Discos have no excuse not to execute performance agreement, meter customers, says NERC boss

Dr. Anthony Akah is the acting Chief Executive Office/Head of the Nigerian Electricity Regulatory Commission (NERC). Prior to his appointment, he was the General Manager (Director), Consumer Affairs at the Commission. In this interview with EMEKA ANUFORO in Abuja, he speaks on the state of the electricity power sector and plans for its revival.

What is the way out of the current electricity supply challenge?

The template is still the full implementation of the Electricity Power Sector Reform Act.  One of the challenges is the blowing up of the gas pipelines. At the same time, we have a framework to attract investors into other renewable sources.  We have a feed-in tariff framework. We have also done a diagnostic check on the regulatory requirement. To the extent possible, we have reduced the burden for getting licenses of embedded generation.

We have regulations for clusters of embedded generation that, if possible, could be at an affordable rate where we have willing sellers and willing buyers; where we could have incremental power to Nigerians. This has nothing much to do with exposures to the gas infrastructure to be raptured.

Most of our turbines depend on gas and to the extent also that most of our generating plants are not sited close to the source of gas. To that extent, you have a longer area to pipe in gas to the generating plant.  When this happens, you have exposed that expanse of gas pipelines to potential attack.

But one of the things that the Minister of Power has initiated is for us to have a complete energy map of the country and develop policies that would ensure that potential investors key into areas that have the best potential for the source of energy. With this, you won’t have a situation where people would site a gas pipeline in Katsina and then you are piping the gas all the way from down South. With the kind of energy mix that we are looking at, which the Hon. Minister has set up a committee to look at, we should be able to map the country.

For instance, in the South-South, we should be looking at the quantum of gas, the density of the area, its demography, the evacuation point, and the unmet energy.  We will do same across the country.  At the end of the day, we would find the necessary regulatory tools that would encourage investors to go to those areas and not necessarily them picking where they want to go. What is happening now is that there are pipelines that run a longer distance before they get to the plant.

There is hope.  There may be need for the gas pipelines to be ringed in such a way that if you disrupt one portion, a minor repair on the other side can serve for the portion that was destroyed.

The way the gas pipeline is now is such that if it is destroyed, it affects the whole chain down the line. I know that the Ministry of Petroleum is working on building more gas pipelines and trying to insulate them from such attacks.

Why is it so difficult for Discos to meter customers despite all the directives from NERC?

The initial problem was that they said they did not have a cost reflective tariff and their performance agreements were predicated on having a cost reflective tariff. Those things are no longer excuses for us as far as we are concerned.  We have done a critical analysis of the metering so far done since they took over and it was glaring to them that they have not done anything significant. The reason behind that is that we want to set the ball rolling to get the Discos to do what they need to do, especially with respect to metering. As a regulator we have, to a great extent, provided the necessary environment for distribution companies and operators in the sector. We have a reasonable tariff now. We have also gone beyond our regulatory purview to trigger a CBN intervention fund that came in, working with other stakeholders.

We are hoping go get the CBN Part 2 funding. Of course, the Minister of Power has also been helping us, coordinating and guiding this initiative.

We have gone to the point of also helping Discos hopefully to be able to have their MDAs debts taken care of. It has not been taken care of. We are hopeful that with the scheme that we are working with alongside the permission of the Minister of Power, the Minister of Finance and the Office of the Vice President, we are hopeful that the framework would come out in respect of the MDAs debts, both the accumulated ones and going forward.

This time around, distribution companies should perform on their own agreements. We have set up task teams. One task team will focus on the issue of metering, with special emphasis on CAPMI. For those consumers who have paid under CAPMI and have not been refunded, that will be considered as an issue.  We are currently collating all the data and after that we will do verification. If they are found guilty we will sanction them severally and ensure that serves as a deterrent to such occurrence.

We also have a task force that is focused on estimated billing. We want to make sure that Nigerians are billed according to the estimated billing methodology.  We also want to make sure that Discos adhere to our Order, that if a customer that has no meter does not pay his bill because he feels that he was irrationally billed, that he has the right to reject that bill. He will only pay the last bill which he accepted to pay and then submit the bill that he doesn’t believe in to the NERC’s redress mechanism for us to determine.

We have a taskforce that will make sure that on no account would a Disco disconnect them or estimate them based on that decision of theirs.  In all those circumstances, we want to make sure that the distribution companies adhere strictly to the regulations of the Commission. We also want to make sure that the CAPMI that the Disco claim they are doing are done strictly in line with our regulation of CAPMI and is not a mere acquisition of meters by the Discos and selling back to the consumers. We want to be sure that they are done by our vendors. A whole lot of fieldwork and data analysis are going on within the Commission and in the field to make sure that things are done well.

What of the allegations that Discos are rejecting power?  That was supposed to have stopped with the new tariff?

We have got that feedback and we are inviting all the parties responsible in find out about that, because there are penalties that are spelt out in the regulation. Until we have done detailed analysis, I will not be able to make further comment on that. But they have no right to reject power.

Electricity workers recently made a call for the reversal of the privatization hinging their argument partly on the alleged inability of the new owners to muscle the financial capacity to turn around the sector. Is this a possibility?
The privatization that we are doing is only less than three years old. It is only two years plus. To totally change a sector that was almost neglected for more than twenty years is not something that we can do in three years.  You don’t stop a baby from taking its first step because it fell.  The sector is still crawling, no doubt about it.  It is now crawling on a faster pace. It has taken its first steps to start walking and fell. It does not mean that we will not encourage more attempts.  There is no going back on privatization in our own opinion. This is not government’s opinion. It is our opinion at NERC. We think that the sector is on the right track.  We need to be consistent in the policy implementation. We need to ensure that regulations that are done in line with the electricity power sector reform act are followed.

In all countries that passed through the kind of privatization that we did, that have the same kind of characteristics that we have, it took more than twenty years before there could be significant improvement. We are making improvement. We recently had 5000MWs plus, which was the highest in the nation before some Nigerians went and blew up a gas pipeline. So, it is a combination of things. Saying that we should review the privatization exercise is not the best thing for the country. We all know that the financial inflow that comes in Nigeria now is seriously being affected. You are aware also that the foreign exchange strength of the Naira has seriously gone down. You are also very much aware that we have constraints in our foreign reserve. To invest in power involves enough money and enormous foreign exchange inflow.
It is not in the best interest to reverse privatization. We think that it would be a disaster for the country.  Right now transactions are done strictly on business basis, and not because you got a letter from somebody employing you.  We should recall that in the past we had over 47, 000 staff producing less than 3000MWs for the country.  Less than 30% of the number or thereabout were technical staff.  The others were non-technical.  Now things are done professionally.  In some Discos, you can stay in your house and recharge your energy. A lot of things are coming up.

People should be mindful of the fact that privatization has come to stay. It is the best thing for the country.  We are lucky that we are in an era where we also have a government that has a strong political will to ensure that we all do what we need to do. I don’t think it is something that we should even contemplate.  We are on the right track. It is a matter of time and we will get there.