Why electricity sector is challenged now – Eko Disco boss

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By Emeka Anaeto, Sebastine Obasi, Ediri Ejor & Prince Okafor

One of the most prevalent stresses Nigerians are going through now is epileptic electricity supply, and the situation appears complicated with the privatization of the sector in 2013. Vanguard Newspaper is flagging off its power series publication in this interview with one of the most prominent operators, the CEO of Eko Electricity Distribution Plc, Oladele Amoda. He presents more sides of the issues involved, and the way forward.  Excerpt.

YOU have performance milestones signed with BPE in November 2013, but things have gone negative to undermine the expectations. Where is Eko Electricity distribution now on this?

When we signed the performance agreement, it was signed by BPE on behalf of the Federal Government.  The basic thing, although they are so many, during the first five years is to first reduce aggregate technical commercial and collection (ATC& C) lost trajectory, then to meter all customers, to improve services to customers, to ensure that all our networks are in good shape within the five years, that’s on our side.

On the government side, there are promises like level of power availability, which was 7,000 megawatts but was reduce to around 5,500mw close to 6,000mw at inception. Then cost reflective tariff, cost that will cover your cost among other things.

When we came in, the level of power generated went down. We were getting less than 3000mw, out of the 5,500mw promised. So you can see the volume of power that we are getting was not enough, business is based on volume, the volume of energy.

MD/CEO, EKEDC, Oladele Amoda

Volume of energy

It was calculated that when you have this level of power, you will be able to break-even, but when you are having something less, then it affects your revenue, and ability to break-even, and that led to our shortfalls.

Secondly, there was no cost reflective tariff. May be because of political reasons the federal government didn’t allow cost reflective tariff at inception. We struggled until 2016 that they allowed something that looks like a little bit of increase, but then we couldn’t cover the whole thing. They said we should sculpt it (Sculpting means to charge but not the full amount, you charge low amount and recover it over a long period of time).

We had a 10-year charging plan. Before then, they removed the collection factor (ATC&C) the collection part of it, the risk in the collection, they removed it from the tariff, and then put R2. They didn’t allow us to charge the normal rate of R2. In those days government promised subsidy for the R2 customers but those subsidies were never paid. 

We see failed promises on both sides, or rather constraints, does it mean that the promises had collapsed?

No, it has not. On monthly basis, we usually hold this power sector stakeholders’ meeting, with the Minister and all the stakeholders, and we use to take it from one section of the country to another. We discussed some of these things there. Government is working out something to take care of the shortfalls, and the National Assembly is also interested in ensuring that the sector is running the way it ought to be because, everybody has realised that without power we cannot develop anything.

We need power for many things, such as small scale industries, even large scale Industries, for social use and all of that. So everybody is putting heads together to ensure that we find solution to what seems to be endemic.

It means some things are being worked out. What are they?

Yes, some things are being worked out.   Well, we just had a workshop. Everybody is going back, that is the policy maker which is the Ministry, the regulator which is NERC and National Assembly. You know, from what came out of the workshop, they are putting things together and trying to find solutions to it. Maybe in the form of bond or maybe government is going to subsidise the gas price and intake.

So whatever they can do. Right now if we are to bill the customers the way it should be just for us to break-even, it could be close to N60 per unit and that is the lowest for the DISCOs.

But if government doesn’t want that kind of tariff, they should tell us what they want us to do. This is what it costs to produce and deliver electricity to the customer. If you do not want us to take the price to the customer, then what is the government going to do? We are not asking for bail out, but we are asking for some intervention that will enable us to reduce the tariff and recover the short fall that is there.

So it is about tariff increase and you have done that about five times?

NO, it is not true. It is just twice, but that twice did not still meet the level of cost reflective tariff. The one that we had last year did not even meet it so it was cost sculpted and so we just continue to charge what we are charging now, may be little adjustment, then wait for another 2 or 3 years to recover the short-fall, that is from February   last year to now.

