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DisCos and market targets: How Nigerian electricity companies are ‘robbing Peter to pay Paul’

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“All we are saying is give us prepaid meters, save our souls from this long-term corruption,” The bills are affecting our children, “Power bill is higher than house rent”, ” “No prepaid meters, No disconnection”, ” No more estimated billing”, and “Enough is Enough.”

Those protesting statements above cropped up recently when some angry residents stormed a Federal High Court in Lagos when a litigation involving the Eko Electricity Distribution Company, EKEDC and their Community Development Association,CDA, was going on in the court room. The CDA had dragged EKEDC to court to protest the way in which the power company is ripping them off through graft and fraudulent practices in their billing system, lamenting that the system is totally marred with all manners of dubious acts.

Those angry words represent the lingering frustration that power consumers in Nigeria are battling with in the face of alleged reprehensible activities of the power distribution companies, DisCos.

Fraudulent practice is not new in the Nigeria’s power sector, it is an age-long phenomenon that has been in existence before the privatisation of the sector, since the days, of Electricity Corporation of Nigeria (ECN), National Electric Power Authority (NEPA) and the last in the line called Power Holding Company of Nigeria (PHCN).

The effort to integrate Electricity in Nigeria was achieved in 1950 by the Federal Government under the colonialists through the Electricity Corporation, ECN Ordinance No 15 of 1950. This historic move marked a rallying point for power sector in Nigeria. It was gathered that system of operations of ECN under the colonial masters did fairly well. Corruption and other forms of graft practices were at low ebb. Illicit and unscrupulous acts such as “padded bills” or “crazy bills” or “adjustment bill” and all forms of shady acts that later became the norms in the power sector hardly existed when the colonial’s ECN was in the saddle of power system in the country. However, starting from the 60’s corruption and unethical acts started crepting into the system.

Another milestone was added to Nigeria’s power sector on April 1, 1972 when the ECN and the Niger Dam Authority, NDA was merged to become what is known as the National Electric Power Authority, NEPA. It should be noted that the merger became officially effective on January 6 1973 when the first General Manager for the new power corporation was appointed.

The slogans “crazy bills”, “padded bills” and all forms of suspected malpractices were introduced during the era of the defunct NEPA. During that period when the mantra ‘Up NEPA’ was holding sway, power consumers always complained of one unethical act or the order by officials of NEPA. It is an open secret that many top and even middle level officials of NEPA were feeding fat from their corrupt practices they were perpetrating. At that period, NEPA was rated as one of the most corrupt Agencies of the Federal Government. It should be noted that one of the avenues they allegedly used to exploit their customers is the of billing system. The accusation of unfairness and cheating in their billing system rented the air. NEPA was generally viewed at that period as a haven of corruption and impunity.

Power Holding Company of Nigeria, PHCN later succeeded NEPA; however, the story was still the same as some of the challenges that relate to shortchanging that NEPA was known with still subsisted.

It was against this backdrop that energy stakeholders were clamouring for privatisation of the power sector, hinging on the notion that privatisation of the power sector was the only panacea to the massive corruption that held sway in that critical sector. They based their argument on the fact that Organised Private Sector is the only entity that can properly manage a business while the role of the government is just to regulate and provide enabling environment for the private sector to thrive.

Nigerian Government finally yielded to stakeholders demand when it finally privatised its power sector. In September, 2013, as part of the privatiSation process which was vigorously initiated by former President Goodluck Jonathan, PHCN ceased to exist.

Government privatised the distribution system through 11 Distribution Companies, DisCos while the generation aspect is handled by over 10 Generation Companies, GenCos. Transmission Company of Nigeria, TCN which handles the transmission aspect is owned by the Federal Government. The National Electricity Regulatory Commission, NERC is saddled with the onus of regulating the whole power industry and to provide the enabling environment for the industry to fulfill its mandate. Government also owned The National Bulk Electricity Trading Company, NBET, the arm that handles the financial dealings of the power sector.

