Nigerian Electricity Regulatory Commission, who made the commitment also said the focus of the recently reconstituted commission would include enforcing DisCos’ metering commitments, prepaid meters for MDAs, centralised management of market revenues collected from all customers, appropriate capitalisation of DisCos, and prudent procurement.
According to the Communiqué, the Managing Director, Transmission Company of Nigeria, also restated the company’s commitment to expand transmission infrastructure and improve its operation and performance within the Power Sector value chain while encouraging the industry to take necessary steps to address the problem of unutilized load (previously described as load rejection) currently causing high system frequency on the National Grid.
Emphasizing that the purpose of the Nigerian Electricity Supply Industry (NESI) was to ensure that citizens could access power safely, reliably, and consistently, the power minister, Babatunde Fashola who chaired the forum, said the Agency should remain committed to ensuring the achievement of these objectives tasking NERC with ensuring fair play for consumers and providers within the sector among other objectives.
The minister also reiterated the federal government’s commitment to its responsibilities in the sector, through policies such as the Power Sector Payment Assurance Guarantee to ensure liquidity stability in the sector so that generating companies are paid for their services stating also that all stakeholders should remain committed to their various roles in supplying and distributing power to ensure that the power sector functioned effectively.
The governor of Osun state, Rauf Aregbesola, acknowledged the gradual improvement of electricity supply especially in Osun State which hosts the National Control Centre even as he also underscored the importance of the Power Sector Recovery Plan as critical to ensuring accountability for losses, improving customer service, customer accessibility, safety, and performance in the sector.
Urging electricity customers to play their role in the success of the industry, through the timely payment of bills, ending the vandalism of power assets, and the assault of electricity workers who seek to install or read meters, the Minister announced that Federal Government had started fulfilling its promise to pay verified debts by the payment of an initial tranche of N374,551,000 to Abuja Electricity Distribution Company (AEDC) for outstanding MDA debts at the Federal Secretariat, Abuja.
The meeting received confirmation from Independent System Operator (ISO) that the intention of Paras Energy (a private generating company) to sell 60MW internationally would not jeopardize the power purchased by the Nigerian Bulk Electricity Trader (NBET) for use in the domestic market while NDPHC provided updates on host community connections in Egbema, and announced significant progress on Oronta and Omotosho which were previously limited by funding challenges.
While progress was also announced on reconnecting Magboro community, subject to safety checks by the Nigerian Electricity Management Services Agency (NEMSA). Olorunsogo Power also stated that funding for road repairs in the host community has also been approved while TCN presented a report on the problem of unutilized load on the grid and committed to working closely with the DisCos to eliminate the occurrence of the problem.
While TCN announced a 9 per cent improvement in energy delivered to DisCos from the Transmission Company of Nigeria for the month of February, as compared to January, Ikeja and Yola DisCos showed improved remittance to the Market Operator for services rendered in the month of February even as TCN also encouraged sector participants to fulfil all their obligations to ensure the success of the Power Sector Recovery Plan.
Acknowledging incidents of insider malpractice and the negative impact on customers following a NEMSA report on its investigation of various customer complaints especially complaints related to the integrity of meters, the Meeting agreed on the need for vigilance to eliminate such cases.
TCN, which presented a brief on ongoing works to address specific challenges and limitations around the country, also acknowledged the delay in replacing the damaged 60MVA transformer at Katampe which caused prolonged load shedding and poor service in parts of Maitama, Wuse II and Jabi in Abuja while NERC reported on stakeholder performance for 2016.
DisCos were ranked based on metering progress, NBET and Market Operator remittance, amongst other indicators. Eko DisCo was ranked as the best performing Distribution Company, while Kaduna DisCo was ranked as the lowest. Okpai (Thermal Plant) and Jebba (Hydro Plants) were ranked as the best performing in their respective categories, based on indicators such as percentage availability and reporting compliance.
Earlier in his opening remarks, Fashola had urged operators in the industry to play their roles, honestly, accountably and efficiently as Government was now determined to enforce the rules in the sector saying with the reconstitution of the Board of the Nigerian Electricity Regulatory Commission (NERC), Government was determined to make the change required to reposition the sector for effective supply of electricity to Nigerian consumers.
