NERC: We Capped Estimated Billing to Protect Power Consumers
FG hands over Afam Power Plant to Transcorp
The Nigerian Electricity Regulatory Commission (NERC) yesterday stated that the federal government introduced the capping order on estimated billing for unmetered customers to ensure fairness and parity with their metered counterparts.
Commissioner in charge
of Legal, Licensing and Compliance, Mr Dafe Akpeneye, said at a web conference organised by PricewaterhouseCoopers (PwC) that since the Discos failed in their responsibility to meter customers, the only option was to resort to estimation.
He spoke just as the federal government handed over the Afam Power Plant in Oyigbo Local Government of Rivers State to Transcorp Power Consortium, which emerged the preferred bidder of the power asset, with a bid offer of N105.3 billion.
However, Akpeneye described the development as temporary, noting that no customer should pay more than their metered neighbours in the same vicinity and under a similar classification.
He said: “The issue of estimated billing came about as a bridge to manage the interests of the utilities' interest of providing power and the customers' interest of paying for power.
“Under an ideal situation, the meter is an assurance that the utility should get paid for what it delivers and the customer pays for what he consumes. But we have found ourselves in a situation whereby when the assets were handed over, metering wasn't a priority when the utilities were owned by the federal government.
“And if you look at the Nigerian demographics, with the way the population is expanding, rapid urbanisation with new connections coming to the grid, the metering of these customers has become a problem.
“One of the key requirements is for the Discos to bridge the metering gap because the problem we had to deal with was because of their inability to do that on time. We had to balance the fact that customers receive power without meter and devise a way to make sure customers have electricity without having a meter.
“Therefore, the estimated billing methodology was introduced . But that was supposed to be temporary, certain things were not done. So, estimated billing became the number one consumer complaint in the industry.”
The NERC stated that exiting the estimated billing regime is impossible for now, adding that since it is not practicable to meter everyone at once, the practice will continue for a while until the issues are resolved.
“Because we realised that meters can't be rolled out for everyone, something had to be done to balance it out. Some measure of fair estimation had to be put in place.
“The commission developed the capping order. What this seeks to try to create is parity between metered customers and unmetered customers. So, we have someone who lives in a duplex in a certain part of town who is unmetered and we created a scenario whereby one who is unmetered does not pay more than the metered, so that they both pay almost the same thing,” he added.
In his intervention, the Director General, Bureau of Public Enterprises (BPE), Mr Alex Okoh, said the privatisation of the power sector in Nigeria remains the most ambitious of its type in Africa.
According to him, though the sector is not where it should be because of lack of investments, it has improved since it was handed over to private individuals to manage.
He said: “South Africa has 4,904 kwh per capita while Nigeria has 300kwh per capita. Now for the biggest economy in Africa, that says a lot.
“This sort of challenges prompted the bold decision to reform the power sector. So, in 2005, ESPRA was enacted and essentially was geared towards breaking the monopoly of NEPA.
“It was also to make the sector attractive. That particular action led to the unbundling to Gencos, TCN and Discos. Prior to this , electricity was generally poor. We are talking 1,500mw across the value chain.
“Post-privatisation, we have seen significant improvement and impact of privatisation of the power sector. We are just 10 years.
“There are interventions that are currently going on to correct some of the shortcomings of the privatisation exercise. Let's not also forget that the power sector privatisation in Nigeria is perhaps the biggest privatisation programme in the continent of Africa.
“Were we rather overambitious in this privatisation. I don't think so. Could we have taken a modulated approach to it? Maybe. But I think the decision was bold to address the lack of investment in the sector.”
In his remarks, former Minister of Power, Prof. Barth Nnaji, said government must strive to draw private sector investment to ensure sustainable supply of power.
He stated that with the right environment, the Discos can conveniently pay for power, as was shown by Eko and a few others at a point, adding that the bulk trading arrangement should be jettisoned once the Discos become credit worthy.
FG Hands over Afam Power Plant to Transcorp
The federal government has handed over the Afam Power Plant in Oyigbo Local Government of Rivers State to Transcorp Power Consortium, which emerged the preferred bidder of the power asset, with a bid offer of N105.3 billion.
President Muhammadu Buhari has also restated his commitment to address the liquidity challenges adversely affecting the viability of the nation's power sector.
This is coming as the Group Chairman of Transcorp Plc, Mr. Tony Elumelu, has said that access to electricity is central to Nigeria’s economic growth.
The handing over of the Afam Power Station followed the fulfilment of the requirement of the request for proposal (RfP) and approval granted by the National Council on Privatisation (NCP) after Transcorp had paid 25 per cent of the bid amount (N26.325 billion), a condition precedent to the handing over.
At the ceremony marking the final consummation of the transaction in Abuja yesterday, the Director General of the Bureau of Public Enterprises (BPE), Mr. Alex Okoh, said it was a significant milestone in the process of the privatisation of the last successor generation company of the defunct Power Holding Company of Nigeria (PHCN) and a culmination of several years of painstaking efforts by the National Council on Privatisation (NCP) and the BPE in the face of daunting challenges.
Okoh added that sequel to the previous failed attempts to privatise Afam Power Plc and the approval granted by NCP for the recommencement of a new process, the bureau had commenced a free, fair and transparent competitive process of the privatisation of Afam Power Plc and Afam Three Fast Power Limited, which culminated in Transcorp Power Consortium emerging as the preferred bidder with a combined offer of N105,300,000,000.
He stated that after negotiations, which were impacted, among others, by the COVID-19 pandemic, the federal government, through the BPE signed the Share Sale and Purchase Agreement (SSPA) with Transcorp Power Consortium on November 5, 2020.