Many Nigerians were of the opinion that the advent of privatisation would usher in the era of transparency, integrity and honesty in their style of operations, as against the high level of corrupt practices that were glaring in the former NEPA/PHCN. However, as the way things are going now, there is this widespread notion that the degree of corruption during that period was a mere child’s play if compared to the ones that are being perpetrated by the DisCos at present.

Unlike the era of NEPA/PHCN, the present system of generation and distribution that is under private body is purely a profit oriented one because they are now run by investors. However, despite having a goal of profit, the issue of quality, transparent and fair services must not be sacrificed on the altar of any element. That is why government established NERC and TCN.

However, despite the presence of these two bodies, accusations of unfairness and dubious acts against the Discos by power consumers have been in the front burner. They have been accusing them of devising all forms of fraudulent methods to meet up with the financial targets they set on periodical basis.

Part of the accusations is that they are only bothered about making financial fortune; thereby, paying lip service to power stability and consumers satisfaction. They see them as a mere profiteering firm who ‘rob and defraud Peter (power consumers) to pay Paul (Discos and Gencos)’ in the area of estimated bills and other suspected crafty methods.

One of the points that the consumers are using as basis of their argument is the questionable way in which millions of Nigerians are being denied the access to own prepaid meters. With prepaid meters, consumers will only pay for what they produced; this implies that the cases of “crazy bills” will die a natural death. Many stakeholders believe that DisCos would see this as a nail in the coffin of their fraudulent acts because the platform in which they use in “robbing” the consumers will be blocked; thus, they are deliberately denying consumers of having pre-paid meters.

National Bureau of Statistics (NBS) data which was released in December 2017 revealed that over 50% of electricity users in Nigeria were not metered. Analysts believe that DisCos’ act is  deliberate on account of the “free money” they are getting from estimated billing to meet the target of revenue they set periodically; and there is this fear by Nigerians that this trend may linger for a long time unless the regulatory agencies such as NERC wield its big sticks against them.

One of the experts and retired staff of the defunct NEPA who pleaded anonymity in his interview with Businesshighlight, an online news channel, accused the DisCos of wickedness and sly practices,

He noted that it doesn’t take them much time to meter their teeming customers, but they are being driven by greed due to enormous money they are deriving from the estimated billing as they are using as a way of meeting their revenue target; unfortunately at the expense of millions of customers.

He said “Discos prefer estimated billing system more than prepaid because they make more money from estimation than prepaid.

“They know what they can do to meter every consumer in Nigeria in less than two months but it has been lingering because they make more money giving indiscriminate bills. In fact, many reasons can be deduced from the continuation of the mess and wickedness against Nigerians and Nigerian businesses,” he added.

Speaking further, he blamed both the consumers and the government on the logjam of prepaid meter, stressing that lot of Nigerians are oblivious of their basic rights in the manner they take critical matters that concern their welfare in a docile manne,r while the government on the other hand are treating the issue with kid gloves; thereby, giving the DisCos the affront of impunity.

In his statements: “One, Nigerians are not good in tracking their rights, that is, we hardly raise alarm whenever we are pressed to the walls. Then the second reason is that government and the Ministry’s body language has given Discos more windows to continue delaying the distribution of prepaid meters by Discos.

“Let me tell you, if the Minister issues a strong notice to sanction any Disco that fails to meter all users in its area within a given time frame, you will be surprised on the speed with which they will give it out and mount them.

“Power billing system would have been one of the conditions for concessioning the sector in the first instance. Part of the terms and conditions government would have given all Discos would have been to meter before billing. If that was done, we would not be discussing this matter of meters in Nigeria today”, he added.

The issue raised by this former NEPA staff cannot be jettisoned because it is discovered that a very ideal meter in the open market in China costs between $20 and $35. So; that implies that it doesn’t take them (DisCos) much to meter their consumers across the country. So, that is why many still believe that they have an axe to grind for not supplying their customers with meters.

