…There revenue generation rose by 20.81% – NBS
…They’re only concerned about making profit– Olamilekan
…Regulatory authorities have failed – Experts
…AEDC already implementing tariff increase – Consumer
The first quarter report on the nation’s power sector by the National Bureau of Statistics (NBS) that electricity distribution companies (DisCos) raked in more money during that period has once again proved the popular axiom that Nigerians have been paying for darkness; BENJAMIN UMUTEME reports.
Nigeria’s electricity power sector was supposed to receive a boost when it was handed over to the private sector by the former President Goodluck Jonathan administration. But alas, after ten years, it is still the same old story albeit with different meaning.
Prior to the privatisation era, it was thought that the government inefficiency was a hindrance to the smooth running of the sector; however, a decade down the line, the same complaint dogs the sector with the electricity distribution companies always cooking up reasons they are unable to provide services paid for by Nigerians.
The more the DisCos complain, the more their revenue increases. This was evident in the fourth quarter 2022 electricity report by the Nigeria Electricity Regulatory Commission (NERC).
According to the NERC report, the total revenue collected by the 11 DisCos in Q4 2022 was ₦243.65 billion out of the ₦332.28 billion billed to customers; this translates to a collection efficiency of 73.33 per cent. Cumulatively, DisCos’ collection efficiency improved by +1.1 pp from 72.23 per cent in Q3 2022 to 73.33 per cent in 2022/Q4. While the total collections increased by 15.65 per cent (compared to ₦210.67 billion in 2022/Q3). At a macro level, the total energy billed increased by +13.93 per cent compared to ₦291.66 billion in Q3 2022. According to the electricity regulator, it underscores the progress recorded by the DisCos in the period under review in revenue collection.
Similarly, the NBS in its electricity sector report for the first quarter of 2023 revenue collected by the DisCos during the period was N247.33 billion from N232.32 billion in Q4 2022.
On a year-on-year basis, the revenue generated in the reference period rose by 20.81% from N204.74 billion recorded in Q1 2022. However, on a year-on-year basis, electricity supply declined by 1.74% compared to 5,956 (Gwh) reported in Q1 2022.
Back and forth
While Nigerians were still trying to assimilate the import of the NBS report, the Abuja Electricity Distribution Company (AEDC) on Tuesday came out with a statement that it planned to review upwards its tariff considering the prevailing economic circumstance.
The AEDC statement read: “Effective July 1, 2023, please be informed that there will be an upward review to the electricity tariff influenced by the fluctuating exchange rate.
“Under the MYTO 2022 guidelines, the previously set exchange rate of N441/$1 may now be revised to approximately N750/$1 which will have an impact on the tariffs associated with your electricity consumption.
“For customers within bands B and C, with supply hours ranging from 12 to 16 per day, the new base tariff is expected to be N100 per kWh while bands A with (20 hours and above) and B (16 to 20 hours) will experience comparatively higher tariffs.
“For customers with a prepaid meter, we encourage you to consider purchasing bulk energy units before the end of this month as this will allow you to take advantage of the current rates and potentially make savings before the new tariffs come into effect.
“For those on post-paid (estimated) billing, a significant increment is imminent in your monthly billing, starting from August.”
As the furore that greeted the statement was yet to die down, the DisCos recanted, urging its numerous customers to disregard its earlier message as there was no official approval to that effect yet.
“Please disregard the circulating communication, regarding the review of electricity tariffs. Be informed that no approval for such increments has been received. We regret any inconvenience,” a part of the statement read.
Only profits matter
For Adefolarin Olamilekan, the DisCos are more concerned about making profits than efficient service delivery.
Speaking with Blueprint Weekend, Olamilekan said it was not surprising that the DisCos were still bent on tariff increase when they have not fulfilled their obligations to Nigerians. According to him, they were only taking advantage of the laxity of the sector’s regulator to do their duties.
He said, “So, we should not be surprised if after administering epileptic power supply to Nigerians and reaping so much from it they still want an upward review of electricity tariff.
