Why is it so difficult to have regular electricity supply?
It should not be so difficult but unfortunately that is the situation we have found ourselves. The major problem is that we don’t get the generation that is promised in MYTO. We have less than 50 per cent of the power that we should receive. That is the first problem. We also don’t get the power where we need the power. In other words, when we need the power to get to certain areas and not others, we don’t get it there. We need to get electricity to those who can pay. The third one is the quality of the power, switching it on and off, high and low voltage, the interruptions that we get on a daily basis is very bad as well. So, overall the generation is a problem for us. We know that they also have problem in that area, especially with gas supply. We know there are issues surrounding gas supply, I am not blaming anybody I am only highlighting the issues.
Another issue is bad debt. We still have a huge number of people who don’t pay their bills. In other words, we don’t receive payment for the electricity we supply. We also have issues with the Manufacturers Association of Nigeria (MAN) whose members are still paying the old tariff, we are talking about almost N12 billion as a result of that. We have a lot of bad debts that are not being paid. On top of that we have issue with tariff, we are still not allowed to have a cost-reflective tariff. According to the rules of the regulator, we should have had three tariff reviews, which means we have not taken into account the exchange rate and we have not taken into consideration the operation cost.
The industry needs to develop a programme to rectify all of these issues. Government has a Power Recovery Plan but we were never invited to make a comment on it, we were never invited to be part of the process. I believe we need to work as a team if we are going to solve the problems. The industry is still fragmented and we are still not looking at issues as a team.
In January, my bill was N5.8 billion. I was allowed to bill only N5.3 billion. So, even before I did anything, I was already half a billion naira short. I then collected N3.2 billion, which means I lost another N2 billion. So, we lose N2.5 billion on a monthly basis just between the generation and our collection, and I am accused of not doing enough metering, I agree that I am not doing enough but the fact is that we don’t have enough money to do all of that because we don’t have a tariff that is cost-reflective. I believe that if the government wants to keep the tariff low they have a right to do so but the question is who will pay for it? The government should pay for it through subsidy. If you make a decision you also have a responsibility to bear the cost, you can’t pass the responsibility to distribution companies.
We are trying to sort out a problem that has been there for over years. We should not lose sight of that. I don’t think people realize that. Right now, the more electricity we give to people, the more money we lose because we don’t have a cost-reflective tariff in place. That is the arrangement for now. The truth is that unless there is an appropriate tariff which will make it possible to run the business profitably, it will be difficult to invest in the business.
We pay interest every month on the money we owe the bank but the government owes us money but we can’t charge interest, customers owe us money we can’t charge interest. So, it is a difficult situation we are in. we want to work with the government to ensure that there is regular power supply, we want to meter everybody, we want to improve our processes but we need money to do all of these.
There has been so much noise about meters. Why is it so difficult to meter your customers?
We want to meter all customers, which is the right thing to do. I need a million meters but how am I going to get N60 billion to pay for them when I am losing N2.5billion every month? How? In order to invest for future growth, we need stability, we need reliability and growth from all sectors, not just one. One of the growth areas is the revenue growth, we need money and that will come from a cost-reflective tariff. We have never had a cost-reflective tariff in this sector.
We are not trying to run away from any of our commitments but it will take a minimum of 20 years to get a return on investment in meter. Before I see profit out of a meter, it is 20 years. Why do I say that? The average bill that goes to a prepaid meter is two and a half thousand naira and 20 per cent of all prepaid meters are not vended. We all know what they are doing. When we analyse crazy bills, 13 per cent complaints are crazy bills. When I calculated crazy bills, about 68 per cent of all crazy bills are around N7,000. Now, if you run one air conditioner for two hours a day, for 30 days, your bill is going to be between N5,000 and N6,000 a month. The problem is that most people are used to paying N1,000 and N2,000 for electricity. Electricity is the only product you can buy without paying for it. Customers don’t pay us.
Isn’t there a technology to stop electricity theft?