In his article titled, “Electricity racketeering and govt’s care-free attitude to unmetered distribution,” Tunde Temionu, a Public Affairs Analyst comes down on the DisCos, accusing them of ripping off their teeming consumers to swell the ranks of their financial portfolio.

Temionu said: “With the monopoly of GENCO, under the TCN, and the attitude of DISCOs to consumers, electricity generation and distribution cannot be public friendly in Nigeria. The existing privatisation in the electricity sector has only created opportunities for power supply merchants, rather than reduce the obstacles between the final consumers and the sector. The arrangement has also ossified the opportunity for the ordinary man to have fair access to electricity power consumption.

“With the degree at which the operational structure of electricity distribution is adversely dealing with the innocent consumers, obviously, the Federal Government has almost completely abandoned the duty of providing security for the people, in the area of electricity supply,” the analyst added.

Another area where the adage of “Robbing Peter to pay Paul” is allegedly playing out in the sector is the unfair and biased manner they bill their customers. For instance, if house A is known to be a perpetual debtor of power, and house B pays promptly; in a desperate move to meet their financial target for that particular street, the DisCos will allegedly make house B to bear much of the financial burden of house A by inflating the electricity bills of house B. That is one of the areas where people believe that ‘crazy bill’ stems from.

Raising a motion last year in the Senate with the title:“DISCOS, electricity consumers and the burden of overbilling” sponsored by Dino Melaye, Senator representing Kogi West, the outspoken Senator echoed the agony that many Nigerians are facing as regards the billing system of the power distribution companies.

Melaye lamented that he was very displeased that DISCOS prefer to frustrate consumers with jaw-dropping estimated bills by devising means of realizing targeted profit margin through the imposition of arbitrary and bias billing system usually referred to as ‘crazy bills’.

He said that the Senate should be worried over the astronomical rise in the electricity bills across the country, adding that years after the privatization of the power sector, DISCOS handling the retailing and marketing of the electricity of the country’s electricity supply have not been able to effectively meter their consumers; a situation that leaves millions of their consumers to fall victims of estimated billings.

Responding to barrage of complaints being thrown against the DisCos by the power consumers, The Consumer Protection Council (CPC) recently warned DisCOS to stop the act of arbitral billing and disconnection, adding that such act is tantamount to gross abuse of electricity consumers within the country.

Issuing the warning at a Town Hall meeting in Abuja with power stakeholders, including DisCos, the Director General of CPC, Tunde Irukera said a situation where the Discos connect their balance sheet to an opaque arbitrary metering system was the worst form of abuse, especially as it bothers on essential public utility such as power supply.

According to Irukera, it has gotten to a point where no one will take their bills seriously anymore because they were considered outrageous. He even said that the pressure on metering would not have heat the polity to that extent if the so called estimated billing was more transparent and reasonable.

He said: “The key complaints that we receive are arbitrary, unsupported and unreasonable billing; people not being treated with dignity, the complaint resolution process is either lacking or unclear and there is really no respect for people.

“Discos have got to a point where no one takes their bills seriously anymore because they are considered outrageous. I think the pressure on metering will not be so bad if the estimated billing was more transparent and reasonable.

“What Discos are doing is connecting their balance sheets to receivables from consumers, but consumers are connecting what they owe to what they receive.

“You see people who are complaining about supply because they, as individuals, have been responsible, but the Discos have painted them with a broad stroke and disconnected even the responsible people. As a lawyer, our approach to criminal work, even legal work, has always been that let the guilty man go free instead of punishing the innocent man,” He stressed further:

Responding to plethora of accusations of unfairness by its customers concerning billing policy, the Business Manager, Yola Electricity Distribution Company, YEDCo, Usman Wafta said that those allegations of unfairness and bias in their billing system are baseless as far as he is concerned.

“Ours is just to distribute the allocation received. We don’t charge outside the law. We have a methodology of billing, based on the average number of people in the area. And we welcome complaints from customers that feel unfairly charged,” he said.

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