As Nigeria continues to struggle with the provision of public power supply, there seems an underlining burden, or to borrow the language of electricity – an underlining current – politics. After years of no-light in perpetuity, the government, listening to the yearnings of most Nigerians unbundled the former Power Holding Corporation of Nigeria (P.H.C.N.) into separate eighteen companies. The glorious day was in November 2013. It was the day of immeasurable joy to most Nigerians with the hope to live true to the biblical “Let There Be Light” (Genesis 1:3). The government unbundled P.H.C.N. into eleven distribution companies (DisCos), six generating companies (GenCos), and a transmission company (T.C.N.). The 2005 Act had created the Nigerian Electricity Regulatory Commission (N.E.R.C.) as an independent regulator for the sector. Seven years down the line, it appears Nigerians have not followed the dictates of that heavenly saying, instead governed by the sovereignty of being a creature of self-interest. So, most Nigerians’ expectations of having a supply of constant power remains a dream mired in politics. The present administration, from the onset, pushed out narratives to the general public, which points an accusing finger to the privatisation process.
Our pursuit of political supremacy and private profit, of individuals involved, both in government and the private investors, seem to have exceeded our sense of civic responsibilities. Nigeria is losing a whopping one billion Naira (N1 billion) daily as the government, wittingly or unwittingly, allows the squandering of the country’s resources each time the DisCos reject power generated for distribution. The losses, by themselves, are becoming unacceptable and unsustainable and could sink Nigeria into bankruptcy. Energy rejected by the DisCos wastes into thin air, as not being used by anybody whatsoever. It is an unredeemable colossal loss to the public treasury, on accounts of whatever arrangements. To an innocent mind, this is an unforgivable sin. It is natural to point an accusing finger to the villain, at such a time like this. Without a clear understanding of the intricacies behind the curtain, the DisCos have emerged as the fall guy. But are they? The DisCos too are crying they “can’t breathe” because the government has its knee on their neck. Call this the devil’s advocate. One needs to understand the nature of electricity itself, as a commodity and at the centre of the power play, or should I say profit play?
Electrical current (electricity) travels at the speed of light. It means once generated by the GenCos; the power practically gets delivered to the consumer at the same time. Storage of electricity, on such a national scale, remains challenging and uneconomical, and that is one major obstacle. Power is, therefore, lost forever if not used instantly. The DisCos, after the immediate euphoria of a favourable bid, now realise they are holding the short end of the stick. Circumstance forced the DisCos to hire the same workforce of the old P.H.C.N., who has collected the proceeds of privatisation as their final settlement and has less motivation. The DisCos’ situation became worse as regulatory constraints of unrealistic marketing models, and equity snuff air out of them. The marketing model N.E.R.C. constituted in the power sector was designed for a regime of uninterrupted power supply, the Multi-Year Tariff Order, M.Y.T.O., notwithstanding. The households, workplaces, and factories do not give advanced notice to the DisCos (public utilities) about the amount of power they need and when they need power. With insufficient energy to go round (interrupted public power), the calculation for aggregate income becomes a struggle. In a regular supply regime, if a, b, c, d, etc. do not use light at any particular time, e, f, g, h, etc. may need light. That balances out the aggregate public demand for power within the grid.
What the country currently experiences falls short of adequate power to meet the ever-increasing demand. Maybe we should reflect on that reality. As it is today, we, the electricity consumers, for those metered, only pay for what our electricity meters record, which technically is the power consumed. It means even if there is supply to one’s area and we do not use the light while other areas denied, we will pay nothing to the DisCos. We are in a regime of no constant power supply, which on a typical day, the demand easily exceeds 12,000 megawatts, and with less than 4,500 megawatts generated. So, the DisCos alternate power supply among supply-clusters for equity and fairness. There is no technology yet to inform the DisCos when I need power or how much I need from the grid. Since the DisCos cannot ascertain which supply clusters will maximise the use of electricity, or cannot get power to the appropriate areas, they continue to struggle with cost recovery based on the present tariff structure. From experience, however, the DisCos seem to know where to divert light for better cost, but the T.C.N. has not been cooperative. The T.C.N. most times mistimes where they send power to, and for that, the DisCos have been rejecting power if not sent to where they need it. Otherwise, with the current cost setup, the DisCos will incur the losses. In all of this, it is the public treasury that pays; by reimbursing the GenCos for the rejected power.
So, what can be the low hanging fruits, in the interim, to mitigate this squandering of our resources that benefits nobody? First and foremost, the DisCos should have a say about what area they want to power, to reduce rejecting power immediately. That will quickly cut down the aggregate daily losses. Instead of reimbursing the GenCos, the federal government should only guarantee the sector to facilitate the uninterrupted supply of gas to the GenCos, for instance. Because of inadequate capacity, the DisCos require a minimum charge from consumers in the form of connection fee or line maintenance fee. For example, people hardly visit banking halls any longer, but the banks keep the branches open just in case. The banks charge the depositors for account maintenance to cover operational costs. The DisCos deserve such to cover the cost of powering the lines as well as maintaining the power lines. On the issue of equity and cost recovery, tariffs ought to reflect the volume of demand. Those who demand more should pay more – that is equity. There is not enough space to elaborate further on the marketing model – a topic for another day – maybe.
Samuel Akinyele Caulcrick
MD/CEO Gianni-Sam Nig Ltd