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N120b intervention will address Nigeria’s electricity challenges, say experts

By Kingsley Jeremiah, Abuja
29 April 2021   |   4:20 am
Stakeholders in the electricity sector, yesterday, said the Federal Government’s intervention in the power sector, especially efforts being made to address challenges...

Electricity workers. PHOTO: Amos Kobor

Decry estimated billing

Stakeholders in the electricity sector, yesterday, said the Federal Government’s intervention in the power sector, especially efforts being made to address challenges limiting the capacity of distribution companies (DisCos) is necessary to improve electricity supply.

The experts also insisted that funding by the Centre Bank of Nigeria (CBN) hovering around N120 billion could drastically reduce the lingering challenges of arbitrary billing of end-users and ensure evacuation of stranded generation capacity.

With an estimated metering gap of five million, electricity customers had repeatedly raised concerns over arbitrary billing. The Federal Government through the CBN last year launched a mass metering programme to improve revenue collection and ensure a lasting solution to estimated billing.

The Guardian gathered yesterday that at least N3.6 billion has already been disbursed to the 11 DisCos by the apex bank.

According to the Nigerian Electricity Regulatory Commission (NERC), Nigeria has a total of 8, 310, 408 registered active electricity customers. Since the power sector was privatised seven years ago with metering standing as a Key Performance Indicator (KPI), only 3, 704, 302 (44.6 percent) of electricity customers have been metered, leaving out 55.4 percent.

While the distribution companies have been unable to dispatch generated electricity due to weak infrastructure, the power generation companies (GenCos) told The Guardian that they have lost as much as N1.2 trillion to poor capacity utilisation and the country’s inability to transport over 21,184.62 megawatts generated to end-users.

The Special Adviser to the President on Infrastructure, Ahmad Zakari, had stated that “there is N120 billion capital expenditure (CAPEX) fund from the Central Bank for DisCos to improve infrastructure for the tariff classes similar to the ongoing metering programme,” Zakari said.

PwC’s Associate Director, Energy, Utilities and Resources, Habeeb Jaiyeola, said that CBN intervention in the sector remained the right step because, given the current installed capacity for the generation companies in Nigeria, the inability of the Discos to completely distribute and collect payment would continue to hinder the ability of the country to fully leverage the installed capacity.

He added that: “government’s continued support to Discos will have an overall impact on the sector to facilitate the required progress, adding that the federal government also has equity ownership in the DisCos needs to see to their successes.

“Previous intervention funds have been utilized to settle collection challenges. The plan to use this intervention for infrastructure development is a step in the right direction,” he stated.

Jaiyeola advised the government to clearly outlined and monitored the intervention to ensure it achieved projected objectives, adding that the National Mass Metering Programme may need to be checked against some of its set objectives in terms of coverage, availability, and completion time.

“This is an important process for any past and future intervention programme in ensuring set objectives are achieved. An assessment of the impact of intervention funding in the power sector also needs to be looked into. While government intervention continues to be an important sector catalyst, monitoring impact will ensure government scarce resources are appropriately channeled for the benefit of Nigerians,” he expert said.

An energy expert, Michael Faniran noted that metering remained critical for the power sector as it would enable the sector to generate enough revenue to address the liquidity gap in the sector.

According to him, without government intervention in bridging the metering gap, DisCos may not show the willingness to end arbitrary billing of consumers.

Faniran noted that there is a critical need for government to support infrastructure development in the sector being also an investor in the distribution link, adding that without the infrastructure that would reduce collection challenges the sector would not be able to fund gas and other links in the sector.

The expert decried the attitude of the DisCos in the sector, stating that the sincerity on the part of the investors to end estimated billing of consumers was lacking.

National President, Association For Public Policy Analysis (APPA), Princewill Okorie noted that initiative that would end estimated billing of consumer remained a critical development, adding that accountability was critical in the power sector.
Former Chairman of Nigerian Electricity Regulatory Commission (NERC), Sam Amadi said the intervention by the CBN to meter consumers should be supported.

He, however, stressed that there was a need for NERC to speak more on funding for the sector and also ensure that its capacity to regulate expenditure and ensure it goes to what is relevant and prudent should be a critical factor in funding support for the sector.

“I support the funding for meters but I doubt if it will solve the problem because the DisCos will use the fund to largely replace bad meters and control revenue loss. But the rebate of unmetered customers will remain high and undermine any movement to a cost-reflective tariff.

“Government should directly mandate full metering in a large scale and allow discos to charge whatever tariff that is necessary and no longer fund DisCos. Meter Nigerians and let them pay the right tariff and let discos live or die by their own efficiencies. If they fail the efficiency test you unbundle them,” Amadi said.