Power supply and the debt challenge

Electricity Tranformer

Electricity Tranformer

It is certainly worrisome that Nigeria’s electricity Generating Companies and Distribution Companies have cried out that the burden of unpaid bills could impair their ability to generate and distribute power. The electricity supply situation is bad enough. A crippling debt compounding it is absolutely unacceptable. While government, generating companies, transmission companies, distribution companies and end users must play their respective roles, however, unless the necessary investment is injected yearly for the next five years, the situation is likely not to improve. This is, therefore, a call on government to take the lead in the effort to improve on delivery of electric power in Nigeria.

The minister with responsibility for power, Babatunde Raji Fashola, has appropriately warned the Discos to stop “blackmailing” the government, which, according to him, did not hand over the business to them as a Trade Union. Each of the 11 companies signed agreements and supposedly knew what they were doing. In the situation, he questioned the locus standi of the Association of Nigerian Electricity Distribution Companies, that had gone public with paid advertisements on their so-called worries. In a recourse to the law of tort, Fasola also declared that the debts now being claimed would have to be verified. He reported that monthly meetings are held by government with the generating companies and transmission companies. At such a meeting in Sokoto, the parties agreed that the companies would utilise an on-line platform for verification of debt claims. The minister then wondered why none of the companies complied with the agreement.

Granted that the companies are owed huge amounts due to a culture of irresponsible living over the years, verification may be indeed daunting, against the background of the experience of domestic consumers and the oddity of fixed billing in the face of poor infrastructure for doing an appropriate one. It is known that some communities often in unison refuse to pay estimated charges and their Discos have had to resort to “negotiating”. Other consumers have cried out over pre-paid meters not delivered. And they have balked at paying since such meters alone can ensure payment for actual consumption with them. And the minister has stated unequivocally that bills cannot be “estimates” but actual.

However, in the production, transmission and distribution chain, the matter is not as simple as that. The generating companies deliver to the Nigeria Bulk Electricity Trading Company as the wholesaler to the Distribution companies. The Discos have, however, blamed their inability to make payments on the N100 billion they claim to be owed, mostly by the military institutions, government departments and agencies.

The supply chain is affected. The Discos owe the generating companies a claimed amount of N300 billion, The Gencos owe the gas suppliers. The Nigeria Electricity Regulation Commission (NERC), endeavours to make the Discos comply with the terms of the agreement they signed. Between them there are disagreements on tariff.

The present situation is, however, beyond apportioning blames. It is not a question of who is at fault but what is wrong with the entire gamut of the power business. This was frankly and clearly stated recently by the Chief Executive Officer of one of the distribution companies, who reeled out the requirements for solving the problems in electricity generation and distribution: inadequate investment. The nation needs to invest about N250 billion every year for five years. Nigeria generates only two per cent of needed power, while 36 per cent of it is lost through commercial theft, illegal consumption and very poor network. The census of consumers reveals 32 million households but only four millions are official customers of the six distribution companies.

End users also require education on electricity usage, as 30 per cent of supplied electric power is wasted through simple faults like failing to put out the light and turning off things that are not in use.

In a period of global economic downturn, and domestic recession, where is the requisite fund to be found for the needed investment in the power sector?

As a first step, government should promptly verify and pay the claims of the distribution companies. The ripple effects of that through the supply chain will give a glimmer of hope in the present dismal situation. Also, the entire infrastructure for billing and collection of payments should engage the attention of all stakeholders so that end-users can properly pay their appropriate bills and the power companies can remain going concerns.

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  • Tunde Suleiman

    What a story. Th Disco’s should install prepaid meters and 50% of the problems would be resolved. Its very simple. They can come with innovative ways of doing this. They can take credit from home owners and pay back when they bill the customer. I have approached my DISCO several times to bear the full cost of a prepaid meter they turned me down. They can even challenge neighbourhoods to do together. They can can also encourage people to move to prepaid meters by making the tarrif on the old meter higher than the new. The regulators should get out the way and let these guys run this business as a business.
    What the regulators should be worried about is how to allow for innovation so that customers that do not like their current Disco can move to another.
    This is the only way the disco will have a grasp of their revenue and meet their obligation to the generating companies.
    FG should also let disco increase traffic. This will solve the problem of waste. If you waste you pay more. My generator cost me more that x10 the cost of public supply!


    criminals deceiving them selves so fashola now you hear and see that it is not easy for jonathan regime , as you claim it took serious leader 6 months to fix electricity , i tell people always that propaganda is not leadership. let the disco and others make the deal of power online and crime will reduced

  • lord of jaspers

    dey should b given a timeframe, anyone of dem dat cannot install prepaid meters to 95% of its customers should hv its license witdrawn!

  • real

    it is the centralized nature of nigeria electricity that is the problem. we have gas producers depending on genco, genco depending on transmission companies, and also depending on disco. In other economies, the generating, transmitting and distribution is handle by one company in a specific region. There is no depending on other companies. we need to start decentralizing our power sector. we need to generate, transmit and distribute with the region we generate the power with fuel from the region.