Electricity Supply: Is NERC A Clog In The Wheel Of Nigeria’s Progress?

Nigerian-Electricity-Regulatory-Commission-NERC (1)

The coming on board of the President Muhammadu Buhari administration in 2015 brought an unprecedented hope of improved and steady power supply  to Nigerians, especially as the electioneering campaign and the Party’s manifesto spoke so much about turning around the key sectors including power for effective economic development. The government inherited a  partially liberalised sector and a power power roadmap from the immediate past administration and promised to work for its actualisation. According the grand plan, by the end of 2016 the country of about 180 people would have 6, 000 mega watts (MWs) of the electricity on the national grid to boast about. While at the end of 2019, no less than 10, 000 MWs would have been achieved, culminating in the achievement of 30, 000 MWs in 2030. Since the assumption of office of the Minister of Power, Works and Housing, Babatunde Fashola, SAN, in November, the minister has been seen to be working round the clock with stakeholders from the private as well as the public sector to bring the dream to reality for Nigerians to see light, speak light and savour it. An orderly path of progress had been charted to achieve incremental power in the short term, uninterrupted and stable power in the medium and long terms respectively. But what is holding the people spellbound is the fact that in the face of all the these efforts, not excluding the increased budgetary allocations, the sector is not seen to better than what it has been years ago in terms of power supply; there seem not to be any significant departure from what it used to be as the power being delivered still hovers around the daily average of 3, 000 to 3, 500 MWs, even as we bade bye to the first half of 2017, resulting in the hope raised in 2015 dashing off fast.

Accusing fingers are keenly pointing in different directions by stakeholders and experts: some school of thoughts believe that the Nigerian Electricity Regulatory Commission (NERC) which is at the centre with the mandate of providing the operational framework for the industry which is the economic backbone of the country and ensuring compliance with all regulatory measures in line with government policies has not been living up to its billings hence the one-step-forward-two-steps-backward journey of the sector. On the other hand, some stakeholders have attributed the stunted growth of the sector to undercapacity and inefficiency of the Transmission Company of Nigeria (TCN) which is yet a public enterprise sandwiched by the privately managed generation subsector upstream and distribution subsector downstream.

The liberalised electricity distribution sector, i.e. the distribution companies (DisCos), who represent the face of the power sector to the people, has been flayed at different times over sharp practices prominent among which are: slow pace of metering; issuance of crazy bills under the cover of the estimated billing methodology which the yet unmetered majority is grappling with and crying out loud, but to no avail; rejection of load transmitted by TCN; disregard for consumers’ plight, incessant power outage among others.

In a telephone chat with our correspondent recently, the Executive Secretary of the association of electricity generating companies (GenCos), Dr Joy Ogaji, said lack of vibrant leadership in the sector is largely responsible for the set-back being suffered by the sector amidst all orchestrated efforts at bringing about incremental and stable power.

“By virtue of my experience in the sector, because I was part of the presidential taskforce that developed the roadmap on power during the immediate past administration, I think what is obviously crippling the sector is absence of leadership compounded by lack of independence of the regulator as is the practice in other climes.

“The regulator, and I mean Nigerian Electricity Regulatory Commission (NERC), is yet to be seen in action, performing its statutory regulatory obligations with all sense of commitment and independence.

“A situation where the Minister decides what the regulator should do or say is counter-productive. Terms of the roadmap and the operational code even direct that the government focuses on policy-making while the regulator concentrates on regulation, just as it is happening between the Nigerian Communication Commission (NCC) and the ministry of information,” she said.

Dr Ogaji also advocated improvement and transparency in liquidity whereby monies coming into the sector will be seen and utilised judiciously by all stakeholders, adding that the recent move by NERC to escrow and centralise the sector’s revenue account is a welcome development.

She also identified lack of market discipline as a major contributor to the ‘avoidable leakages and losses that has culminated in the liquidity crisis the sector, especially the GenCos, is grappling with, noting that it was because NERC was not standing up as a regulator that some stakeholders flagrantly flout the contractual terms, knowing that nothing will happen.

Ogaji, who described the losses incurred by the GenCos as alarmingly huge, noting that it will be published soon, said at the moment, the GenCos have the capacity and are ready to generate 8, 000MWs but constrained because of the under-capacity of the transmission and the distribution systems which are 5, 000 and 4, 600MWs respectively.

“And you cannot generate and store power, so we have had to ramp down at the instance of the operator from time to time to avoid system breakdown,” she said.

Responding to questions as to the impact of the widely publicised  N701 billion intervention, Ogaji said “We are yet to even see the so called fund, not to even talk of utilising it to ease the liquidity challenge. It all ended up with the announcement reported in the media.”

