NERC – REGULATING IN
WHOSE INTEREST? – By Idowu Oyebanjo

What
exactly is happening in the Nigerian electricity Supply Industry (NESI)? Whose
interests are the leaders serving? Whose interest are the operators of the weak
electrical network serving? And most importantly, in whose interest is NERC
regulating the industry? These questions have remained with us for a long time
now. Each time one examines these questions, more questions come to the fore.
Was Nigeria ready for privatisation? Does Nigeria realise that the management
of electricity systems is highly technically intensive and would need
individuals who know their onions to mediate the course? Is the regulator aware
of its role to protect consumers from the regional monopoly of the operators?
Why has it taken so long, after “unending” complaints from poor and
already impoverished consumers, before NERC was forced by an order from the 8th
Senate to carry out what is supposed to be its main function? Why should
consumers be pushed to the wall before a revolution occurs? Why should
government wait until a huge crisis of discontent from millions of individuals
– North, South, East or West, united in one voice, unleash mayhem on public
utility and public officers because of years of neglect and mismanagement of
funds meant to provide electricity for the nation? Why is Nigeria yet to have
electricity which was discovered over a century ago?

It
is widely accepted that regulation, where it is impossible to have competition,
as is the case with the distribution of electricity through wires, is a
veritable means of providing quality service at low cost to service users. This
is true but so much depends on the regulator. The principal role of a regulator
in a privatised electricity system is to cater for the interest of the
consumers in such a way that operators can make reasonable profit without
exploiting the consumers. In this regard, NERC has failed Nigeria woefully in
recent times. Why do we say this?

There
is ample evidence that NERC has orchestrated a villainous act against customers
in the area of estimated billing and fixed charges. In effect, NERC has raised
money for the distribution companies (DISCOs) from the pocket of already
impoverished Nigerians. With NERC unable to account or monitor how much money
has been “borrowed” from individual consumers, this act of treachery
is daylight robbery. Take for example the Credited Advance Payment for Metering
Implementation (CAPMI) programme. It is advanced robbery! The CAPMI jargons is
simply for exploiting consumers. The CAPMI scheme was to provide a platform for
willing consumers to pay the cost of the meter and get the meter installed
within 45 days. Also, the distribution company was to return the payment made
by the consumer via a percentage deduction in their monthly electricity bills
until the distribution companies repaid the consumer for their advance payment.
It is regrettable that consumers have paid for these meters and years after,
they are yet to receive their meters. This is double jeopardy considering that
these meters were supposed to have been supplied to consumers free of charge in
the first place. For the avoidance of doubt, the electricity meter is the
property of the distribution company! NERC is unable to account to date for the
number of consumers who have paid but are yet to have their meters nor can they
articulate a means of monitoring the return (with interest) of payments made by
consumers as promised by distribution companies when the proposal was muted in
the first place. No one is looking after the interest of the consumers!!!!

A
close examination of the components which make up the tariff payment by
Nigerians as stipulated by the multi-year tariff order 2 (MYTO 2) shows a
significant amount attributed to the cost of losses. This is a deliberate act to short-change the
consumers because of their lack of awareness and understanding of Power
Systems. How can you pay for the cost of losses which cannot be accounted for?
The distribution companies to begin with are yet to know their Assets as they
claim. They have been unable to determine their losses yet they are being paid
for these losses. They have not metered the customers, yet they are being paid
for aggregate technical, commercial and collection losses (ATCC). The use of
bogus language and profligacy to confuse the generality of consumers who do not
understand the meaning of Megawatt is pulling the wool over their eyes.
Worldwide over, consumers are never interested in the details of Power Systems.
One thing and only one thing interests consumers anywhere in the world – the
availability of electricity! A survey of developed countries of USA, UK and
Europe shows this fact too. The role of an efficient regulator is to protect
the interest of “disinterested” and disenchanted consumers. Power Systems is
hard enough to understand for power engineers, not to talk of the wider
citizenry whose businesses and activities differ extensively. For NERC to have
allowed distribution companies to extort consumers for this long through the
estimated billing conundrum tells the whole world of power systems that it is
serving the interest of the cartel behind the woes of the power sector. As long
as those who are in charge of the power sector have no clue about the technicalities
of power systems, the hope of having an efficient and robust power system will
remain a mirage for a distant future.

In
one of its latest misdemeanour, NERC suddenly jolted consumers with the idea of
negotiating with the distribution companies before any increases in tariff can be
approved. Insult upon injury! This is a total begging off from one’s duty.
Observed on the face of it, this looks like a brilliant idea. However, this is
no brainer for those of us who understand how current flows. Apart from the
obvious fact stated earlier that consumers know less about the concept of
electricity, and care less by the way, this is the role of the regulator. The
regulator should as a matter of course include in the regulatory order an
incentive for distribution companies to engage the consumers and include this
in the regulatory mechanism. These guys don’t understand how to run an
electricity supply business, and rightly so because we are not used to putting
square pegs in square holes.

When
asked recently to explain why we are experiencing improvements in power supply,
NERC has stated that poor project management skills have contributed to their
dismal performance in times past. Anyone can come up with an excuse for not
doing something at anytime. The problem with that is we cannot move an inch in
power system in this way. Says the NERC chairman, “we now realise we need
to pay closer details to the details of the electricity market, the issue of
gas, metering, legacy debts etc”. A lot of putting the cart before the
horse. What is the guarantee that this will not be the lame excuse they will
offer us after another ten years? How on earth was it possible to build
gas-fired power stations without provisions made for gas pipelines to carry gas
to such thermal power stations?

It
is no wonder then that the many cases of wanton killings and electrocution of
Nigerians reported daily to NERC have not been investigated and dealt with
according to the provisions within the electricity act. I believe NERC will
continue allow Nigerians to be killed because it lacks understanding of how to
run the show. Take for example the fight NERC put forth against the
establishment of the Nigerian Electricity Management Services Authority (NEMSA) Act. This shows clearly that the regulator
does not understand its role. More than that, it betrays the general lack of
understanding of power systems in Nigeria today. Nigeria needs a holistic
appraisal of the power system and how it should function. The opportunity is
there now to develop the power system in a way that meets the objectives of
today and the aspirations of tomorrow in the areas of design, infrastructure
development, installation, policies, and
regulation. Since we have come this late, it is best to get it right once and
for all time. There is need for seasoned Electrical Power Engineers of Nigerian
origin with a minimum of five to ten years of cognate experience in the
business of electricity supply within and outside Nigeria to lead this course. The
government may have to provide electricity as a social service for some time at
least to palliate consumers who have remained in darkness for so long.

Idowu
Oyebanjo is a Power System Professional from the UK

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