The difference is huge. Now, we can take decisions without having to wait for the government bureaucratic process. That time, anything we wanted to do, we had to go to Abuja. Any little thing, you have to get approval and the procurement process was rigorous.
Sometimes, most before some companies were through with their procurements process, it would be too late to execute the projects and for accountability purpose the appropriated fund would have to be sent back to the government treasury.
So, now decisions can be taken with much more speed than what used to be the case in the past. But it needs be said too that the liquidity loss is still much. Many times, the owners need to mobilise funds for us to keep operating. So, the liquidity loss is still much in the sector and we are hoping that government will take the right step to curtail this trend through appropriate regulation that will be beneficial to all stakeholders in the sector.
There is no cost reflective tariff so it’s like our cost of delivering power to the people are well below our expenditure. We spend like N100 and we charge like N50, yet the government said we can’t increase tariff.
The effect of this is that month after month, we incur debt which has affected our quality of service and we are unable to raise funds from the banks.
What are the challenges in the sector now?
Well, I have just mentioned one which is the liquidity issue. But besides that, there are others. After handover, what was handed over was a dilapidated structure and network. More than 70 percent of customers did not have functional meters and services were very poor. We also faced a lot of apathy from customers with respect to payment of electricity bills.
Added to these are other issues like vandalism and theft of electricity materials, energy theft and even violence against our staff in some communities. All these challenges are still there but we are not just sitting down and bemoaning the situation we have found ourselves.
We are rising up to the occasion to tackle these challenges one after the other and with the support and strong backing that we are enjoying from our Board, we are surmounting the problem gradually. The federal government said it underestimated the number of households needing customers upon privatisation to 6 million.
What was your won calculation after privatisation?
When you say customers, these are the registered ones. There are lots of customers using light without paying or their being registered. Right now, we have commenced a customer enumeration exercise, going from house to house to see those not on our records. That time, it was 6 million. Now it should be about 8 million registered customers nationwide.
Remember I told you that as at that time, we did not get enough funds for anything especially the last year, there no allocation for the power sector. Right now for Eko, we started with about 300, 000 customers. Now it has increased to about 500, 000, out of which 65% have been metered.
Recently, we heard that NERC will start reviewing the MYTO monthly or quarterly. Does that mean that tariff will increase monthly?
No. The fact is that we do review once in a year and do minor review every six months. We do this in conjunction with NERC, looking at the economic indices of the moment. We look at what has changed overtime.
Maybe inflation has gone up or down, generation availability, distribution and others- they look at these whether to adjust the tariff up or down. For the past two years now, although we have done the review for increment in tariff but it has not been implemented because government has not given the required go-ahead.
What are your profits and losses since privatisation?
We have both because we have not recovered those debts being accrued, government is taking cognizance of them along NERC. They know that we are incurring debt on monthly basis due to lack of cost reflective tariff and government is coming up with palliative measures. Like the intervention funds from the CBN, power sector assurance programme and intervention to GENCOs.
I believe they are thinking of some other measures that will stabilise the sector to the relief of all stakeholders. Right now, it is close to a trillion naira that we have accrued in terms of debt nationally which government is trying to do something about.
There is an argument that the N701billion first released for the sector did not produce anything meaningful, and that the government has again, approved N32 billion The first intervention was N213 billion to the discos for the gaps in operations in the sector from immediately after privatisation up to sometime in 2015.
But money that were due to the discos, was turned into loan which the repayment plan was spread over 10 years. Right now, out of the N213 billion, only about N60 has been disbursed to beneficiaries because of conditions each discos needs to meet. Those that have not met the conditions are yet to be given.
EKEDC has accessed the funds, and we have done a lot with it. We were able to reinforce our network, repair dilapidated transformers and networks, we bought several transformers, and meters. As I speak, we are metering although not in a very large quantity. Our plan was to cover our customers within three years.
And that would have been about 600, 000 customers at the cost of about N50 billion. You can see that if everything had gone the way we planned it, our customers would have been very happy with us because we would have covered everybody that required meters. We received about N5billion. Also, we are investing part of the money on technology. We want to automate our network such that from here, we can monitor all the lines, transformers, meters within our networks.
We also improved on our channels of payment. We made it easy for our customers to pay leisurely without going to the bank or queue up at cash offices. You can pay through your phone, internet, internet, POS, and ATMs.
They can also recharge their prepaid meters and pay their analogue bills from the comfort of their homes.
How is the company handling the issue of theft and vandalism?
Vandalism has been one of the issues we are battling. People go to our substations and vandalise cables, damage transformers, looking for transformer oil.
In some cases, those illiterate ones think there is mercury in the transformer and destroy it, and we are losing a lot of money. Just yesterday, somebody was electrocuted while trying to vandalise our cable. Last week, a Yaba court jailed another vandal for six months.
Apart from vandals, we have bypasses. When you look at all these losses, the cost is enormous. Averagely, the loss every month in terms of vandalism and theft of our equipment is about 100 million every month. We leant that ANED is about to declare force majeure on the eligible customer recently declared by Fashola.
