FG, DisCos and the electricity challenge

THE Federal Government is so peeved by the performance of the Electricity Distribution Companies (DisCos) that it has described them as technically insolvent, and is contemplating repossessing them and paying off the core investors it tagged ‘failed investors’. Apart from the failure to ensure proper distribution of electricity, the government is also piqued by the DisCos’ accumulated debt to the Nigerian Bulk Electricity Trading Plc.

The government’s angst is reflective of Nigerians’ frustration with the distribution companies. Six years after the companies were transferred to the new owners, the much expected transformation is still a mirage. Rather than improve, electricity distribution in the country has taken a turn for the worse. At the inception, the DisCos promised adequate provision of pre-paid meters to consumers, improvement of customer service delivery, extension of the distribution network and reduction in power interruptions. But six years after, prepaid meters are still not available, crazy billing is the order of the day, the electricity distribution networks inherited by the DisCos are still the ones largely in use and poor customer relations is still the order of the day with the DisCos.

The situation is so bad that sometimes, the DisCos are unwilling to evacuate electricity allocated to them by the Transmission Company of Nigeria (TCN). Consequently, millions of Nigerians spend the better part of their days without electricity, many companies still expend a huge fortune on generators, which has shot up their cost of production and has made it extremely tough for them to be competitive and profitable. So, for the private and corporate Nigerians, it has been six years of pain and anguish at the hands of the DisCos.

However, we consider it unfair of the government to heap all the distribution blame on the DisCos. In our considered opinion, the government is as culpable as the distribution companies for the deplorable state of the country’s electricity distribution because the government still owns 40 per cent of each of the companies. So, the government cannot absolve itself of the blame for the poor state of electricity distribution. But beyond that, the electricity generation level is still too low for the country’s population.

According to the TCN, while the country’s installed generation capacity is 12,910.40MW, the available capacity is 7,652.60MW. But because of the poor state of the nation’s power plants, the output usually oscillates between 2,600MW and 4,000MW. How well can 4,000MW serve a population of over 200 million people?

Then, at the take off of the DisCos, the government promised to emplace a cost-reflective regime to the effect that the tariff would be reviewed every two years. But six years after, the tariff has yet to be reviewed once. In addition, the government promised the payment of N100 billion subsidy to the DisCos with a view to making them debt-free so as to position them to deliver adequate and sustainable power to consumers. That too has not happened. According to the Association of Nigerian Electricity Distributors (ANED), the country’s ministry, departments and agencies as well as the military owe DisCos well over N70 billion.

We are of the opinion that the DisCos need rejuvenation but we do not agree that the government should repossess them. Doing that would be akin to ballroom dancing, a step forward and two backwards. Nigerians agreed to privatising the companies due to the failure of the government to manage them well. What the DisCos need is better regulation. The Nigerian Electricity Regulatory Commission (NERC) should put the DisCos on their toes and sanction them heavily whenever there is any infraction. That would awaken the companies to their responsibilities. But before the Commission can effectively do that, the government has to meet its obligations to the DisCos and encourage the MDAs to pay up their debts.

The government should also tweak the Electric Power Sector Reform (EPSR) Act, 2005 to break the centralisation of power generation and distribution. The Act should be amended to allow more electricity generation and distribution companies that would operate at the local government and state levels. A country of this size cannot depend on a national grid. The government should, however, carry out due diligence to ensure that only companies with proven technical and financial capacities are allowed into the sector to forestall the repetition of past mistakes.