FIVE YEARS AFTER, DISCOS STILL DANCING DISCO! - KELECHUKWU OGU
he expectation was high! The general belief was that as soon as the state-owned electricity generating and distribution company, the National Electric Power Authority, better known by its acronym, NEPA, was sold to private individuals, the country would start experiencing uninterrupted power supply.
Not only that, but the people also hoped that the practice of sending “crazy” bills to customers or estimated billing, that is the practice of billing customers without metres, would be a thing of the past.
But six years after privatization, when the National Electric Power Authority changed to the Power Holding Company of Nigeria, PHCN, how have the consumers fared?
Long before the electricity assets in Nigeria were privatized, customers struck deals with agents known as marketers, to pay less than the amount charged by the Nigerian Electricity Power Authority (NEPA). Being a government-owned agency disinterested in profit making, such excesses went unnoticed.
In 2013, PHCN’s assets were broken into six generation companies, a transmission company retained by the government and 11 distribution companies— Discos.
The expectation was that, old things would pass away and that the shenanigans of the past, would go with the old ways.
It turned out to be a pipe dream.
The Discos kept up with the old practice and failed to enumerate its customers to enable it bill them according to their consumption.
Ismail Aromire, son of the traditional ruler of Ijora community said the Eko Electricity Distribution Company, showed no interest in undertaking verification of its customer base in Ijora Oloye until it was pressurized to do so by the community. He says he took that initiative to bring down the estimate on the bills charged each flat in Ijora Oloye. That evaluation revealed a known secret: many houses were not registered as customers on the company’s database.
“Everybody was like we’re having crazy bills- the bill is too much, some didn’t even have before- like new structures. As the Eko Disco officials sent to monitor electricity in the area are replaced after each quarter, they just advise themselves, ‘please don’t bother creating bill. We will be collecting the money with our hand to go and pay on their behalf’ and it goes into their pocket
“It was when we insisted on this enumeration that these irregularities were discovered,” he disclosed.
What was more disturbing, however, was how the Eko DISCO chose to solve the problem.
“When they [Eko DISCO] were doing the enumeration, they now said those that don’t have bill that they had been paying money illegally to some individuals that they should go and pay loss of revenue, so that they can use it to create bills for them.”
Some more bill samples from Ijora area
They were charged N5,000 for loss of revenue.
“We requested for the list- the streets and numbers of those who got ‘LOR’ so that we can know who and who is who. They did not give us. Instead of giving LOR of N5000 each, they joined five to six houses together and gave them a LOR in one person’s name.” This is one reason why distribution companies might be unable to collect 100 percent of the electricity delivered to customers.
Aromire further informed us that some people had been declared wanted on account of the Loss of Revenue. Five years after the DISCOS took over PHCN’s distribution assets, is it still possible to defraud the system or is the Ijora incident an isolated one?
Igando and Egbeda are two communities in the Alimosho local government of Lagos State. Many in these communities have not received prepaid meters and they are fed up with paying estimated bills. Some landlords have, however, devised a means of cutting down on their electrical expenses. A resident in the community who spoke to us on the condition of anonymity describes how it is done:
“There are few prepaid meters in this area. Most of the houses use analog meters. So what they do is to get an agent of the distribution company- Ikeja Electricity distribution company to run 30 percent of their light on the meter and the remaining 70 percent directly to the transformer.
“Since the Disco guys can see the meter reading in their office, they will not border to check if the landlords are cheating or not.”
I decided to tail one of these rogue agents to see if a deal could be truly struck.
Seun had just helped one of his clients in Egbeda to adjust her connection a fortnight back; the client was spared the terror of discovery suffered by five landlords in the nearby Igando. They were hoodwinked by officials from the Ikeja Electricity Distribution Company, IKEDC, on a routine inspection.
We begin our attempt to monitor Seun by paying a visit to his customer in Egbeda. To avoid any suspicion, my colleague made an introductory call to him with the woman’s phone.
For N25, 000, Seun agreed to read the meter at an agreed location. He said we should endeavor to pay our last two bills fully, then he would be able to take over. He would also charge N10, 000 for periodic inspections to ensure the connection is not detected. Unauthorized connections like these, have formed silt on the track of the maturing Nigerian Electricity Supplying Industry.
The regulatory authority was no less worried about these ugly developments.
In December 2017, The Nigerian Electricity Regulatory Company, NERC issued a directive titled: “Order on unauthorized access, meter tampering, and by-pass order no: NERC/REG/41/2017.” The circular prescribed a fine of N50, 000 for any resident with a single phase meter who gains illegal access to electricity.
“Any single phase residential customer that gains unauthorized access to electricity by tampering or metre bypass shall be reconnected upon payment of the reconnection costs of N50, 000.00 initial and 75,000.00 for subsequent incidents,” the circular directed.
