Ten months after private investors acquired the distribution firms unbundled from PHCN, electricity customers have continued to endure long spells of power outage or irregular supply in Nigeria. The new owners have maintained the argument that most of the factors responsible for the problems bedeviling the power sector are beyond their control. ISIOMA MADIKE, who just returned from a tour of some industries, tells of the debilitating effects of incessant power outage on consumers
Small and medium scale businesses and homes, who could not afford generators to run their affairs, were supposed to gain from the unbundled Power Holding Company of Nigeria (PHCN). It was expected that with the coming on board of the Distribution Companies (DISCOs) and Generation Companies (GENCOs), in November last year, the sector would experience stable power supply across the country.
But, that is not to be. Instead, the power situation, according to consumers, has gone from bad to worse since the historic change of baton about 10 months ago. In some parts of the country, customers say electricity has finally gone comatose. This virtual total collapse in power generation and distribution has, indeed, plunged the entire nation into almost darkness. There seems to be little hope, as it stands today, of improvement in the immediate future.
The hope of the numerous small and medium scale enterprises, which had been shut down for years, of coming back to life, has, indeed evaporated with such optimism turning into despair.
Those that are hard hit include artisans like welders, barbers, hairdressers, tailors and pepper grinders, who depend on electricity for their businesses. It was expected that the economy would grow with the return of these people to their normal businesses with greater capacity to create jobs and wealth. The reverse, incidentally, has been the case thus far.
With this gloomy picture, most of these artisans have been forced into other trades to earn a living and meet their families’ obligations. For instance, Mrs. Abike Balogun, a frozen food seller in Ikeja says she spends over N30, 000 weekly on diesel to operate her frozen food business.
“It has never been this bad in the Centre of Excellence as far as electricity supply is concerned. In the last three months, power supply to this area has become erratic and this has affected social, business and commercial lives. Some artisans, who cannot afford generating sets, have taken to commercial tricycles as a way out. Go out and see how many women now engage in tricycle riding. It’s not supposed to be healthy for the womenfolk, but what can they do, “she asked.
She said the electricity supply in Ikeja and environ had degenerated since the privatisation of the power sector. “We were told before now that the new owners would ensure efficient power supply in the land. But, what we are witnessing today, especially since January this year, is a reversal of fortunes and this is not what the Nigerian economy needs; this pathetic situation can’t stimulate industrial growth,” Balogun added.
The development has continued to force small businesses to close shop. Daniel Ogbonna, a cyber café operator at Ikorodu, an outskirt of the mega city, is operating skeletally at present. He said he had lost many customers due to poor
power supply. For Adebayo Olawale, a barber at Oluwole Estate, Ogba, “the Federal Government should urgently look into the problem. We all know that efficient power will be a great improvement to industrial development of a nation. We want more efforts to be put in place. We will be happy if the new electricity distribution companies live up to people’s expectations,” he pleaded.
Families feeling the heat
At the home front, most families had, though, erroneously believed that they would be greatly relieved from the task of having to cook every day. A housewife, Mrs. Yetunde Ashiru, had hoped her household would experience a better home management in the area of feeding and house-keeping. She had noted that the “household will no longer be cooking every day. We expect light to be regular, so that our fridges and deep freezers will come up again. How wrong we were.
“As a family, we have, presently, packed up our two fridges and deep freezers because we could not afford to run them on generators. We usually spend N200 each day to fuel the generator and that is to enable us sleep in the night and for the children to do their homework. The experience wasn’t too good because we had been spending more on feeding for the family since we cannot preserve the foods in the fridges and deep freezers.”
Apart from Ashiru, most single young professionals, who had been forced to be eating outside, had also wished to get some relief, as they longed to equally begin to cook their foods and to store them in fridges and deep freezers for preservation. They had expressed delight at the prospect of a regular power supply and the fact that they could see power to resurrect their fridges.
“For years, we have not used our fridges to preserve cooked food. We only use them for water and drinks because we can’t afford to always power them with generators. The cost of running on generators is too much,’’ some asserted.
