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Home Law Understanding Nigeria’s Electricity Conundrum - George Etomi

Understanding Nigeria’s Electricity Conundrum – George Etomi

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To say that the power sector has been a national challenge is an understatement. After the federal government had invested about N2.7 trillion in the sector without success, it opted for privatisation. But ever since the sector was handed over to private investors in 2013, not much in terms positive results have been recorded as power generation has hovered around 4,000MW. Besides, transmission and distribution have been lagging with the distribution companies unable to do more than 6,000MW at best of times because of weak distribution infrastructure occasioned by inadequate financing to upgrade their equipment.

 Last week, the Transmission Company of Nigeria disclosed that the 11 electricity distribution companies in the country’s power sector are still in the habit of refusing to take maximum electricity loads allocated to them for distribution to their various consumers.

Speaking on a CNBC Africa live broadcast, one of the directors at EKO Disco, George Etomi, said power has generally improved, but there will be a requirement for the strengthening and expansion of the national grid along with improvement of distribution systems:

What is more disturbing is that 1000 Megawatts is rejected daily by Discos in a country where irregular power supply is the order of the day. What is going on? >>>>> The transmission company needs to work a lot better with the discos in understanding how power should be allocated. For the Discos our concern is we need power to be allocated to consumer areas where we can get revenue from, so that we can continue to feed the industry with funds. As you know that’s the biggest headache. But what is happening and as a throwback to what it used to be, the transmission company is the one that does the allocation. At times they took it to areas where we experience heavy losses, and instead of us continuing to carry those losses not because we don’t need them, but we don’t need them in those particular areas. So what we need to do going forward is to sit and agree with the transmission company, that load allocation should be in accordance with what discos want, not necessarily what the transmission companies want.

But these sounds like a very new angle. Is it as a result of wrong dumping of the loads in areas where you don’t generate income? >>>>>   In the manner of speaking, yes.

According to the report of the daily generation statistics, “what we can generate right now is over 12,000MWt., yet we transmit below 7,000MWt., and we have a demand of over 17,000MWt. In this case, if we have a capacity to generate over 12,000MWt., and we are transmitting below 7,000MWt., isn’t it as a result of transmission infrastructure and not necessarily wrong dumping somewhere? >>>>>    The infrastructure has been wired such that you just sort of allocate power across the federation. Now, in a privatized setting, where it is sensitive for you to generate income from whatever is given to you, it is important that the transmission company works with you to allocate power to where you get most of your revenue so you can feed the industry. If you don’t do that and you continue to allocate power; many times the transmission company sights reads stability for allocating power, so, essentially they go dump power where you don’t want it. And instead of the discos carrying the debt which also adds to their losses, one of the things we need to do is to reduce losses.

You talk about areas where you cannot get your money back, what kind of areas are you talking about? >>>>>    Part of the challenge we have in the industry of course, is electricity theft. And you have situation in which many distribution companies are grappling with issues of theft. So until we get to that point where consumers themselves become more alive to their responsibility, what we would do is to try as much as possible to reduce our losses. Don’t take power to an area where the people are refusing to pay. It has nothing to do with rural or urban areas.

Even after giving them the pre-paid meter they still don’t pay? >>>>>   They bypass the prepaid meter.

Even in the urban areas? >>>>>   I am not discriminating between the urban and the rural areas. In fact, some of the greatest bypasses are coming from the urban areas. It’s just a bad habit consumers have. And that’s because this entitlement mentality, this feelings that I am entitle to get power it must be reversed. Otherwise everybody will suffer for the wrong of a few.

So how do you bypass the few? >>>>>   Well, it’s going to be a mixture of technology. We are investing in processes that would enable us get hold of these guys. But before we get there most of the depends is still on the manuals we met on ground and it would take awhile to improve on this. But even at that, I think consumers would begin to understand that they also have to play a role in allowing this industry to survive. When you don’t pay for power, if you get somebody to bypass, apart from the fact that it’s a crime, you are actually making the good guys pay for the bad guys. So it doesn’t serve any purpose to keep quiet.

I remember working on a report on electricity theft few years ago, and after explaining to some consumers that when you allow your neighbor get away with not paying, you are paying back in return. The question I asked them was, “would you report if you find out that your neighbor is bypassing and not paying? They all said no it wasn’t their job”. Now am asking, is there a way to ensure that people pay especially with the idea of hanging the meter on the pole? Do you think that would work? >>>>> Those were the smart meters. Those are one of the areas I tell you we are trying to see if we can use technology to deal with the issue. But let me quickly return to that issue of the word ‘Report’. You can say that in a place like Nigeria. If you’ve live in a country like the UK and you know that your neighbor was doing a social service fraud or whatever wouldn’t you report? They do. It’s a civic responsibility. So part of what we need in the industry is a robust mechanism for detecting, reporting, and in many cases preventing theft. Theft is theft. It doesn’t matter if its electricity equipment, the neighbor’s car, goods or whatever it is.

You said it’s just for them to have entitlement mentality. But there are those who see it as a free lease from the government.  >>>>> I know, but we need to get out of that. Because this is a privatized industry. Its germane to our industrial survival. Now oil is getting out of fashion, we need to get the point where we respond to global changers. And if we don’t understand that power is the key, it holds the key to our industrial revolution; we will continue to behave the way we are behaving. And in any case it hurts us the most.

What is the discussion right now with the TCN to improve the transmission grade and infrastructure?  >>>>> Well the fact is that TCN is still government bond. So, most of the allocation tree is budgetary and sad enough they don’t get what they want. I think last year, what they required was about N400billion but what they were allocated was about N40billion. I don’t know what they’re going to get this year.  Hopefully based on the power recovery programme of the government there would be agencies who would blend to TCN. But TCN needs to improve on their network because it’s one thing that generation has improved, we all can see, and transmission by way has also improved. The issue is the consistency. Whether they can win 7,000 consistently is the challenge. Yes, at 3 or 4 it could be consistent, but once it starts going to 5 or 6 you start getting grid collapses. They need to be supported with the funds they require to boost the grid. Once they do that then the pressure gets to the distribution company who as well must improved on all their feeders and their distribution networks, expand them to ensure that that power that comes in is in the minimum got into consumers. And then the burden goes unto the consumers; if you consume power you must pay for it. Don’t expect somehow that you would steal power and then get regular supply. That is the problem, it’s everybody’s responsibility.

George Etomi, Director, Eko Distribution Plc.

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