The higher level you go on meter the higher the cost. Certainly there is a technology that can ensure that energy is not stolen by those who do not pay but the cost is high. It is very expensive. Everything is possible technology-wise but if I had a billion naira would I rather put it in transformers or meters? That is the issue. Don’t forget that I don’t just need a billion to fix meters, I need N60 billion and if I go to borrow that I will pay interest on it. And we are talking about compounded interest here.
But the government has a stake in this business. Won’t the government be affected if you don’t make profit?
It is supposed to be a partnership. But… If you were running this business this way in any other part of the world, it would have closed down a long time ago. It is a very peculiar situation. The government does not take kindly to criticism. Can you imagine the government having something as important as the Power Recovery Plan without involving any of the electricity distribution companies? Why would we put so much money in a business and you won’t want us to be part of the process of building the business? All we want from the government is to look at the facts of the business realistically and honestly to be able to solve the problem. We have a problem; it is in our interest to solve it together. The communities need our help; Nigerians need our help; the customers need our help. I feel sorry for my customers, I really do. I feel bad that they are not having regular electricity supply. But I need the government to understand my plight and do what is right for me to be able to help my customers.
How do you see the eligible customers policy of the Federal Government?
We agree with the minister that it is good to create competition by encouraging generation companies to supply directly to customers. But today we don’t have the conditions to cope with eligible customers because we are getting on the average just a half of power promised us. So, what power can I give to the customers? I cannot give what I do not get. There is a huge subsidy between industrial and commercial customers. How will I be compensated for the subsidy that I give to low paying customers if you take away my major customers? It was never part of the original terms and conditions that are supposed to guide our operation. Under the terms, we cannot afford to have the government just dictate to us without talking to us. We need to work together. The government needs to talk to us; we need to discuss all of these issues. All we are asking the government to do is to be fair to us. The government should do what is right. That will help the industry.
We need to grow this economy, we need to help the small scale business operators who need stable electricity to operate. We can only do that if we get the electricity issue right. If we get electricity right in this country, we get everything right. To get electricity right will involve all the stakeholders; government, the regulators and the operators discussing to solve all the knotty issues.
I know that some distribution companies are considering generating electricity on their own. If that is the case, what is wrong with generation companies supplying customers directly?
We don’t have any problem with competition as I said earlier but we need to have the right condition in place. We must have the right market condition. So, before the government can talk about allowing generation companies to supply, it must ensure that the condition is right. I believe that many of these issues could be resolved if the government would take time to discuss with the operators and stakeholders. If we want the industry to grow we have to negotiate and discuss.
What are your expectations from government knowing that the government is a partner in this business?
We expect the government to do what it said it would do. The government promised to provide N100 billion subsidy after we took over the business but it has not done that. The government promised to ensure we have a cost-reflective tariff but it has not happened. Those two things are fundamental to the success of the industry. This business was sold to Nigerians; it was not sold to foreign companies. The government knows that the business was sold 70 per cent loan and 30 per cent equity. It was sold to Nigerians for Nigerians. Now we are doing everything in our powers to charge in dollars without even discussing a cost-reflective tariff to go along with it. In other businesses if the cost of production increases, you charge more and if cost of production reduces, you charge less but we cannot do that in this business, the tariff is fixed. We just carry on piling up huge debts. If the government made the decision not to increase tariff then it should subsidise the industry.
Why are we charging Nigerian gas at dollar price? Aren’t we Nigerians? I remember the law says you cannot charge anything in a foreign currency in Nigeria. Many of the items we need in this industry are imported, yet we do not get dollar at any special rate and there are industries in this country that are allowed to get dollar at special rates and the most important industry, electricity does not enjoy that privilege. The government needs to help the industry. We want the government to keep to the rules of engagement and see if there will not be positive changes in the industry.
Some communities are not happy with your organization because of poor electricity supply. Do you have any word of assurance for them?
We cannot give what we do not have. We have been to a number of communities to explain the situation to them and some of them see reasons with us. What we are doing is working with communities, with generating companies and with those in transmission to ensure an improvement in the situation. It is in our interest to have regular supply of electricity but the issue is beyond us. We are the ones at the end of the chain and we can only give to our customers what we get from others. But I want to assure our customers that we shall not rest on our oars to see that they are better served.
Source: Nigerian Tribune