Noting that the role of government, as represented by his Ministry, was now that of Policy formulation, Oversight functions and enablement for all of the operators to play their parts, the Minister added, “The regulator in this business is NERC; that is the official referee of the interactions. They will issue red cards, yellow cards and where it is necessary, award penalties”.
He told the Operators and Stakeholders, “I hope all of you the players in the industry will get ready for what is a change of behaviour, a change of attitude”, adding that after 60 years or more of a difficult Electricity Sector experience nobody should presume that it would be a walk in the park to make the change.
Reiterating the determination of Government to make the difference in spite of the past experiences, Fashola declared, “For Mr. President, this Government is determined to make that change and it requires everybody to play their roles honestly, accountably and efficiently”, adding that in the last three weeks, especially since February, government was now “stepping up valiantly to its responsibilities and confronting the challenges in the sector”.
“Some of the things that happened since February, if we should and I will recap, is that the Regulatory Commission has been substantially reconstituted and they have briefed us now what they are doing. In terms of policy, Government has taken action to approve a Payment Assurance Guarantee that addresses the liquidity challenges in the sector”, the Minister said.
He, however, noted with regrets that “some Association of DisCos” was reportedly saying that N701Billion was not enough to provide for them pointing out that Government did not contract with an association but with 11 individual Distribution companies.
Acknowledging the right of the DisCos to associate as a constitutional guarantee, the Minister, however, reiterated, “We don’t have contract with an association and the regulator knows what to do in terms of the exercise of its rights and we leave them to take their decisions”.
He said what Government wanted to achieve was not to give anybody money but to guarantee to those who did their work diligently, honestly and performed their contracts “that their entitlements are receivable to be secured and paid” adding that it would enable others across the value chain to also perform their roles.
On the payment of debts owed the DisCos by government Ministries, Departments and Agencies, Fashola said lately Government was not only verifying DisCo debts as reported consistently in the Meeting, but recently paid about N374,551,000 debt owed by the Federal Secretariat in Abuja to the Abuja DisCo as proof of its commitment to paying debts that it could verify.
Assuring that government would continue to pay in that vein, the Minister, however, expressed regrets that some DisCos have still failed to furnish the government with all the information needed adding, “I have reiterated that we will not pay any debt that we cannot verify”.
The Minister also told the Operators that the Federal Executive Council has approved an Energy Recovery Programme, which, according to him, “cuts across the issues of gas, transmission, metering, loss reduction, contract enforcement, customer service and consumer protection to mention a few” adding, “What this means again is that Government is determined to enforce the rules including on itself. The government is not above the law”.
He declared, “The daily losses in the Power Sector are avoidable and they must be avoided. Every loss must be accounted for and paid for whether it be by cash or by sanction or by the combination of both and more. This is a business and I have had cause to say that in any business that is properly run, when losses begin to occur those who run those businesses pay for them either by losing their jobs, or making refunds or by resigning”, adding, “We are heading in that direction”.
“Whether it be in government, whether it be in the Private Sector; we will track every loss and we will apportion it at every door and we expect that those losses will be accounted for. So this is the time for everyone to sit up, to close up and be ready to assume his own role or ship out of the sector”.
Fashola said because a large part of the Power Sector was now in private hands it was important to emphasize that the burden of compliance would tilt heavier to the side of the Private Sector adding, however, that with the NERC Commissioners fully on board and demonstrating that they knew why Mr. President appointed them to deliver the mandate given to them by law, there was high expectation that both his Ministry and the Operators’ businesses would succeed.
“It is good to now have the Commissioners of the Nigerian Electricity Regulatory Commission fully on Board and demonstrably showing that they know why Mr. President appointed them and expectedly they will commit to delivering on the mandate given to them by law and by the appointment”, he said adding that if the Commission succeeds his Ministry would succeed while the Operators’ Businesses would do well and Nigerians would have better access to electricity.