Power interrupted: Panic at the DisCos
Nigeria’s electricity sector has performed below expectation, as evident in the more than 80 million Nigerians who do not have electricity in their homes. Systemic issues currently affect all aspects of the power value chain, forcing Nigerians to rely on self-generation of power. The long-standing problems have persisted, not for want of attempted solutions, but in spite of these. We have had many rounds of exciting initiatives and intervention: regulatory reforms; an omnibus power sector reform Map in 2005 to introduce competition and scale up the efficiency and effectiveness of the power sector and opening up the sector to privatisation. Yet, electricity consumers continue to face unreliable supply, distribution utilities are in poor financial health, and, most problematic, some areas are faced with no access to power at all – 13 states in the country reportedly have below 40% access to electricity and, according to the World Bank, Nigeria still ranks second worst in the global electricity access deficit charts.
The utility failures point to an unwillingness or perhaps an inability by the distribution side of the business – the DISCOs – to meet the expectations of stakeholders in the provision of access to reliable power services to all customers and yet they operate as business as usual.
There are several issues on the distribution side of the business – from – old, obsolete networks; lack of maintenance of network equipment; poorly trained manpower; poor customer data; low meter penetration.
According to NERC in June 2018, only 42% of registered electricity customers had been metered in the entire country.
There are also health, safety and environmental issues and a near absence of investments despite the commitment of the DISCOS and their investors in the Performance Agreements signed as part of the privatisation. To top it off, oftentimes, billing systems are faulty and there is a complete disregard for customer care. Some urban, peri-urban and rural communities have no access to electricity at all. This comes at a huge loss to the average Nigerian and businesses; SMEs collapse under heavy utility cost when available and perish with 24-hour diesel bills.
The DISCOS collect revenue for the entire power ecosystem – however, due to the technical, collection and other losses incurred by the DISCOs, liquidity constraints have manifested across the entire power value chain creating bottlenecks in reigniting economic growth. There is huge concern about what appears to be systemic partisan practices within the sector, which are harming access to electricity, confidence in the market and basic quality of life. Regulation is the only way that this can be overcome – however this is the missing piece of the puzzle. The Nigerian Electricity Regulatory Commission (NERC) does not appear to have been effective in setting proper parameters for operations and intervening in ways that clearly promote the interest of the helpless consumer.
The goal should not be to protect the monopoly DISCO or generation or transmission company. It should be to protect the consumer from the failures of sector operatives.
To support the expanding access to modern energy services in a timely and sustainable manner, regulators should ensure a level playing field when it comes to willing buyer, willing seller – the core of how we approach energy supply from infrastructure to the end user has to change – if the DISCOs are unable to provide power, then new entrants and power providers should be encouraged to enter the sector and provide the necessary infrastructure and services where they are able to meet the consumers’ needs, especially in areas that are not adequately served. The long-term interest of Nigerians should be the priority – let’s move on from business as usual and work towards the day when we do not have to jump in joy when power from public supply resumes, whether the resumption is signaled by chants of ‘UP NEPA’ or by a blaring siren. These need to become very distant, unpleasant memories.
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