Uddin Ifeanyi
19 July 2004
opinion
Lagos — The National Electric Power Authority (NEPA) is a gratuitous impost on the national wallet. Like a succubus, it slowly drains the life force from the nation: and it is at its most pernicious when the sweltering weather beguiles the innocent to sleep. Take a walk along downtown back streets and alleyways at night and the challenge to a nation from its inability to meet its energy/power needs is graphic. In the more genteel locations spread round the country, the threat from power outages is even more physical. Everywhere, a patina of smog from the plethora of low-power generating sets threatens an upsurge of respiratory tract ailments. How did we as a people arrive at this sorry pass?
With three hydro-based stations and five thermal stations, the nation has on its books approximately 5,900 megawatts (MW) of installed electric generating capacity. But (according to NEPA) with 13.9% of this installed capacity over 20 years old; 57.1% over 15 years old, and 79.6% over 10 years old, it is scarcely surprising that the power sector operates well below its estimated capacity, or that power outages and brown-outs are a frequent occurrence. Visit NEPA's website, and you invariably run across this gem: "Friday August 29, 2003, NEPA hit a new generation peak of 3,479.3 Mega Watts of electricity." Although the authority celebrates this as "a significant achievement in the history of electricity generation in Nigeria", before pledging itself "to re-position to improve on energy generation and performance in our mission to meet (its) stakeholders' expectation", it is more significant that less than 10% of rural households and 40% of Nigeria's total population have access to electricity.
The cost of setting this situation aright has been put at sums well beyond the current capacity of both NEPA, and the government that it is an agent of. However, the issues which electricity generation, and transmission in the country confront go way beyond the N10 billion price tag attached to the sector's investment needs going forward. You throw money at NEPA as is, and it would doubtless be like throwing good money after bad. So, what's the proper solution to a problem this bad? For starters, it helps to remember, that when once you fall into a hole, of the alternative remedies, digging your way out ain't a particularly bright one. Ultimately, there is an overriding case for structural reforms in the nation's power sector. Reform along the lines contemplated would facilitate the free entry and exit of independent power producers into the sector; it would permit the hiving-off of the transmission facilities owned by the current monopoly provider, and set equal terms for competing suppliers to feed into the grid; it would create a framework for integrating micro-power plants into the national supply infrastructure; it would establish clear parameters for the operation of a proper regulator for the power sector; etc. A properly packaged reform agenda would do these and more, in appreciation of the travails of the nation's small and medium enterprises (SME) sector, whose growth prospects have been choked by the huge cost of building their own power generating infrastructure. It would do these even more for the sake of the many struggling quoted corporations, whose huge infrastructure costs have to be borne out of profits, since, domestic demand (depressed by failed SMEs) won't absorb further price increases.
Apparently in response to these needs, NEPA recently changed both its business model and the nomenclature of its functional operatives, and set stretched revenue-mobilisation targets for its field personnel. Ordinarily, these would have been fair precursors to the much-needed reform of the sector. But, the authority's business model is a major service-delivery problem. It is an exemplar of how not to do business. Start with its policy on electricity meters. These devices, ordinarily establish each subscribers consumption of electricity per kilo watt hour (Kwh). They are thus useful to NEPA only to the extent that they faithfully capture the authority's income stream. Since revenue stream from electricity consumption is actually NEPA's cash cow, these meters ought to be given to subscribers free. In a competitive environment, such a policy, and the accompanying switching costs will help an entrepreneur lock customers into the grid.
Instead, NEPA's meter policy is an oddity. Subscribers actually buy them, but never own them. They are so expensive, the mass market makes do without them; resorting instead to illegal connections. Then the meters do not run (remember you haven't had power for days on end). Yet you receive bills for the same amount every month. And when you inquire about the inappropriateness of this? You get told that NEPA has some arcane calculus by which it determines how much someone of your status who lives in a neighbourhood like yours ought to pay. Arbitrary? Grossly inept, at best. Down right criminal at worst! Why should I or any other Nigerian for that matter, pay for service not rendered? If NEPA were not a government agency, it would long since have been hauled before a chief magistrate on a felony charge. Worse, by establishing its revenue-generating process on an arbitrary basis, NEPA invests its personnel with the impunity, which invites subscribers to renegotiate their statuses with NEPA, in a bid to reduce the capricious tariffs to which they are exposed. In other words, in the absence of an objective method of assessing each individual domestic unit's power usage (when last was your meter read), NEPA's current practice invites subscribers to suborn officials of the state.
Why contend with this level of ineptitude, when such, however, is the state of the operating technology in the industry, that meters outside this country are read on-line (via the very same cables which bring electricity to the hearth), and instructed to cut-off customers who are in arrears of their payments. It is time we stopped accepting the "Nigerian factor" as short-hand for the perpetration of all manner of crimes against the people.
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