Does it mean that the Discos are not happy with the declaration?
During the privatization, there was an agreement that the discos will have exclusivity in service. To generate revenue and pay cost of energy we receive from the grid. Now if part of the exclusive area is now being taken off, there will be a big problem.
However, an arrangement is being worked out how it will benefit both the disco and those that will benefit from the eligible customer regime. However, it is because we are not able to get enough from the grid to meet our demands. Our demand is about 2000 megawatts but we get just 300-400MW. So they are looking for ways of generating their own power to sell to people that need them. It is a complex thing and we are working out something.
The government meant well so that we can have incremental power. But in Eko, I am not sure we have issues surrounding that because some areas like Lekki, Ikoyi, Surulere already get 24 hours supply once we have supply from the grid. Once government is able to maintain capacity to wheel power from the grid, even the 6,600MW now wheeled is not enough because what generation companies can produce now is up to 12, 000 MW.
Even if they want to generate up to 12, 000, we will then have enough capacity then, we will have enough power. Work is ongoing to expand the wheeled capacity What about FG’s 2016 fast power scheme? Those ones still need gas to power them.
It can be moved to areas with enough access to gas. Here, what we do is source for embedded power where we encourage private people to generate their power so that we can boost our power. We have about 10 companies ready to do that and we will commission it soon. I will say that both government and regulators and operators are working together to find a lasting solution to power problems.
Very soon you will see and feel the effect of these collaborations and our customers will be happy for it. Recently, we heard customers will start paying for meters after NERC had made us believe we were not supposed to pay for them.
How do we merge these controversies?
Initially, customers are not supposed to pay for it but due to liquidity issue part of which I explained earlier, CAPMI was introduced for customers that cannot wait for the discos’ plan. There is no way we can meter everybody at once. We have our metering plan within five years. CAPMI provides the platform for customers to approach discos and pay for meters which will be installed immediately.
Discos will then pay back to customers on monthly basis. But some discos collect money and fail to meter leading to a flurry of complaints from customers. I think when these complaints got to the Minister of Power, he directed that the scheme be stopped. But because of issue of liquidity that has slowed down the disco from raising enough capital to buy meters, there was a reconsideration that we can go back to the scheme but it must be done in such a way that whenever customers pay for meters, they must get them within an agreed time. But the modality is being worked out by the NERC.
It’s likely that we will get a third party that will supply the meters and customers will pay to the third party in agreement with the Disco. It will be a three-way agreement. This is to ensure that when money is taken, the meter gets installed.
So it is coming back but the modality is being worked out so that anybody that pays for meters will get it within 30 days or even less. Assuming there’s cost reflective tariff, customers will get free meters. That is not to say there are no more free meters. We are still metering for free. Go to places like Yaba, Festac Town, Ajijegidun in Ikate, Dolphin estate, we are giving free meters.
Even the ones to be installed under CAPMI is still free at the of the day because the customer will be paid back with some percentage of interest through energy units over a period of time There was a recent controversy in Festac Town between your workers and a particular block at 312 road.
Then we heard NERC has asked that you meter all the flats in that block. Have you metered them?
I don‘t know about it. We merely read the news on pages of newspapers. We did not receive any memo from NERC to meter them. But we are metering Festac already. You know Festac is large- it includes satellite and others and we can’t meter everybody at once. There was an area that barred us from coming to them until we meter all of them and guarantee 24 hours supply. It pays us when people have meters.
We go through rigorous process to apportion the bill. It takes a lot of time looking at different criteria on which we base the bill such as availability of supply and customers’ consumption history all in an attempt not to overbill. Even with all these, our customers will still complain no matter the bill we give them.
So on our part, we are eager to have a situation where everybody is metered so there will be no controversy about the accuracy of our bills.
How true is the accusation of over-invoicing by discos against GENCOs?
It is the billing system between GENCOs and gas producers. We deal directly with NBET and not directly with GENCOs. Our transaction is dollar-denominated. So their bills fluctuate with the prevailing foreign exchange rates. Whereas on our own side, they charge based on N305 official rate and we still charge our customers based on N197 old rate. So you can see the difference.
If you convert the money to naira, the difference is much. They use the foreign exchange figure to sell to us while we sell with fixed exchange which was N197. So while the bill is coming to us, we are not able to collect the totality of the bill from customers. We can collect just like half.
That’s why the complaints came up. It’s not like they are inflating but it is what is in their contract with NBET. But the regulator will look at it. That’s why part of the power sector’s assurance programme that brought the N701 billion will go to the GENCOs to take care of some of the liquidity issues they have. You will see that they are no more castigating the government. We are all trying to find solution and very soon, customers will be smiling. We are lucky to have such a Minister as Fashola.
He is very passionate about solving the challenges in the sector. Nigerians just need to exercise a little more patience with us. With what I can see as an insider and major participant in the sector, things will soon take proper shape and we will have the kind of power supply system that we can be proud of.
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