He said: "In line with the requirements of the RfP and approval granted by the NCP, Transcorp Power Consortium paid 25 per cent (cash) of the bid amount today November 26, 2020, which was a condition precedent to the current activity of handing over.
"Distinguished guests, I must add that my emphasis on cash payment is to correct some misinformation in the media that purported that the Afam deal is a mere reconciliation of figures between the federal government and Transcorp. For the benefit of those who wish to know, this idea was never accepted by both the NCP and its several subcommittees.
"However, with the payment of the money by Transcorp to the treasury today, we hope this unfounded and concocted information being fed to the public would stop."
He added that the challenges facing the electricity sector in Nigeria are enormous, and it was convincing that the opportunities are far greater and certainly worth exploiting.
He noted that the federal government has demonstrated commitment to create the enabling environment encourage private sector investors to take on these challenges and the opportunities therein to ensure quality and cost-effective service delivery to electricity consumers while also receiving adequate compensation.
While congratulating Transcorp Consortium for emerging the winner, he thanked other bidders for their faith in the process, the government and economy despite the trying times.
The challenge now, he stated, is for Transcorp Consortium to use its proven capacity and pedigree as demonstrated with Transcorp Ughelli Power Plant and Transcorp Hotel, Abuja to transform Afam Power into an exemplary utility company of reference.
Okoh, who gave a synopsis of the power sector privatisation journey, said change did not come easy, adding that the reform is necessary for laying a solid foundation for sustainable electricity supply, loss and cost-reduction as well as service efficiency in the sector other ventures."
In his remarks, Elumelu said the event was an epoch, adding that access to electricity is central to economic growth.
Elumelu cited the contraction of the nation's gross domestic product in the third quarter by 3.6 per cent as part of the pitfalls of a poor power base.
He noted that getting the power sector right is one of the elements needed to correct the negative economic trend.
Elumelu, assured the people that Transcorp Power Consortium will improve the nation's power situation, create jobs and better the lot of its host communities.
He added that the confidence reposed in the company by the federal government would not be taken for granted.
He said Transcorp possesses the human and financial muscles to meet the expectations of the federal government and Nigerians.
Meanwhile, the Minister of Power, Mr. Saleh Mamman, has said that the Buhari administration remains committed to address the liquidity challenges adversely affecting the viability of the nation's power sector.
The minister spoke yesterday while inaugurating the Supervisory Control and Data Acquisition Centre -Distribution Management System (SCADA-DMS) project at the Eko Electricity Distribution Company (EKEDC) headquarters, in Lagos.
SCADA is a computer system in network operations that gathers real-time information, identifies loopholes or breaches in the network and transfers received data back to a central site for analysis and control.
Mamman, who read Buhari’s address at the event, said the present government has noted with grave concern the increased fiscal burden on it, which was occasioned by the shortfall in electricity tariff which are no longer sustainable.
He said the subsidy on electricity, which was being used to support tariff shortfalls, will no longer be extended and must be phased out to promote financial independence of the power sector.
"My (Buhari’s) efforts, via the CBN's Power Assistance Fund (CBN PAF) targeted at supporting tariff shortfalls. Such interventions can no longer be extended and must be phased out to promote the sector's financial independence.
"We are also aware that these tariff shortfall sit on Discos' books and impair their ability to raise capital and invest.
"The federal government is working assiduously to address these financial and fiscal challenges through various programmes such as the National Mass Metering Programme ( NMMP), the Siemens AG Power Project and the Work Bank Distribution Sector Recovery Programme (DISREP), etc," he added.
Buhari said the efforts by his administration were geared towards integrated resource planning in the Nigerian Electricity Supply Industry (NESI).
"We must ensure that there is an alignment of capacity and attraction of investments cross the generation, transmission and distribution components of the power sector's value chain," he said.
Highlighting other efforts by his administration to tackle the sector's challenges, Buhari stated that the Ministry of Power had launched its Central Data Management System, which is a digital platform of the Nigeria Sustainable Energy for All (SE4ALL) initiative that monitors power networks across the country.
He added: "This initiative is part of our efforts to digitalise the Nigerian power sector using new innovative digital technologies and processes that will help address many of the key challenges that our power sector is facing today.
"We recently launched the National Mass Metering Programme supported by the Central Bank of Nigeria (CBN) to urgently and immediately address the metering gap and eradicate estimated billing in the sector.
"Under the initial phase of the Presidential Mass Metering Initiative of supporting the Discos with the much-needed financing for the bulk acquisition of 1,000,000 meters, the installation of which is at no cost to the consumers.
"The deployment has already started in parts of Kano, Kaduna, Lagos and Abuja."
The president, however, called on "valued customers of all Discos to desist from tampering with electricity meters", saying "this is not only on account of protecting the revenues of Discos but also related to the safety of customers as there have been reports of consumers losing their lives in the course of by-passing meters."
Buhari reaffirmed the commitment of the federal government to ensuing that electricity gets to the homes and businesses of all Nigerians, whether underserved or unserved.
According to him, in the area of off-grid electricity supply, the federal government recently unveiled the five million solar connections programme, through the CBN's Development Finance Department, adding that this is open for application.
He said upon completion, the five million programme will expand energy access to 25 million individuals by providing five million new connections through the provision of solar home systems (SHS) or construction and operation of mini grids.
Earlier in his welcome address, the Chairman of EKEDC, Mr. Charles Momoh, said the achievement by the Disco was a proof that "the federal government's power sector privatisation programme was a laudable decision, as it is transforming this sector and the Nigerian Electricity Supply Industry."