Estimated billing as the bane of Nigeria’s power sector reform

 

By Solomon Asowata

 

When the Nigerian Power Sector Reforms started in 2005, there was optimism that the country would get its act together within the next few years and increase its power generation, transmission and distribution to be able to meet the demands of its huge populace.

The hope was hinged on the private sector’s involvement after the unbundling of the ineffective Power Holding Company (PHCN) Plc following the enactment of the Electric Power Sector Reform Act, 2005.

Consequently, the assets and liabilities of PHCN were transferred to private power generation companies (Kainji Hydro Electric Plc,  Shiroro Hydro Electric Plc,  Sapele Power Plc,  Robin Power Plc,  Afam Power Plc and Ugheli Power Plc).

The transmission arm was transferred to the Transmission Company of Nigeria (TCN), which is fully owned by the Federal Government that also owns a 40 per cent stake in the 11 Electricity Distribution Companies (Discos).

The Discos are: Abuja Electricity Distribution Company, Jos Electricity Distribution Company,  Ibadan Electricity Distribution Company, Benin Electricity Distribution Company,  Enugu Electricity Distribution Company and Kaduna Electricity Distribution Company.

Others are Kano Electricity Distribution Company, Eko Electricity Distribution Company, Ikeja Electricity Distribution Company, Port Harcourt Electricity Distribution Company and Yola Electricity Distribution Company.

Almost 15 years after the reforms started, the Nigerian power industry remains characterised by unstable power supply, owing largely to inadequate installed capacity, frequent breakdowns and high inefficiency levels.

Nigeria currently accesses far below its installed generation capacity of about 7,228MW, as less than 5,000MW is generated and transmitted.

Some experts believe that one of the major challenges plaguing the sector is estimated billing by the Discos which has made them unable to think outside the box on how to improve their own end of the electricity value chain.

Presently, there is a bill before the National Assembly seeking to criminalise estimated billing which has the support of many Nigerians, due to the exploitative nature of some of the Discos.

In the House of Representatives, the bill was passed in October 2019.

The Nigerian Electricity Regulatory Commission (NERC), in its Second Quarter 2019 Report, said 57.08 per cent of end-user customers were still on estimated billing as at the end of June 2019.

According to the commission, out of 8,881,443 registered active electricity customers, only 3,811,729 (42.92 per cent) had been metered.

It said complaints relating to metering and billing also accounted for 52.80 per cent (77,036) complaints received by the Discos out of a total 145,959 complaints received in the period under review.

The commission believes it will take about three years to close the metering gap in the country at the current pace of the Meter Assets Providers (MAPs) scheme initiated by the regulatory agency to fast track provision of meters to customers.

Worried by the incessant billing disputes between end-user customers and the Discos, NERC resolved to cap estimated billing for various categories of electricity consumers from February.

NERC’s Chairman, Prof. James Momoh, says once the regulation is released, unmetered customers will only pay what the commission compels Discos to collect as estimated bills.

But Mr Adeola Samuel-Ilori, National Coordinator, All Electricity Consumers Protection Forum, says the move will only embolden Discos to slow the pace of metering customers, especially with the government’s plan to increase electricity tariffs.

Samuel-Ilori said: “If the regulators are up to their tasks, should capping estimated billing be their priority?

“It clearly shows that they have been pampering the Discos when they are supposed to ensure that all customers are metered.”

According to him, until customers begin to get value for the electricity consumed, the power sector will remain comatose.

Similarly,  Mr Sural Fadairo, National President,  Energy Consumer Rights and Responsibilities Initiative, claims some electricity customers have refused to pay their bills due to disputes with Discos.

“If people are refusing to pay now because they are disputing their bills, will they now pay if it is further increased?

“What they need to do is to meter all electricity customers so that we can end the issue of estimated billing,” he said.

Mr Uche Ileogbunam, Founder, Energy For All, says estimated billing poses a great risk to the overall power sector value chain and will continue to hold it down.

“We talk about under-remittances by Discos and this is partly caused by refusal of some customers to pay their bills as and when due because they feel shortchanged.

“Some customers get as high as N30, 000 monthly bills which they believe is unfair.

“So, the Discos find it hard to meet their obligations to the Nigerian Bulk Electricity Trading (NBET) Company which in turn affects payments to TCN and Gencos for their services.

“I think we can only get this aspect right when the majority of customers have been metered and pay for energy being consumed.”

On their part, both Ikeja Electric and Eko Electricity Distribution Company say they are vigorously pursuing the metering of customers within their network of operations.

Mr Felix Ofulue, Head, Corporate Communications, IE, says the company recently opened bid to add more Meter Assets Providers (MAPs) to fast track the metering of  its customers.

According to him, IE is targeting the registration of over a million electricity customers in the next three years.

He said: ‘’We just carried out advertisement to bring in more MAPs because we envisage that there will be more demand in 2020.

“We, as a business, are encouraging more customers to embrace pre-paid meter because we are not interested in estimated billing.”

Also, Mr Adeoye Fadeyibi, Managing Director,  EKEDC, says the company remains committed to ensuring that all its customers get metered under the MAPs scheme.

“This is to stop incessant complaints over the estimated billings by customers, bridge the metering gap and accelerate meter roll out to enhance revenue generation,” he said.

Despite these assurances, many experts believe criminalising estimated billing by Discos is the way to go and are urging the National Assembly to urgently finalise passage of the bill.

They say this will force the hands of the Discos and other players to put in more efforts to eliminate such practice, thereby ensuring that Nigerians get the right value for their money.

NAN Features