Residential customers who use three-phase meters will pay 100 percent higher than single phase customers if caught.
“For three phase residential customers, violators of this order are expected to pay N100, 000.00 for the initial incident and a fine of N150, 000.00 for subsequent incidents,” the order said.
For maximum demand customers, the order directs the Discos to charge 350 percent of their last monthly reading before reconnection and 450 percent for subsequent breaches.
“The initial incident of unauthorized access to electricity by tampering or bypassing a Maximum Demand, MD meter shall attract a reconnection cost of 300% of the last authorized recorded monthly consumption of the customer. Subsequent incidents of unauthorized access to electricity by tampering or bypassing an MD meter shall attract a reconnection cost of 450% of the last authorized recorded monthly consumption of the customer.”
The regulators are not satisfied with ordering the distribution companies to impose penalties; they want to be able to secure jail terms for offenders as well. That intent was made known in a bill sent to the National Assembly on 12 December 2018.
NERC hopes to amend the clause to read that: “Any person who willfully taps, makes or causes to be made any connection with overhead, underground or underwater lines or cables, or service wires, or service facilities of a licensee; or (c ) damages or destroys an electric meter, apparatus, equipment, wire or conduit or causes or allows any of them to be so damaged or destroyed as to interfere with the proper or accurate metering of electricity shall be guilty of an offence punishable with terms of imprisonment for a period of not less than six months and not more than two years or a fine of N100,000 or both.”
Durosinmi-Etti runs a hotel on Odofin Street, Ijora; he uses a maximum demand meter. He is one of those customers that are sorely tempted to use backdoor ways to reduce the bill he receives monthly.
“Now, if they bring 150,000 I will pay N100, 000”, Durosinmi-Etti said in anger.
His hotel has three floors and his bills dramatically soared from N100, 000 to N200, 000. The businessman man who interrupted his lunch to attend to us, says being a diligent customer brings him no gain:
“The money I’m owing now is going up to N268, 000; the method they are using now is that, if they give you N150, 000 and you pay N100, 000, before the end of the month they will disconnect your light. I fought them and said I don’t want to see any PHCN official. They begged me and said I should pay N100, 000 out of the money and they would find a solution.”
Friday Ikewere is the Administration Manager of ENCON International Ltd. The company leases its offices out to different businesses. He says electricity charges are given to the customers on a per floor square meter basis every year. That billing system is dependent on the company having electricity charge for Eko Electricity Distribution Company.
When we met in October, something shook the foundation of that billing method:
“The money we charged them was based on the fact that over the years, the bill fluctuates between N50, 000 80, 000 to 100, 000,” Friday explains as the bill is presented to him.
“It has remained like that from last year even till May June. This month, it is N205, 000 I don’t understand.”
Ikewere is at a loss as to what he would tell his tenants who had paid their electricity charges at the beginning of the year. He says they will bear the brunt of the increase and add it to the charge on their tenancy in 2019.
Like Durosinmi-Etti, ENCON is a maximum demand customer. They are charged at a fixed rate, higher than customers under the residential classification system. These are the class of maximum demand customers:Encon Ltd and Jan Lodge and Suites will most likely fall under the C2 category. These customers are entitled to a transformer of their own and were not to be on estimated billing as from June 2017.
However, Durosinmi-Etti says he was not given a transformer.
Ikewere says officials from Eko DISCO wanted to change the firm’s meter under the guise that it was not reading properly. When we checked back with Ikewere, he said the bill for October was N189, 000 and that of November was N50, 000.
“For September they gave us a bill of N205, 000; we challenged it and they said that it was supposed to be our actual consumption. We wrote a letter and in October they brought it down to N189, 000. In November, they brought it down to N50, 000, what we used to pay before.
“Right now, they disconnected the light because we refused to pay the N189, 000 in October.”
Maximum demand metres are read manually and billed postpaid, they are simply at the mercy of what the discos say.
What NERC Quarterly results Say
In the third quarter of 2018, the distribution companies got an invoice of N147 billion but paid only N44 billion to the Nigerian Bulk Electricity Trading Company (NBET). That left a shortfall of N103 billion in the market for that quarter. In the fourth quarter, however, the DISCOS received an invoice of N166 billion from NBET for energy purchased and Market Operator for service charge. The DISCOS, however, paid just N40.1 billion. In the third quarter, the DISCOS issued bills worth N151 billion, while it charged N161.8 in q4. The DISCOS collected an average of 90.4 billion or 55 percent of its bills in q3 and 101.2 billion or 62.5 per cent of its bills in q4. In q3, the Discos held on to N46.4 billion; it withheld 61.1 billion in the preceding quarter. What is surprising, however, is that the distribution companies billed less than what they were charged for in q4.