Aside the artisans, housewives and young professionals, other sectors of the industrial production and businesses have also been grounded due to massive load shedding, and the multiplier effect of the dismal power output on the economy, is enormous. Businesses are down and failing across the country while the citizenry continues to wreath in pain and suffer untold discomfort.
At Sea Sandy Investments Ltd, manufacturers of ball point pen and exercise books, situated at Block 17A, Niyi Ogunbameru Street, Ajao Estate, also in Lagos, the story is no different. The company, which was originally into advertisement and Public Relations, went into merchandising and importation of ball pens from abroad, until the Federal Government put a stop to such items when it banned the importation of biros.
According to the company’s Chairman/ Chief Executive Officer, Emeka Nnama, “the government’s action spurred us into thinking as we set out from then on to contribute aggressively in reducing the unpleasant unemployment wahala in the country.
“For this reason, we started the production of biros in 2006. So today, we make ball pens for schools and some corporate bodies that would need biros to promote their products, which eventually end up in schools as well because they go about giving free biros to primary, secondary and higher institutions across Nigeria. In addition to that we also make exercise books, which also are distributed free to some schools in the country,” he disclosed to this reporter.
Yet, Nnama is not happy at the turn of events in his company. “Due to poor electricity supply in this area, we are consigned to doing less than 10 per cent of our production capacity when we are busy; and this has affected both our vision and mission of helping to reduce unemployment in the country.
“We run generator almost 24/7 here; we are spending more than N600, 000 a month on that just to keep the company going and see little money to pay the workers because without that the workers would desert the company. No one would work for eternity without being paid. They have their families and other dependents to take of like every other normal being in the country,” Nnama further said.
Industries, not fairing better
However, his, is not an isolated case. A top management staff of Chemiron International Ltd., off WEMPCO Road at Ogba, Ikeja-Lagos, who pleaded anonymity, said, “it has never been quite like it has been in the last few weeks. I would say that we have spent more on private generation of power than we had in a long time. These days, we run our private generator for 24 hours daily and that is impacting negatively on our income. But, do we have a choice?
In like manner, a general manager of one of the new generation banks with head office in Victoria Island also said the power situation has driven up his bank’s cost of doing business by over 350 per cent.
He said that the cost of running the company’s generators non-stop daily dwarfs that of the total sundry costs put together. He further said there are other more painful costs to his business than just the cost of diesel and power plants maintenance.
“Over the past few weeks, we have lost some teller machines and the rate of computer damage is alarming. As I speak with you now, so many of our computers have parked up; it’s been like that for some time now. What we are planning currently is to cut municipal power supply off completely and run only on our private generators,” he said.
The Sea Sandy Investments’ case and others across the land best describe the debilitating effects of the power situation in Africa’s second largest economy in recent times. For upward of 10 months, Nigerians have continued to groan and grope, searching for comfort as private companies that purchased PHCN appear to be failing in their earlier promise to deliver the much sought-after energy to Nigerians.
But, poor electricity supply is not the only headache for consumers. There have also been complaints about the high tariff, which has allegedly been increased by over 200 per cent. The latest increase, which sparked off a deluge of criticism among Nigerians, took the form of what has been described as
“fixed charge.”
The Nigerian Electricity Regulatory Commission (NERC), made this new tariff mandatory for electricity consumers to pay between N750 and N800 for individuals monthly, up from the former N500 being charged, regardless of whether the consumer makes use of electricity for the period or not. However, companies pay much more than that.
This raise in power prices add to the miseries and ultimately left the inflation-hit masses in complete lurch. But, while some accuse NERC of foisting on consumers, regular and unjustifiable tariff increases, others blame corrupt habits of some electricity officials, who preferred exploiting helpless customers by hiking their bills in the name of estimated billing system. This situation prompted the Association of Electricity Consumers of Nigeria (AECN) to frown upon the charges being imposed under the new Multi Year Tariff Order (MYTO2) introduced last year.
The President of the association, Gani Makanjuola, had alleged that officials of the electricity companies were extorting consumers by the new tariff regime. According to him, electricity consumers are being charged outside the MYTO2, thereby forcing consumers to pay in excess of power consumed. “Many consumers do not have prepaid metres, which can accurately measure power they consumed. We want the NERC to instruct the distribution companies to massively roll out the new metres,’’ he said.
