Vanguard (Lagos)

Nigeria: Our Expectations of the Electricity Distribution Companies in 2013

There are 11 electricity distribution companies in Nigeria and the public comes into contact with the electric power sector through these distribution companies. We have great expectations with respect to the performance of these distribution companies during 2013.

Each time power supply goes off in our communities there is a cry of despair, and whenever power supply is restored we express the hope that we would have supply for what we consider a reasonable period of time. We are unhappy when supply comes at low voltage and when phase failure occurs.

When the rains come accompanied by winds and lightning, power supply goes off. During 2013, the electricity distribution companies would be free of the constraints of the national budget. The distribution companies would be expected to invest appropriately in insulation systems, protection systems against lightning and short circuits and the replacement of the four-wire 415V distribution system with 11kV distribution using 30kVA transformers suitable for two or three buildings to a transformer.

It would not be necessary to switch off power supply when it rains if the distribution companies use the 11kV distribution system with appropriate protection systems. Pilot schemes using the 11kV distribution system are in place in parts of Surulere and Agege in Lagos State.

The Nigerian Electricity Regulatory Commission, NERC, issued the Customer Service Standards of Performance for Distribution Companies in 2007. It is obvious that there are no penalties for failure on the part of the distribution companies to meet the standards.

NERC should introduce penalties to be paid to NERC by the distribution companies whenever NERC upholds a customer's complaint. A number of the performance standards are about meters. However, there are not enough meters installed in the premises of the customers of the electricity distribution companies.

It is worrisome that NERC has issued a formula for the computation of estimated bills for customers without meters. It gives the impression that estimated bills are likely to remain as a permanent feature for several customers for some time. There are two factors that may be responsible for the lack of meters, the substantial amounts of money needed for the procurement of meters and a court action by a company seeking to enforce its right in respect of meters.

I believe that NERC should in the public interest advise the Ministry of Power to seek a negotiated resolution of the court action. The Supreme Court recently delivered a judgement on a 2004 transaction in respect of privatisation in the aluminum sector. The period that has elapsed since 2004 is a loss to the Nigerian public. The customers of the electricity distribution companies should be spared having to wait for several years before they can obtain meters.

The Multi-Year Tariff Order, MYTO, recently implemented by NERC has brought increased revenues to the electric power sector. However, it is only one of the electricity distribution companies that is able to cover its costs from revenues received from customers.

The other ten distribution companies continue to receive subventions from the Ministry of Power. The distribution companies should be able to cover their costs when revenues are twice the present levels. The progression of increases in the MYTO should bring about the enhanced revenues within a few years without any significant increase in the power available from the national grid.

Customers may be left to cope with increasing tariffs and an inadequate supply system. The Managing Director/CEO of each distribution company should prepare an audited balance sheet reflecting the state of affairs of his/her company as at December 31 2012.

It is expected that when the preferred bidder for each company assumes management control, they would within a few months tell us what they found in each company and what their investment plans are such that customers have improved services to match increasing tariffs.

The electricity distribution companies have to find electric power generated outside of what is available from the national grid. There are indications that if the electricity distribution companies are willing to work in partnership with the state governments, there would be marked improvement in the power supplied to customers in some states.

For example, there are two small power stations in Lagos State operated by private sector interests for the exclusive use of the Lagos State Government, LASG. It would be possible in at least one of these power stations for an expansion of the generating capacity. The communities close to the station could have 24-hour supply everyday.

The LASG has plans for some other small power stations which could benefit the communities close to these power stations. Over the years, the state governments have established distribution networks for rural electrification and they have also provided transformers for use in urban areas.

During this period, the electrical distribution companies belonged exclusively to the Federal Government of Nigeria, FGN. With privatisation, the electricity distribution companies should ask the state governments to have equity participation and in return the state governments will make capital investment in the distribution networks and in the provision of generating capacity outside of what is available from the national grid.

By DR. AKINTOLA OMIGBODUN

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