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DisCos, Your Customers Can’t Breathe – Adeolu Adekola

The disturbing footage revealing circumstances leading to George Floyd’s death after being arrested by police outside a shop in Minneapolis, Minnesota, USA reverberated across the world and sparked protests by the Black Lives Matter (BLM) movement against incidents of police brutality and all racially motivated violence. The footage showed a white police officer, Derek Chauvin, kneeling on George’s neck while he was pinned to the floor. This lasted for 8 minutes and 46 seconds with repeated groanings and appeals by Mr Floyd to the officers arresting him; ‘I can’t breathe, I can’t breathe’! It fell on deaf ears. Since the incidence, taking the knee has become a symbol to show solidarity and condemn the action portrayed in the video. Police brutality is widely witnessed in Nigeria. The #EndSARS movement which started as a social media campaign is pushing for reforms to demand Nigeria’s government to scrap and end the deployment of Nigeria Police Force Special Anti-Robbery Squad, popularly known as SARS. This is amid other dysfunction Nigerians have to endure in the form of corrupt/inept leadership, insecurity, rising unemployment and underemployment, stretched and failing public health and education facilities, increased taxes/levies and a wobbly economy.

All these are enough to choke the life out of citizens who still try to survive the times. But just like George Floyd, citizens and electricity consumers have to add the ‘knee’ of inflated estimated bills to their necks. Electricity is central to the rest of the economy since it overlaps with almost all other systems. Think of it this way, the cost of data subscription may drop if telecommunication companies do not have to power their base stations independently; school fees may reduce and a better conducive environment for learning created if millions channelled to buying fuel to power and maintain generators are removed; access to quality health will improve as general hospitals also budget and spend millions monthly on power (diesel and generator maintenance). Maybe, just maybe the budget of the State House and the National Assembly will reduce if there are no line items to cater for generating power. This is not a cynical thought. As at 2017 which is the only time the National Assembly has published details of its budget since 2009, the line item of ‘plant/generator fuel cost’ amounted to 759.4 million naira.

When you think of when electricity came to Nigeria, you will wonder why the country is still struggling. Electricity was first generated in Nigeria in 1898. This was a 60 kilo-watt installation mainly for colonial officials in Marina, Lagos, in 1898. That was just 17 years after the world’s first public electricity supply in Goldaming, England. According to the then power ministry’s permanent secretary, Louis Edozien in 2019, only 40 per cent of the nations’ 200 million people are connected to the grid electricity. So, we potentially have over 100 million Nigerians without access to electricity by not being on the grid. Generators have become a near compulsory household item nationwide as the population even on the grid experience regular power cut and blackouts. The unpopular National Electric Power Authority (NEPA) was notoriously known for being responsible for Nigeria’s power challenges as it was responsible for the entire value chain.

The unbundling process/reforms commenced and it became Power Holding Company of Nigeria (PHCN) at some point, then the adoption of the National Electric Power Policy in 2001, and then the enactment of the sector reform law (Electric Power Sector Reform Act of 2005). This culminated in the privatisation of the power sector leading to the establishment of the Nigerian Electricity Regulatory Commission (NERC), the Rural Electrification Agency (REA), and splitting NEPA/PHCN into – the six successor Generating Companies (GenCos), the Transmission Company of Nigeria (TCN) and the 11 Distribution Companies (DisCos) in 2013 under the Goodluck Jonathan administration. This left only the transmission service for the government. The 11 largely privately-owned Distribution Companies, therefore, are saddled with the responsibility of ensuring power generated to an extent is distributed to the consumers and they, in turn, collect revenue on behalf of the value chain. While the Federal Government owns 40% stake in each DisCo, it took over Yola Electricity Distribution Company (YEDC) after a force majeure was declared in 2015 by the core investor – Integrated Energy Distribution and Marketing Company citing insecurity in the North-East zone where the company covers. The National Council on Privatisation (NCP) however, approved Quest Electricity Nigeria Limited as the preferred bidder for the re-privatised YEDC with a bid price of N19bn (about $62m) in October 2019.