“For us this has only confirmed the negligence from the regulatory authority and the failure of the Nigerian state. Absolute, poor regulatory oversight in ensuring Nigerians are not short served, cheated and exploited through reckless and poor services by the DisCos within the electricity distribution subsector either at the residents, commercial, rural and industrial clusters.
“Regrettably, the argument put forward by DisCos and other stakeholders with the electricity power value chains that include the GenCos, TransCos and DisCos citing current foreign exchange rate due to the floating rate in the market. Meanwhile, these sets of businesses over the years enjoy subsidies and free interest loans from the CBN, including tax exceptions from imported power equipment, tools and machineries.”
He said further that, “This also exposes the lack of reinvestment or refinancing in the sector particularly with part of the profits put into the expansion and upgrade in electricity hardware and software equipment.
“Rather, they have chosen the part that is convenient and exploitative in nature. It’s so sad that Nigerians have to contend with that by paying for blackouts, inefficient and exploited without redress.”
Contradictions
In his view, a chartered management consultant, Prosper Awhoregba, described it as a contradictory situation where DisCos make more money, but continue to churn out poor services to their customers.
Describing the situation as “unacceptable,” Ahworegba expressed dissatisfaction with the increase being contemplated by the DisCos, insisting that they should concentrate their energies on improving power supply to Nigerians before talking about tariff review.
He said: “It is contradictory that DisCos generated higher revenue while there was a drop in power supply to Nigerians. It is a testament to that fact that Nigerians are being fleeced by the DisCos. Nigerians are thus being made to pay for darkness, which is unacceptable.
“The decision to contemplate a tariff hike when power supply hasn’t improved doesn’t sit well with me and with the majority of electricity consumers.
“It’s important for the government and regulatory bodies to assess the reasons behind the drop in power supply. However, whether the drop in power supply is due to infrastructure or operational challenges, the focus should be on improving service before considering a tariff hike.”
Nigerians worse off
Olamilekan also said Nigerians are at the receiving end of poor service delivery by DisCos. He noted that poor power supply to the real sector has led to many companies relocating to neighbouring countries where power supply is steady.
Speaking on AriseTv, the president of Manufacturing Association of Nigeria (MAN), Otunba Fidelis Meshioye, said members spent N124.5 billion on alternate power in 2022 alone. The MAN boss also said many of its members have relocated to Ghana and other West African countries. This, he added, is just a tip of the iceberg as more may be forced to relocate due to the planned upward review of tariffs.
The sad reality, according to Olamilekan, who is also a development researcher, is that “Nigerians and operators of the real sector are the losing end.”
“We all know that for many years, electricity power as a subsector of the energy sector is the bane of the economic deficit, and this in the short-run and long run have created a very negative impact. This is seen in the relocation of several manufacturing plants to other African countries, closed down of many small scale Industries, destruction of cottage industry within the rural and suburban areas, collapse of millions of SMEs across the country as all been mentioned birthed the huge army of unemployed and underemployed citizens.
“Frankly, we are still under the burden of poor services of electricity till today, so the implications of negative impacts would continue until we get it right.”
Backdoor implementation
For some Abuja electricity consumers, AEDC has started implementing the proposed 40 per cent increase in its tariff band.
Blueprint reliably gathered from the DisCos customer in Kubwa that she bought N10, 000 credits on Wednesday and instead of getting 179 units, she was given 139 units.
“I thought I could load my meter before July 1, but it was not to be,” she tearfully told this reporter.
Going forward
On what ought to be done to stem the tide, Olamilekan opined that service delivery must match revenue generation.
“What we are saying is simple; cost reflective tariff increase can’t be accepted in the face of failing service delivery. For us, they must place a premium on better service delivery. And in this way they need to invest and reinvest and provide light to Nigerians instead of darkness.
“Another thing they should do, and without delay, is to prioritise effective monitoring and maintenance of all their generation, transmission and distribution channels. This would go a long way in boosting confidence in customers through the availability of electricity.
“Lastly, the above recommendation is not enough without the regulatory agency and the Nigerian state tackling the lapses created by official negligence. We hold it in high regards that an upward review of tariff can only be on the table in reference to efficient service delivery. The argument about cost effectiveness holds no water if service delivery is poor and epileptic,” he said further.
