DISCOs are said to be owed billions of Naira. How much is the industry total and Ikeja Electric’s. What is the distribution between private and public sector and what efforts are being made to recover the debt?
The amount of money owed can be split into two; what customers owe and what Ministries, Departments and Agencies, MDAs, owe. What customers owe is for the electricity distribution companies (DISCOs) to go and collect that money. What the MDAs owe, yes it is the duty of the DISCOs to collect that money but the source of the money is government. There is very little we can do to collect such money. But of course there are other measures we could work with, like disconnection and other schemes, but ultimately that is government debt as opposed to residential debt.
For the residential debt, we are doing all that is necessary to recover such debt through legal and operational means, but we have appealed to the government through the Ministry of Power and the Vice President’s office.
There is an initiative going on, where they have asked the DISCOs to submit their claims with supporting documentation of what they are owed. The DISCOs are going through a verification process. Right now, all DISCOs have submitted their invoices and other information the Ministries and the Vice President’s office need to see and we are hoping that they would make the payment.
The government has done well in that regard to take the responsibility to try and make good for that debt from the MDAs, but for the residential, it is our responsibility like I said, to collect that debt because we pay for the power.
For the MDAs’ debt, it is between the ranges of N1.7 billion, covering January 2015 to December 2016. That is where we are. It is a continuous thing and to make sure that the debt is not built up again in the future, there are all kinds of initiatives that are been put in place.
What is your customer profile, in terms of commercial and residential?
There are various categories. There are commercial, residential and industrial. And each of them has a corresponding tariff. The tariffs are associated with various customer categories. We have the whole entire mix within our network.
We are talking about figures here?
In total, our active customer base for now, is about 800,000 for Ikeja network. The big bucket is that post paid customers constitute about two third and the one third is pre-paid. Now within the bucket, we have MDA customers, which approximately is 5000 and 400,000 postpaid customers and 200,000 pre-paid customers.
We are actually concluding a customer enumeration exercise to know who our customers are, because in our network we have consumers and we have customers. Consumers to us are those who take the power and don’t pay. Sometime in 2014, we started the enumeration exercise and would be rounding up in May this year. As the name implies, we are counting those on our network.
When we say customers, it is the facility. What consumes the power is the facility. We are getting the coordinate of the Geographic Information System, GIS, where our facilities are located. It is not just the coordinate. It is not just for customers, as the project is in three folds. We have the customer enumeration, asset mapping (which are the electricity poles, transformers and so on) and the components that make up the assets.
The whole idea is to know what assets we have, where they are, the state of those assets and who is consuming the energy that we have in our network, so that we can be more efficient to manage the energy we collect and we want to collect the money that people consume. That is what has been going on.
Customers are very vocal in their complaints that Ikeja Electric has refused to give them meters and instead they are given estimated bills. What is your comment on this?
Well, I think it is noteworthy to correct the language often used that we refused to give customers meters. Nobody is refusing to give customers meters. First of all these meters are not available. Let me make this clear, it is in our interest to give out meters, especially pre-paid meters. Like your mobile telephone, you recharge and vend. It costs the DISCOs money to produce and deliver a bill.
At the point of privatisation, there were plans made. And as a matter of fact that was one of the criteria giving to the DISCOs. The reality of the situation is that at that point, we had N160 to N190 to a dollar, but towards the end of last year, we were torching over N500 to a dollar. Meters are not manufactured here in Nigeria. As a matter of fact, what they do is that they import the component and assemble them here. They are often exposed to the foreign exchange fluctuations.
Over the last three to four years, no DISCO has been able to purchase meters as planned because of the foreign exchange challenge. We buy from Nigerian manufacturers who simply buy the product outside. Our revenue is in Naira, and if I set aside a million naira in 2013 to buy 10,000 meters, that amount cannot buy up to 5000 meters in this current FOREX regime. In a nutshell that is what has happened.
Some of your customers also complain that they pay for meters
Nobody has paid for meters post privatisation. In Ikeja Electric, we install meters and people don’t pay for them. In early 2013, we had operated on credit advance payment for metering implementation (CAPMI) which we pay back with interest to customers. In Ikeja Electric, we didn’t start it immediately because we needed to understand the system.
The process is that when you pay, the meters should be installed within 45 days. Of course customers paid for them and they were not given meters and they complained to Nigerian Electricity Regulatory Commission, NERC and the Minister who later cancelled the scheme.
I personally feel the CAPMI scheme is a positive one because today I get calls from some customers who tell me that they are ready to pay and all I needed to do was to install. We declined because we are under a regulator that stopped us from doing so.
This metering shortage is such that, where we are, we cannot stick to one method and say the DISCOs should provide the meters. Of course, that is what should happen in an ideal situation, but we cannot afford it and we don’t have the money to close the metering gap between now and 2020. We have to come up with different ways to close the metering gap.
The key thing is that the customers should not be exploited. We are appealing to the government to support us and monitor us in any way we fall short.
As I said, we are in a recession; we have to think of ways of getting these things done. As we are aware, the topic of metering is a very emotional subject for Nigerians. All we want as Nigerians is that box in our house. Metering starts from the distribution perspective, where you get the power, because you get the power from transmission.
We metered feeders and transformers. What we started doing in Ikeja Electric was to meter all our feeders and from there to our transformers. The reason being that you can account for the energy that comes in.
What we have done is to make sure that those distribution transformers are metered so that if I give an estimated bill it is reasonable. For most Nigerians, it is not the estimated bill that is the problem, but the ‘crazy bill’. Estimation is still going on and even NERC accepts that fact and there is a methodology for estimation.
