Experts raise concern, seek review of power sector

Experts in the energy sector have raised fresh concern over the poor state of the Nigerian Electricity Supply Industry (NESI), saying the sector may collapse anytime soon unless government embarked on an urgent holistic review.

The experts, gave the warning at the 2019 Energy Policy Roundtable on “Nigeria’s Electricity Challenges and Policy Bottlenecks,” in Abuja, recently.

They insisted that the lack of effective power sector governance, lack of cost-reflective tariff, poor regulatory framework, aggregate technical, commercial and collection (ATC&C) losses, non-adherence to contract and performance terms, negative treatment of consumer, lack of validated and centralised data, metering challenges, and estimated billing among other challenges would totally impede growth except they are urgently addressed.

The stakeholders equally raised concern over the disconnect in the sector, the huge infrastructure deficits as well as the inability to provide meters to consumers five years after the sector was privatised.

Specifically, Project Director, Taleveras Power Ltd., Belije Madu, argued that “Industry contracts are not enforced. There is visible lack of coordination and engagement between sector players. Investment decisions are made without consultations with the boards of distribution companies (DisCos). Investment processes are not well structured. There is a need for strong cross-cutting corporate governance across sector and consistent cross-sectoral communications across the value chain.

“Nigeria’s electricity supply industry is experiencing policy incoherence and gaps. Several organisations are currently making policies for NESI, without any over-arching policy harmonisation, thus resulting in policy bottlenecks.

Rural Electrification Agency (REA) is making policies on off-grid electricity supply for underserved areas. Transmission Company of Nigeria (TCN) is making policies on levels of electricity supply (TCN Expansion Plan). Eligible Customer policy has been declared, but not been implemented.”

Speaking on estimated billing, energy theft, and metering contribution, Partner, Nextier Power, Emeka Okpukpara, noted that while the world loses about $89.3 billion annually to energy theft, emerging markets such as Nigeria lose $58.7 billion.

He expressed concern on the kind of meters being used in Nigeria, noting that while it was feasible to address power by-pass through smart meters, the types of meters being used are designed to provide back end information.

Okpukpara and the Managing Consultant at Energy Market And Rates Consultants, Chibueze Ekeh, said challenges bothering on energy theft and estimated billing can be addressed provided government reviewed and remodelled estimated billing methodology.

While speaking on “Addressing the challenges facing the Nigerian Power Sector: The Role of Various Stakeholders,” Senior Manager, Market Competition & Rates, Nigerian Electricity Regulatory Commission (NERC), Aisha Mahmud, stressed the need for additional funding as bridging loan to the Nigerian Bulk Electricity PLC (NBET). This will enable it guarantee a minimum invoice payment to GenCos above the current level of payment NBET receives from Discos, adding that payment under this intervention should be made directly to Genco’s creditors – sas companies and banks, Mahmud noted.

She stated that there was need for government to commence enforcement of existing laws that criminalise power theft and ensure prompt payment by heavy public defaulters.

“Activation of market or industry contracts will enable sector participants to be held accountable for operational and managerial performance; market contracts should be made fully effective concurrently with the implementation of new tariffs on first February 2017 in order to forestall further build-up of shortfalls in the industry and ensure financial discipline. Contract security (i.e. bank guarantees) should be strictly implemented in line with the provisions of the Market Rules, TEM Supplementary Order and industry agreements,” she added.

Research Fellow, Centre for the Study of the Economies of Africa (CSEA), Precious Akanonu, who insisted that gas-to-power challenges required urgent attention, while reiterating the need for proper coordination in the industry.