New tariff regime, necessary to stabilise sector
But, an official of the Ministry of Power also explained that the new tariff regime was necessary to stabilise the sector as well as attract private investments that are required to drive it in the medium to long term. The official noted that the new pricing regime would further enthrone efficiency and good governance in the Nigerian Electricity Supply Industry (NESI), eliminate waste and guarantee cost-reflective pricing.
The introduction of a fixed service charge for electricity consumers had stirred up controversy across the nation. The reactions, however, may have prompted NERC Chairman, Dr Sam Amadi, to mandate the distribution companies to stop collecting fixed service charge from consumers if they fail to supply electricity for a period of 15 days in a month. This was to take effect from May 1, 2014.
According to him, “upon due consultations of these complaints and considering the Commission’s role in the Nigerian electricity supply industry, as provided under Section 32D and F of the EPSR Act 2005, it is hereby ordered that effective May 1, 2014, where any customer of a distribution licensee has not received continues electricity supply for a period of 15 days in a month such a customer shall not be required to pay the fixed charge.”
But, instead of applause, a cross section of electricity consumers that spoke with this reporter described the statement as deceptive. They are, nonetheless, suggesting that it should be pegged on five days not 15 days as well as try to put mechanism in place to make it work. There are others, who have been appealing to the Federal Government to compel NERC to totally stop the fixed charges. The consumers said the increase was “ill timed” and has brought misery to both the common people and small scale industries.
For instance, Nnama says at the moment, his company is finding it difficult to break even because “we are being subjected to pay for services not rendered.
“That is in addition to what it costs us to power our generator for production by the Ikeja electricity distribution company because we are under them. Apart from not getting energy, we are subjected to pay the fixed charge every month irrespective of whether we get light from the distribution company or not.
“So, after paying that and still buy diesel to work, you cannot break even. Because of this, we have continued to borrow from banks to make sure the business is on at all. You pay the workers and still borrow to pay the fixed electricity charge. At the end of the day, you have nothing to yourself,” he said.
He did not stop there. He claims that there is no difference between what the smaller industries pay and that of the larger business concerns. “The difference of what they charge is inconsequential. They really do not consider that some of us are small scale, others medium and the large companies.
“They arbitrarily charge everybody almost the same and that is our other worry. We felt there should have been some considerations for smaller establishments like ours. It’s almost uniform because the difference is less than N10, 000. So, how do you expect those of us that are small to survive? It’s extremely difficult in this circumstance.
“As small as we are, the fixed charge given to us is over N240, 000 per month. That is before they begin to charge on anything they write on consumption. We are made to pay for what we do not consume. That is the crux of the matter,” Nnama said.
Nnama is, however, advocating that the Federal Government should abolish the fixed charge totally. “They should only allow the consumers to pay for services rendered. If that is done, the DISCOs would now know that they would have to seriously invest in the business. That way, they would have to render services before they can earn a living. But, if they are encouraged to continue this way, they would never learn to invest in the sector because they would continue to see the fixed charge as cheap, unearned money.
“They should consider total abolition of fixed charge to small scale industrialists just to encourage growth that could actually stimulate the economy and mop up unemployment in the land. But, if the fixed charge cannot be abolished, they should charge according to the amount of energy supplied. In addition, I would suggest a fixed charged of not more than five per cent of consumption,” he said.
Also, the Chairman, Alaba Market Electronic Association of Nigeria, Dele Dawodu, alleged that the DISCOs were hoarding prepaid metres for their selfish motives of arbitrarily hiking electricity bills in an estimated billing system. He suggested strict punishment for any erring worker, threatening that the group would embark on a protest if the trend was not checked.
“We will not accept cheating and we will never pay estimated billings. God has put standard measurement on everything He created, even the market women use measurement to sell their goods, why did the DISCOs discontinue from accurate measurement for power,” he asked.