Thus, a man who is unmetered, his bill cannot be 30 percent more than the metered one. So, we go to the unmetered public and say to them, if we meter you and your bill is more than what you deem reasonable, having compared with other people that share the same transformer with you, come and talk to us about it. That’s only possible because we are metering transformers. We will still make sure individual customers are metered and we are here to provide solutions to people’s problem.
Is that why you refuse patronising Nigerian meter manufacturers, because they had complained of not been patronised by the DISCOs
I can’t speak for the other DISCOs. However, Majority of our feeder meters are sourced locally. As a matter of fact, we are talking with local manufacturers to give us meters. I say this with all honesty. The objective is to have reliable, functional meters. I would rather patronise my compatriots than go elsewhere. If the meters are available at reasonable cost, it is only in my interest to buy the meters from a Nigerian manufacturer/assembler/vendor.
Availability of the service
The vendors would not manufacture except there is an order, in other to avoid risk. It takes time to put the meter together. Nonetheless, we have no policy against purchasing from Nigerian vendors. We have them on our network.
You have always talked about power theft, knowing very well that some staff of DISCOs are involved on this, what are you doing about it? It is a systemic issue. Many Nigerians share the idea that power is a social service and should not be paid for, especially when it is not readily available. In my opinion, there are three main challenges; availability, measurement and payment of the service.
If power is available for at least 20 hours daily, the noise about no meter will decline. The first problem we must tackle is the availability of the service. If the service is there, people will be willing to pay. However, when the service is grossly unavailable and the bill appear as an overcharge, people will jump at an opportunity to get the service at no cost. That is how it has been for a long time. So, what should we do about it?
First off, we remind people that it is illegal and there are laws governing this. Thus, when one or two persons are caught, they should be used as an example to send a clear message to the general public. This also depicts transparency of the DISCOs to the public. For example, for Ikeja Electric, if there has been no power for more than 24 hours, a text message will be sent informing you of the power outage and when it would be restored. That’s transparency. This also applies to people who are unmetered and are unhappy with their bill. They can always come to us to review the bill. Candidly, I believe that for as long as the DISCOs are transparent, acknowledge the challenges and proffer solutions to the problems, people will considerably reduce energy theft. Nonetheless, the law is the law. If one is caught stealing power or beating up a staff, the person will be arrested and we would publicise it as the consequences of their actions.
Is the government playing its role to help salvage the crisis in the power sector?
Yes they are. The government’s role in this partnership is regulation and facilitation. We also hear of funds that are pumped into the industry. This is just to ease or reduce the liquidity crisis within the power sector. Yes, the government is actually playing their role. We are actually fortunate to have a Minister in the person of Babatunde Fashola, that understands the challenges and is supportive. When DISCOs and GENCOs fall short in performance, he readily reprimands us.
The Ministry of Power is aware of the realities and it encourages us to look for alternative means, bearing in mind that the customers are at the end of the value chain. You must be seen to deliver quality service. The role of the government is to support and regulate with laws.
What is the average power per day supply your consumers get and what is the target milestone?
The average power per day varies from 5-18 hours. There are dependencies. And again, the metering of our trading points helps us. There are certain areas that if you give them 24 hours power, they would not be able to pay you cash for the equivalent of 24hours power they have consumed.
This is as a result of economic reasons and they can’t afford to pay more than that.- for example, they can only afford the power that N2000 can buy. Also, there are those who don’t feel like they should pay anything. Why would I give my product to a man I can’t collect money from? I would rather give more to people that can pay for services rendered.
There are certain areas where traditionally they refuse to pay. So we give them just enough to keep them happy. And we tell them that when they are ready to pay more, we would give you more, provided the network is flexible enough.
When people have a higher propensity to pay, we will give them more. That does not mean we are just chasing money. We understand that there is a social component need because power is a social human right. It is just that the product is in short supply and we have to find a way of distributing it in an equitable manner.
So there are areas that have more power. Again, depending on how solid the network is. I might want to give you more power, but if your transformers and substations are bad, I can’t give you more power. We are better at controlling our network. We are not there 100 percent but we are pushing to attain such position.
Transmission Company of Nigeria, TCN, blames DISCOs for rejecting power. How do you react to this?
Remember I said the demand of power is high. Does it make sense for somebody to give me the power and I will reject? We must be careful because TCN, DISCOs, GENCOs, do not matter to the ordinary man. What they care about is that there is power. In a situation where I cannot distribute to communities I cannot collect money from, I cannot collect such power and TCN could interpret it as rejecting loads. We are working together now, to understand the challenges and TCN understands that. Now for technical reasons, it may not be possible for them to put it here and there, because the system is not as flexible at that. But because we are talking more there is more transparency in what we are doing and the blame game is going down.
What is your distribution capacity like?
We have the capacity to wheel about 1,200 megawatts, MW a day. That is when you add up all the capacity of the substations. But the reality is that, if we get 700 to 800 megawatts for Ikeja, our customers will have a positive customer experience because we are more efficient on how we distribute the power.
I am not saying they will get 24 hours per day but they will get enough power that they will feel that there is an improvement. They know that if I give them power they will not complain of bills. We have seen it, when there is improved power supply, people pay.
What do you think is the way forward for a better power supply for the country?
The way forward is that no single entity controls the entire chain. That has its danger, because if that be the case, it becomes a monopoly. We have the Nigerian Bulk Electricity Trading, NBET and the other chains. We can argue that, yes, it’s been three years, but still a short period to conclude. We are working together.
We have a minister that is well thinking. Yes we talk about the problems but what are the solutions. It is for all of us to sit down and say ‘how can we make things better’?
We are not just in the business to sell power, but also hope. The way forward is continued dialogue and to take very drastic decisions. Some tough decisions have to be made. There is need for a strategic solutions and transparency in the scheme. There is hope but Nigerians need to be a little bit more patient. We can’t lie to the public because it doesn’t benefit us anyway.