Electricity Customer Survey
After four years, the last two quarters of 2017 still indicated that the industry was not meeting up with its revenue obligations. Could the relationship between the electricity users connected to the national grid and relying on service from distribution companies be a symbol of the financial health of the industry? We carried out a survey and asked these questions:
Do you have prepaid meters?
Do you have a backlog of bills?
Do you pay your bills through third parties?
Has your distribution company come to find out how much power you consume and how much you can be billed?
We sampled the opinion of customers in two communities and six streets within Lagos state.
In Oshodi/Isolo Local Council Development Area, (LCDA), we received responses from 50 respondents in Adewale Adenuga, Joseph and Goloba Ashogbon streets. Out of the 50 persons interviewed, only one individual had a prepaid meter, 32 of them had backlogs, just one individual confessed to paying through channels other than the DISCO’s outlet and 23 have at some point received DISCO officials on enumeration visits.
In the Egbeda area of Alimosho LGA, we received responses from 40 persons. Eight of them said they have prepaid meters, 13 of them say they are behind on their bill payment, 23 of them say they pay through third parties, (banks) and 37 said officials of the corresponding distribution company have come to check on their electricity consumption.
What NERC quarterly results Say
The first quarter of 2018 was more positive than the last three months of 2017. The Discos charged customers N171.1 billion and collected N106 billion- 62.3 percent of the figure- 0.2 percent less than q4 2017. NBET and the market operator sent out an aggregate invoice of N163.1 billion and the DISCOS paid N51.2 billion- 31.4 percent. The Discos held on to N55.4 billion for sundry purposes and caused another shortfall of N112 billion. There was some marked improvement in the latest quarterly result released by NERC. It billed N173.7 billion and collected N111.5 billion or 64.2 percent. The bulk trader and the Market Operator sent an invoice of N161.4 billion to the discos and they remitted an increased 33.3 percent- N53.7 billion. The Discos held on to N58.7 billion and added N107.7 billion to the illiquidity of the industry.
In the four quarterly results released by NERC, it said;
“The major contributors to the financial crisis in the industry are tariff deficits, high technical and commercial losses exacerbated by consumers’ apathy arising from estimated billing and poor quality of supply in most load centres.” In its defence, the regulator rolled out the Metre Asset Provider regulation on April 3, 2018. James Momoh, Chairman of the regulatory commission, said at a conference between the meter providers and their direct clients-the Discos, that everyone who wants power in Nigeria will have a metre before 2020. This, however, does not address the challenge of a cost reflective tariff.
The Excuse of the distribution companies
The DISCOS have always maintained at diverse forums through the Association of Nigerian Electricity Distributors (ANED), that the low cost of electricity in the country has made it impossible for the DISCOS to carryout asset upgrades and metering. While the NERC has maintained that the DISCOS hold on to a large share of the funds meant for the industry, the DISCOS have argued that they cannot use all the meager revenue they get to settle invoices from the Market Operator (MO)- an arm of the Transmission Company of Nigeria (TCN) and NBET. According to them, salaries and other operational expenses need to be looked into as well.
Sahara Reporters reached out to Godwin Idemudia, Head of Corporate Communications at Eko Electricity Distribution Company (EKEDC), to get the company’s perspective on some of the specific issues. Reacting to customers in Ijora Oloye receiving one LOR per five customers, he said:
“I have not seen the documents so I can’t say. But if anyone in the community has a problem they can go to the business unit under the Ijora bridge. What I know is we usually issue one LOR per customer And it is to say the customer should pay for what they have been consuming and not paying for. If the customer has a dispute with the Lor, they can always take it to be adjusted. Ismail Aromire- the traditional ruler’s son, had said when SaharaReporters went to the community that the issue had a=escalated and some officials were wanted. Idemudia, however, maintained that he had not heard of the happening.
Reacting to the findings that Maximum Demand Customers were billed unilaterally- contrary to NERC orders, Idemudia said:
“Maximum Demand customers are our biggest customers. When we are going to read their meter, we always make sure one person from our nearest station and an official of the business comes along. When the observation on Campbell street was put to him, Idemudia said:
“When there is an increase in in the hours of electricity received, you would expect the consumption to rise.” ‘Even if consumption has been constant throughout the year and changes in only ‘two months?’ the reporter interrupted.
“When these customers come to our office, they see that we billed them accordingly. And they go back okay,” he replied. He added that the company has the ‘I’ (Artificial Intelligence) technology to monitor the electricity consumption of the consumers. He also noted that approximately 80 percent of its over 500,000 customers have been metered. Idemudia revealed that EKEDC would have delivered 170,000 meters to electricity consumers within its network.