In what looked like a direct reaction to this threat, the Minister of Power, Professor Chinedu Nebo, insisted on 100 per cent metering of customers saying the DISCOs would curb wastages by ensuring that all electricity consumers are adequately metered. Also, the Consumer Protection Council (CPC) said it
had engaged NERC on the protection of electricity consumers in the country, by insisting on more consideration for consumers on issues of redress and enforcement of regulations. CPC Director General, Mrs. Dupe Atoki, who said that consumers’ interests are adequately protected in accordance with the law, advocated a deeper protection of consumers in the energy sector while stressing that more critical look should be given to the interface between consumers and the distribution companies.
Nigeria turned to a dumping ground for sub-standard gen sets
Amadi has, however, blamed inflation saying that the prepaid five-year tariff plan on electricity ought to make the price remain stable. He explained that the price of electricity ought to remain constant until the next regulation, which he said would take place in 2017.
“The last regulation and review of electricity price took place in 2012 and is expected to remain constant till 2017, when another and fresh regulation would take place. But, the reverse is the case now as the rise in inflation has forced electricity tariff to be high.”
NERC had earlier in the year issued an Order on Credited Advance Payment for Metering Implementation (CAPMI), a response by the regulator to address the lingering issue of noninsurance of meters by the electricity companies. CAPMI was designed to allow for any interested and willing customer to advance money to their electricity distribution company and in return will be given electricity credit until the cost of the meter has been recovered by the customer.
The order, among other things, stipulated that all distribution companies forward to NERC data of all customers, who paid for meters but had not been supplied. Not too long ago, a N2.9billion metering intervention fund was made available to the companies with a view to closing the unacceptable metering gap. Three years after, no appreciable progress was made by the companies.
Aside this, the nuisance value of the importation of Generators is equally causing ripples among Nigerians. Recently, a comment by the Lagos House Committee Chairman on Public Accounts knocked the Federal Government on its tacit support of unrestrained importation of power generating sets (in the absence of an efficient public supply of electricity). The committee said the situation only restated the fact that the country is a dumpsite economy, a society of anything goes and where government officials revel in cluelessness.
However, the disgraceful electricity situation appears to have turned Nigeria to a dumping ground for Chinese cheap and sub-standard generating sets. In spite of the tutored trade relations with China, analysts believe that the situation has only worsened the prevailing power situation. There are those, who believe that a cartel or what they refer to as the “generator mafias” are holding the government at the jugular in order to make it impossible for any meaningful progress in its quest to get out of the electricity quagmire. “The government is handicapped because of its alliance with the mafia, who are importing these sub-standard generators from China. Some top government officials are benefiting immensely from the dubious deal,” said a social critic, Mallam Ahmed Jaji.
Chairman, Manufacturers Association of Nigeria (MAN), Abia State Branch, Dr. Frank Jacobs, has stated that well over 60 million Nigerians now own power generating sets for their electricity, while the same number of people spend a staggering N1.56 trillion ($13.35m ) to fuel them annually.
He was of the view that, “similar level of expenditure on private power generation has characterised the affairs of industrial and commercial power consumers.”
Adepoju Adegoke, chairman of the Association of Fast Food and Confectionary (AFFCON) in Rivers State, also said that “so far, there are a lot of improvements in sending out bills. However, in terms of power generation, it is not healthy. They are also very fast in demanding for payments, despite the poor service, which has actually increased the cost of diesel from 40 per cent to 70 per cent, which is not good for any business in the city.”
The President, Lagos Chambers of Commerce and Industry (LCCI), Alhaji Remi Bello, lamented the plight of manufacturers in the state and the country in general as he described the power situation as epileptic.
Yet, Head, Communication Strategy, Ikeja DISCO, Pekun Adeyanju, says his company requires about 1.2 megawatts of electricity but currently distributes a meagre 350 megawatts.
“So, we do not have an option but to shed light. But, if we get more from the national greed, we will distribute more. We try to evenly distribute power to all customers and it will remain so until generation improves,” Adeyanju promised.
He also informed that his company has embarked on revenue drive to recover the huge amount owed it. “We are persuading our customers to start paying up gradually so that disconnection strategy would become a thing of the past.
“Vandalism is another issue that we are tackling at the moment. We are spending so much money to put back equipment that were vandalised. We have been soliciting the corporation and assistance of community leaders to help in this direction too,” he further said.