Prior to February 2020, the regulator NERC had a Methodology for Estimated Billing Regulations 2012 set up to provide DisCos with a method to bill unmetered customers. Note that this methodology was a temporary arrangement because no customer is expected to be unmetered after 3 months. Several years after privatisation, the DisCos made estimated billing the norm as the metering gap widened. There were consistent discordant tunes about getting consumers metered and NERC enabled this as well. Consumers have been bearing the brunt with inflated bills to pay for darkness. It is impossible to assess what is not measured. In 2018, NERC introduced the Meter Assets Providers (MAP) initiative to get consumers to pay for their prepaid meters and have it installed. By now you will think this would stimulate massive metering. According to a June 2020 NERC report, only 3.9 million of the registered 10.3 million subscribers in the country have prepaid meters, electricity distribution companies distributed 22,825 meters to consumers in the fourth quarter of 2019 and therefore on a quarter on quarter basis, this is 72.76% less than the 83,768 distributed in the third quarter of 2019. In the same light, the number of registered customers on estimated billing was 59.74% in the 3rd quarter of 2019 and increased to 62.37% by the fourth quarter.

The MAP initiative has not yielded the needed results and just like when it commenced, some fundamental issues on the process if left unresolved may cause the initiative to fail. Unlike buying a mobile phone which is usually erroneously compared with meter purchase, the meters are owned by DisCos. Their low liquidity contributed to starting the MAP initiative. There is no clarity on how customers are compensated with a lower tariff after paying and activating the meter till the cost is recouped. Also, by being the property of the DisCo, the meters are not movable. For example, a tenant who paid for a meter and is changing residence after a while losses money. These are just a few of the challenges. I am a witness to how the process can be frustrating. It took 9 months of back and forth, follow-ups and assistance from PowerUpNG (an electricity consumer rights advocacy and education organisation) to get a single-phase meter installed and activated. Even with the upward review of the cost of the meters, I disagree with the theory emanating from DisCos implying that customers are no longer interested in being metered. They are pointing to the recent order by NERC limiting the amount that can be billed unmetered customers by DisCos. This is why interventions such as the survey ( being currently carried out by Enough is Enough Nigeria (EiE) and partners to get relevant feedback from consumers about their experience with the MAP initiative is commendable.

NERC in February 2020 instituted order 197/2020 (capping estimated billing of unmetered customers) to place limits on estimated bills that can be issued by DISCOs to unmetered electricity customers of residential (R2) and commercial (C1) buildings. All unmetered R2 and C1 customers shall not be invoiced for the consumption of energy beyond the price capped in the schedule. According to the order, any customer whose current estimated bill is below the capped price shall remain so without upward review until the installation of a meter by the power distributors. In June, it issued notices of intention to sanction seven distribution companies over alleged failure to comply with the order capping estimated billing of unmetered customers. These DisCos are Benin, Enugu, Eko, Ikeja, Kano, Kaduna and Port Harcourt. The DisCos had 14 days beginning from June 4, 2020, to explain why the Commission should not sanction them over their alleged non-compliance. While the deadline given the power distributors lapsed on June 18, NERC, however, is yet to issue any sanctions, if any. As of July, the feedback was that the process is ongoing and as soon as it was done, NERC will make its findings public. From my experiences in the sector, NERC most times is a toothless bulldog when compared to other regulators like the CBN, NCC, NBC and so on.

A big challenge faced by consumers is the slow resolution by the DisCos when they question their estimated bills which leads to accumulation and then disconnection. While we wait to get to the ‘promised land’ of uninterrupted power supply and before the nearly inevitable tariff increase, DisCos must act responsibly and stop milking consumers. The least they can do is comply with the regulation capping estimated billing while the regulator and others involved in the Meter Assets Providers initiative should improve and adjust the process for consumers to get metered. Let your customers breathe!

– Adeolu Adekola is an active citizen writing from Lagos and working around accountability in governance, civic engagement and investigative journalism.

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