Archive Electricity services in 2014

Electricity services in 2014

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phcn-300x279The arguments in support of the privatisation of the power sector had painted a picture of a future where electricity would be available 24 hours of the day and seven days of the week. Tariffs would likely go up initially but over time would come down to reasonable bounds. Private sector operators were supposed to bring in new finances to revive the sector considering the poor funding from the public sector over the years. Also, they would bring in new efficiency from enhanced technical acumen to turn around the fortunes of the privatised companies. Thirdly, the expectation of a new leadership and managerial culture would improve the day to day operations of the privatised power companies.

It may be argued that it is too early in the day, just after three months, to begin to evaluate the performance of the privatised companies. But as morning starts the day, it is imperative for the new owners to begin to show a sense of direction that will reassure the public about the possibility of realising the big picture painted above in a few years from now.  Many Nigerians spent the Christmas holidays in darkness and are unhappy about the state of the sector. At least, the companies should present a road map for progressive improvements. Things must definitely begin to improve and the era of storytelling should be over. The phase should be one of rolling up the sleeves for work and action to improve service delivery.

First, the Distribution Companies ought to present an agenda to ensure that every customer gets a prepaid meter. It makes no sense talking of estimates and having technicians come to read meters the old way. Electricity cards should be available on the streets the same way telephone recharge cards are sold. Apart from the convenience to the customers, this would help the DISCOs to improve their finances, project their actual cash flows and financial viability which will facilitate raising new funds to further improve service delivery. We have heard of tens of billions needed to ensure that every customer is properly metered; the way the figures have been reeled out suggest a despondency of throwing hands into the air. Rocket scientists are not needed for the provision of meters. It is a question of getting the required money and manufacturing companies abound that can supply and fulfill the requisite orders. The regulator – the Nigerian Electricity Regulatory Commission should drive the process and make it clear to these companies that Nigerians will not take excuses.  In the event these companies do not have the financial resources to improve services, this will question the credibility of the process that selected them as having the financial muscle and as core investors. DISCOs and the GENCOs should also be ready to invest to improve services. The story of the long gestation period of contracts to improve the power sector is old and worn. This story line has been in the public domain for close to 10 years and Nigerians have given the benefit of doubt to succeeding administrations.  But it holds no more water in the present day.

Even if they do not have the resources, the capital market is open for them to get their books together and raise equity from Nigerians to improve services. The idea of running to borrow from banks charging double digit interest rates would further compound their financial problems and in the long run, will escalate tariffs which Nigerians may likely resist. The investor greed that suggests that the investor should keep all his profits and the recurring poor governance structures that deter companies from going public should be overcome if the power sector is to make progress. Also, no company worth its salt should be thinking of returns and profits for its investment in the next one or two years. This is a long haul investment where patience is a requisite virtue before the big profits begin to roll in.

NERC and the DISCOs should also work out transitional arrangements where individuals, families and communities that invest in distribution equipment and materials will get reimbursement. The old story of the unavailability of materials and equipment needed to restore electricity is still in vogue and people are still providing equipment and materials that eventually facilitates the collection of tariffs by DISCOs. In this regard, there is an unresolved issue of rural electrification projects built and financed by communities which the government has purportedly handed over to DISCOs. This cannot be a fair way of dealing with the self-help and community spirit of a people who should have access to electricity services financed by government. The government owed them that obligation but failed to provide the service and thereafter “sold” what did not belong to it in the first place. The legal maxim is nemo dat quod non habet – you cannot give and pass legal title to a property that did not belong to you in the first place. Law suits may be on the way if this particular issue is not resolved in a fair and reasonable manner. On another note, there is still evidence that nothing has changed – the old managerial structures are still there. DISCO staff are still going about their duties the same old way and in some cases demanding gratification for work done. Nigerians expect the DISCOs in particular to recruit more capable technical hands, invest in manpower development and develop a code of conduct and ethics for their staff especially the staff that interact with customers on a day to day basis.

It is therefore imperative that the Jonathan administration realises that the power sector reforms remains one of the key issues upon which it will be evaluated. If the President and his team are able to successfully ensure Nigerians access to 16 hours of electricity every day, history will be kind to them. Thus, NERC, the Minister for Power and relevant Presidential Committees should see that all obstacles for the success of the reforms are dismantled. The unavailability of gas for power generation which has been identified as one of the challenges for the sector can be successfully tackled by interagency collaboration and also getting the legislature to fully support the reforms. The Ministry of Petroleum  Resources can play a key role in this regard and the passage of the Petroleum Industry Bill by the National Assembly will also be imperative. Also, there is also nothing stopping the Central Bank of Nigeria from using its powers to secure cheap funds for the sector. Improvements in electricity services are possible and it is only the political will that will drive the process.

– Follow me on twitter @censoj

By Eze Onyekpere

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