But we are talking of what has happened in the past between November 2013 and January 2016. So much gap and short-fall, even the MDA’s debt are there, though something is being done.

Recoveringthe short-fall

The ministry and the Vice President’s office are   involved in getting the MDA’s debt to be paid but the fact is that we have not receive it yet. For us, If you look at the totality, it is close to N100 billion.

What is the total indebtedness of MDAs?

The total picture of MDAs indebtedness is over N28billion as at the last count of our debt.

On recovery, how will that come in?

Well the balance will be recovered from the customer. Some customers are not paying. Some are bypassing. We have so many customers under disconnection. Some companies, because they are owing so much, they have been disconnected and they are using generators but it doesn’t pay them to use generators, because electricity is cheaper than running diesel.

May we know your customer profile, the distributions in terms of domestic, commercial, industrial, government?

Totally we have 460,000 registered customers. You know we have consumers who may be in hundreds of thousand, but we are doing enumeration to capture this once like those that are bypassing and using electricity without payment.

The one in my register is 460,000 customers, out of which about 7,000 are maximum demand, MD, customers like your company. We have about seven of them that are high consuming customers.

We have more residential than commercial. For instance, the R2 customers are more than 70 percent of our customer population and those are the residential customers, while others are commercial.

There is a wide range of customers who does not want to pay but rather choose to connect illegally. They are called NEPA 2. The multitude always likes to circumvent things. It takes a lot of efforts to detect illegal connections, which is in addition to those bypassing.

What is the proportion of power paid for to power not paid for?

On monthly basis, when we bill about N6billion, we only collect N4.2billion to N4.5billion.

Detection of illegal connections

The shortfall we receive may not be non-payment but theft. For theft, may be about 50 to 60 percent.

Many electricity consumers complain that DISCOs have refused to give them meters and instead, they are being given outrageous estimated bills. What is your response to these complaints? What is the percentage of your customers currently running on pre-paid? How do you react to situations where some consumers are forced to pay for pre-paid meters? How ready are you on NERC’s up-coming sanctions on metering coverage of less than 75%

We have a performance agreement for us to meter all our customers within five years. We are at the third year now. We could have gone far with our metering scheme. We have 600, 000 customers, because we are looking at customers that will come in, and customers that will be discovered during the cause of enumerations, so we have made plan for 600, 000 customers. For our customer based, we have covered 60 percent. Right now, we are still installing meters, but not at the rate at which we planned before, because of the economic indices that have a little bit tied our hands, Forex, inflation and the rest of it.

Last year, we signed an agreement for supply of 200,000 meters, 100, 000 from indigenous meter manufacturing company, Mojec International Limited, and another 100,000 from Huawai which is also in Nigeria, so those are 200, 000 in addition to what we have been doing before. So far all our maximum demand customers, the high end customers, we have all the meters to install in their premises. We have almost covered those categories of customers, except for those we have some issues with, either they lock up their premises or for whatever reason.

For other customers, if you go to Lekki, Festac, we have meters we are installing. The target of five years is still sacrosanct if the fallout of the meeting we had earlier, have positive outcome and implementation, we will still meet our target, because it pays us to have our customers metered. We lost a lot from our customers that are not metered.

No matter what we do to those customers without meters, as well as methodology, they will still not be satisfied. Sometimes, if we should give them zero bill, they will still query you. For instance, if the supply for last month wasn’t good, definitely through our record we will see that they will be billed less, the following month, if the supply improve, they still expect to be paying what they paid when the supply wasn’t okay. That’s why we are pushing to have everybody metered so that there will be no controversy again.

It takes a lot of efforts to meter customers. From the first day of the month, we take record of availability of supply. In such location, from the feeders of the transformers, at the end of the month, the staff in charge of billing, they come together, they look at the availability of supply from feeders, transformers and   compare them with those that are metered. Before they bill again, they deal with those that are not having meters. Its takes several days to do that, and we are not comfortable with that and in most cases we under bill the customer contrary to what they are saying.

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