20 February 2004
The task of meeting the electricity needs of the Nigerian people has been an onerous one for the National Electric Power Authority (NEPA). In this discourse, Emeka Ugwuanyi examines what makes the incidence of unbilled energy or lost energy an intractable one and its implications for achieving uninterrupted power supply by NEPA.
It is incontrovertible that across the world, reliable power supply has proved to be a major index of national development and industrialisation. Particularly, now that economic activities are technologically driven, Nigeria being part of the global village has to strive to keep with the trend by having access to efficient power supply to meet its developmental and industrial needs.
However, despite various reforms carried out in NEPA, the nation's electricity company, over the years, to sustain stable electricity supply have remained a mirage as blackouts and power outages remain perennial
NEPA Managing Director, Joseph Makoju is no less concerned about this development. His efforts to turn NEPA around to meet the expectations of Nigerians have not yielded the right result as was the case when he was called upon to revive the West African Portland Cement Company (WAPCO) some years ago as the managing director. It was gathered, that a lot of factors are responsible for this under-performance, among which include sharp practices in the company, corruption among the staff and key customers, and lack of transparency and commitment of government to policies aimed at improving services and finances of the Authority.
That aside, investigation also revealed that among other factors impeding efficient power supply, unbilled energy (electricity supplied but couldn't be accounted for), is the most outstanding. The problem of unbilled energy presently appears to have defied all efforts to curb it. When the Federal Government announced its plans to privatise NEPA few years ago, Nigerians thought the pronouncement will whip up efforts of the Authority to check its deficiencies. But even in the face of this pronouncement which threatens the existence of the power utility company as a single entity, and the job security of its employees, NEPA remained helpless as it is yet to record a remarkable and sustainable improvement in its services .
When the Federal Government resolved to privatize NEPA, it had tied its reason for the privatisation of the company to non performance. It doesn't totally mean that NEPA has not been making efforts to excel, but such efforts are not remarkable because of the enormity of revenue loss through unbilled energy.
As a company expected to make returns on its business, and has failed to live up to expectations, government decided to stop funding NEPA. Ever since this decision was taken, government's funding of this utility company has immensely shrunk. The implication is that NEPA facilities are steadily decaying as the company now can hardly generate enough revenue to maintain the existing facilities and pay some of its important bills, let alone procuring new equipment to replace the dysfunctional ones.
The small subvention from government and revenue generated by NEPA are inadequate to enable the company meet the desired service delivery and its internal bills as revenue loss incurred through energy loss is not abating.
The Managing Director of NEPA had disclosed that government subvention in the last two years has fallen by over 60 percent. In 2002, government's budget for NEPA was N35 billion but only N28 billion was released, while in 2003, only N5.5 billion was releasecd from a budget of N33 billion.
Vanguard investigated the issue of unbilled energy and discovered as much as 35 per cent of the Authority's total electricity supply is lost in trasmission. In some NEPA districts at times, as much as 45 percent of the grid supply is lost. In this case, 45 per cent of the expected revenue has certainly been lost by the district in question and NEPA as a company.
As a result of this energy loss, NEPA loses a minimum of N2 billion revenue every month nationwide. This problem coupled with the ever decreasing government financial assistance and soaring debt profile, put at N72billion has almost brought the national power utility company to its knees.
Informed opinions maintain that if the N2 billion loss every month incurred as a result of unbilled energy can be made available to NEPA each month, in addition to the company's monthly revenue, under an astute manager like Mr. Makoju, this will certainly aid the turn around of the ailing utility company. However, such a change can only endure if the level of corruption among the some members of management and staff of the company is significantly reduced. Some NEPA staff are alleged to be at the centre of some corrupt practices that exist in the Authority which are carried out with the active connivance of some fraudulent customers.
On what is responsible for this energy loss, investigation reveals that energy losses can be as a result of either technical factor, non technical factor or both. In the case of NEPA, it's both and at a very high level too. Investigations further revealed that across the world there is energy loss but at the barest minimum level and such losses are caused by technical factor.
Technical losses are said to be caused by faulty distribution transformers, bad connection to the grid, overloading of the transmission lines and general system limitations. System loss, however, is said to be internationally acceptable because it is a transmission and distribution facilities problem.
In NEPA, as the energy loss caused by technical factor stands at a maximum of 10 percent, that which is lost to non-technical factor is between 25 and 30 percent.
On why the non-technical losses is high, industry operators particularly the marketing and revenue generation experts, explained that the level of corruption in the company is very high and this is central to other factors that are responsible for energy loss under non-technical losses.
These factors include illegal connection which according to them is high in Nigeria. Aside engaging in sharp practices to evade payment of electricity bills, these experts noted that many Nigerians still believe that a utility like electricity should be enjoyed free, and should be part of government's contribution to citizens' welfare. This reason accounts for why the customers, instead of paying their electricity bills would choose to bribe the NEPA staff or employ the services of artisans to fix their wires whenever they (customers) are disconnected for default in payment of their bills.
Revenue Cycle Management operators before the unbundling of NEPA in January, told Vanguard that most of NEPA's customers bypass their meters, tamper with the meters and render them ineffective while a lot more of the customers illegally connect themselves to the grid without meters. Bad metering and wrong tariff system, according to them, also constitute part of the non technical losses.
The point to note here, is that revenue loss incurred by NEPA through sharp practices appear as a self-inflicted damage because NEPA staff despite being paid salaries by the Authority, play vital role in the fraud despite its attendant consequences . These staff connive with the customers to perpetrate this illegality creating a fertile ground for the crime to thrive. Still no action seems to be taken against these staff perhaps, because they have a godfather in NEPA management or in government.
In view of these corrupt tendencies, there are indications that the ongoing unbundling and privatisation processes is as good as placing the cart before the horse. Informed opinion poll carried out by Vanguard Energy also indicate that until corruption is well tackled to ensure that revenue raised is commensurate to energy supplied and government shows a good measure of transparency in its funding and unbundling of NEPA, ongoing steps to privatisation may not be successful. The summary of opinion polled further contend that unbundling and privatising an establishment which is yet to meet considerable service delivery is outrageous because the investors will charge outrageous tariff, may not render satisfactory service and will not be able to extend electricity to Nigerians who may need it in future.
Until a fundamental step is taken towards addressing the issue of corruption in the company, by enthroning transparency, the efforts at repositioning the Authority through privatisation may end up a fiasco, those polled also contend.
Before the commencement of the privatization process, NEPA was perceived by Nigerians as a drainpipe through which government siphon public funds. Those polled further contend that if government actually spent on NEPA, the money it claims to have spent since 1999 to date, there could have been tremendous improvement in its service delivery but since this is not the case, they do not believe government claims on the authority's expenditure profile.
However, the step taken by government to privatise NEPA has made the management for the first time to open up, getting the Nigerian public to know the true state of the Authority. Previously, its activities were deeply shrouded in secrecy, concealing the prevalent corruption in the system.
Therefore, to make NEPA efficient as a public or privately controlled power utility company, a critical measure should be taken to purge the system of corrupt and inefficient employees. The policy of "no sacred cows" in NEPA should not be mere lip service as it obtains now.
It is expected that staff of the new NEPA particularly the marketers will do their work properly, identify customers who are not connected to the grid (new and illegally connected customers) and connect them properly.
Ensure that customers comply with all regulations including commitment to payment of electricity bills. Above all, a policy that should make provision for NEPA staff to be well motivated and remunerated, should be put in place while there should be a regular maintenance of NEPA distribution and transmission equipment to check the incident of technical losses.
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