A legal expert and stakeholder in the oil sector, Sam Aiboni, who spoke to LEADERSHIP in the same vein blamed the misfutune of the power sector on NERC’s inability to enforce compliance with the contractual obligations among the players.

He said following the disbandment of a presidential taskforce set up to ensure implementation of the privatisation process by this administration, a vacuum of coordination became noticeable.

“It created a coordination gap which even has not been able to be filled to date. For instance,  DisCos which used to pay 80 per cent for energy received, has been paying much less through NBET to the GenCos, and no stringent measure has been taken to enforce the terms of relationship in the value chain,” he explained, urging NERC to sit up and ensure that appropriate sanctions are taken against those who breach the contractual agreements to which they consented at the point of privatisation.

The Executive Director of the Association of Nigerian Electricity Distributors (ANED), Mr Sunday Oduntan, while briefing newsmen in Abuja early this year had blamed the crisis on ‘inconsistency and ineptitude’ of the Nigerian Electricity Regulatory Commission (NERC), called on government to intervene and help out by finding lasting solution to the problem of liquidity rocking the sector.

Looking at the TCN which is the middle subsector along the power supply chain, there have been allegations of inability to expand the grid to be able evacuate and wheel enough energy to the DisCos as can be made available by the GenCos; use of obsolete and incapacitated equipment; lack of commitment by its work team, presumably because it is still enjoying the ‘god-fatherism’ of the government among others. Thus many had in recent past advocated the privatisation of the transmission section to, in their argument, have the power sector fully liberalised for competitive business in the overall interest of economic prosperity.

At another briefing earlier in the year, the ANED helmsman, Mr Oduntan equally urged the federal government to increase its investment in the transmission company of Nigeria (TCN) and reorientate the ‘NEPA-converted’ staff of TCN to make them realise that the industry now has business at the centre of its operations, while urging them to wake up and be entreprising.

On the incessant power outages and load shedding, Oduntan, who attributed it to TCN’s under-capacity, however said TCN cannot be blamed because it can only work with the tool given to it by its owner (government).

“What we are saying is that TCN’s low capacity makes it difficult for it evacuate and wheel enough power.

“There is serious capacity constraint and transmission bottlenecks all around the country because TCN is operating with dysfunctional and outdated infrastructure. We the DisCos cannot do our job effectively when TCN facilities are defective,” he said.

But TCN’s General Manager, Seun Olagunju had, while speaking to LEADERSHIP recently said in the aftermath of the liberalisation of the sector in 2013, tangible success has been record in terms of grid expansion and transmission facility upgrade, adding that aside other challenges, the company now has the capacity to wheel power upto a maximum of 6,000 MWs. “And that was why we were able to wheel out over 5, 000MWs in February, 2016, the highest ever in the history of power generation in Nigeria,” she interpolated. According to her, by the time the remaining transmission projects and facility upgrade exercises are completed soon, the story of power supply will change. Also speaking to LEADERSHIP recently, the Chief Scribe of the GenCos, Dr Ogaji, had stated that the generation subsector now has the capacity of generating 8, 000 MWs, but cannot do so because it has to generate according to the wheeling capacity of TCN in line with the operational code and to avoid system breakdown.

The burning grievances of the public against the DisCos stem largely from what they see as outrageous (cracy) bills served them at every month ‘for erractic power supply’ under the guise of estimated billing methodology. By the contractual agreements entered into at privatisation in 2013, the 11 DisCos were to install prepaid meters free of charge for all customers within 5 years (ending 2019) to avoid the problems of over billing or underbilling of customers, on the basis of which the hike in tariff of February, 2016 was effected. Now it is almost 3 years gone, with a great majority of residential customers yet unmetered, who have continued to receive these crazy bills, even after formal complaint must have lodged at the designated places.

To compound the problem, some consumers have alleged that officials of DisCos have collected money for them to be brought meter, even as it has been officially declared free and the Credit Advance Payment for Metering Implementation (CAMPI), a metering intervention programme introduced by NERC in 2014, was cancelled. Some communities even  contribute money to buy transformer after waiting in vain for so long. In one of his speeches the Hon. Minister of Power, Works and Housing, Babatunde Fashola, had made it clear that provision such facilities remained an exclusive responsibility of the investors, warning the public to desist from paying for installations, except where adequate consultation is made with the authorities. But is that enough? Who is to enforce compliance with this in a society like ours where people need to be regularly monitored and forced to do the needful.

A resident of Dawaki on the Dutse axis of Abuja, father of two, who occupied a one-bedroom apartment, while expressing his grievances said his worry is that since some people who identified themselves as officials of AEDC came and removed the meter he has been using on the ground that it was outdated, all attempt to get them to replace it never yielded fruit.

Source: Leadership

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