In some of my interventions in the past, I had raised several issues concerning the efficiency of the electricity distribution companies (the Discos). My major quarrel has been with the degree of investment by the companies in infrastructural improvements in their domains. It will be recalled that at a point in time, the distribution companies had come up with the idea of premium service scheme in which the consumers pay higher tariff for better service delivery.
The scheme was premised on the “willing seller and willing buyer” concept. The impression given at the birth of the scheme was that there would be infrastructural renewal alongside better maintenance service delivery. Due to these inducements, some areas in the country signed up for the scheme in the hope that they would enjoy the extras but alas, that was not to come due to the obsolete equipment in their vicinities and the failure of the distribution companies to upgrade them. Consequently, the story over time has been that of tears for the consumers. As this harrowing experience was on, there came the almighty classification system of consumer areas into Bands.
Thus, Bands A, B and C are the demarcations made in order to stratify the consumers and give premium service based on purported supplies. The impression given by the Nigerian Electricity Regulatory Commission (NERC) is that with the introduction of the new scheme, service delivery would be enhanced and efficiency would automatically follow. The classification was based on the removal of purported subsidy in the provision and consumption of electricity.
As expected, this never went well with the consumers, not only in terms of the astronomical increase in the tariffs but also the suddenness of the increment that never took into consideration the budget of the consumers nor the period of planning and adjustment. The Nigerian Electricity Regulatory Commission (NERC) never consulted the relevant stakeholders but embarked on the voyage in an autocratic manner.
According to NERC, there would be automatic improvement in service delivery due to injection of more funds into the operations of the Discos by the proprietors. Towards ensuring this, NERC was to be imposing sanctions of different grades on the erring distribution companies. This went down well with the better off elements in society who felt that at least their money could purchase them more hours of electricity supply as to guarantee better enjoyment for them. Experience so far has however shown colossal failure of the arrangement. The challenge is really not so much in my view that of generation and transmission but actually distribution.
If the experience of my community is something to go by, complaints were never acknowledged much less treated by NERC. In fact, rather than the situation improving in terms of delivery, it is actually snow-diving. The plight of the consumers continues to degenerate. With the 2022 takeovers of some of the companies, namely, Ibadan, Port Harcourt, Benin and Kaduna Distribution Companies, by the government under the guise of the creditor banks appointing receiver managers over the Discos, one would have expected that things would be better as the existing managements of the various companies were disbanded and new men and women were appointed to run the affairs of the companies. The story has not changed in those places and the irony of it is that it seems the equipment of these companies are afraid of mere rumbling of thunder as they often collapse whenever there are slight showers of rain. Personally, just as in the case of some other few Nigerians, I have given up any expectation that anything good is coming out of the power sector and I am already sourcing for renewable energy as embraced by my friends and associates.
Thus, I had resolved not to comment again on the occurrences within the power sector. I therefore chose to be indifferent to whatever goes on there. However, in a recent video clip that I stumbled on, I listened to the submission of Senator Adams Oshiomhole on the floor of the Senate on the subject, that is, on the activities of the distribution companies and the plight of the consumers. Due to the appealing nature of the submissions, most of which I had canvassed in recent past, I am unable to resist further dabbling into the arena. Let me confess that I am impressed by him this time, though I am not his fan. In that intervention, he spoke my mind largely and that agitated me to further revisit the issue.
Although I have been interrogating the issues in the last two years, nothing concrete has really happened. I suspect that the same fate might befall his rendition as no authority or person seems to be responding to the points made by the distinguished Senator. The point being made by him which represents my positions is that the electricity distribution companies, when granted the concessions were meant to inject capital into the operations of the companies, particularly in terms of upgrade of the infrastructure. This is based on the principle of laissez faire, put bluntly, capitalism. You inject fund and you reap profit. As remarked by him, the key elements of the distribution chains are the provision of cables and transformers.
As basic as this is, this has not really happened anywhere. Till date, not only are public funds still used to provide these basics by the governments at different levels to the advantage of the undertakings, the private entities and individuals are still bearing the same burden. Where there is a damage to a transformer or a cable is stolen, the discos are in the habit of refusing to make a repair of the damaged equipment or replace anything stolen therefrom only to plunge the entire community into a long-term darkness.
The consumers, having suffered for long, would have no choice than to pull resources together by community levy and purchase a new transformer which the discos will claim is their property or cause a repair to be made on the damaged transformer. The import of this is that the consumers directly and indirectly are still subsidizing the private enterprises. What has then changed, particularly in the plight of the consumers? To an average consumer, the situation was much rosier under the old arrangement prior to privatization.
What they are witnessing is deterioration of not only service delivery but imposition of more burdens on the consumers. It will be recalled that in the old regime, public funds, through the undertakings, were still being used to procure some of the equipment and upgrade facilities with returns to the public treasury, but now what obtains is that both public and private funds are now channeled into private enterprises.
At least, the consumers still were benefitting something from the government but now, the beneficiaries are largely the distribution companies. They virtually provided nothing by way of new infrastructure nor upgrade to the various communities that they claim to be serving.
In fact, the political office holders are the greatest victims during the political campaigns in which they have had to provide transformers to ingratiate themselves to the electorate. The worst aspect of this venture is that upon procurement of the equipment by the private entities, the distribution companies still demand huge sums to connect the transformers and fix other equipment. Even where there is a challenge to any equipment serving a particular consumer, he is compelled to purchase it, regardless of the exorbitant tariff he pays. This is certainly unfair to the consumers. The one that amazes me most is where such transformer is procured for private use of a tenement, the owner is subjected to multiple tariffs, making it a punishment for venturing to assure comfort for himself.
To crown the wickedness, the distribution companies insist that equipment so purchased and installed at the instance of the consumer automatically becomes the property of the distribution company to the extent that the consumer cannot lay any claim to it again. This is the jeopardy that the consumers are experiencing. This is the absurdity that is reigning presently. Definitely such a claim by the discos cannot be emanating from any legal position enforceable in law. Again when it comes to the security of the infrastructure, this is placed on the shoulder of the consumers. The distribution companies hardly make provision for security of their installations. Another valid point made by the Senator is that the federal government still retains forty percent minimum ownership of these distribution companies.
By this, the federal government’s interest ought to be represented on the Board of the companies but again, this is not so. The implication is that the undertakings operate with impunity, without any check and balances. The net effect of the absence of any governing Board over the undertakings is lack of accountability.
Who accounts for the assets and liabilities? Interestingly, the various distribution companies are quick to announce that the federal government and her agencies are owing them. This is true to a large extent as there are fears in many quarters that the privatization process of the electricity sector was actually designed to fail from inception.
However, have the discos accounted for the assets and revenue stream in their custody? Has the government itself shown any seriousness in effectively managing these companies over the years? Where an investor has 40% interest is not a place he will allow to be run anyhow. Where then lies the transparency in the operations of the undertakings.
When both the regulator and the regulated are suffering from similar ailments? The strange thing is that apart from Senator Oshiomole that has raised the issue, no person or entity, private or otherwise, has ever raised the issue of accountability and probity in the undertakings. The plague afflicting most of the distribution companies is that they are largely acquired by those described in street lingo as ‘money miss road’. Beyond lacking the required resources to run the undertakings, they largely lack the technical competence to run the undertakings.
Little wonder that the success so far recorded is abysmal. In some instances, the acquisitions were camouflaged as investment to raid the financial institutions by way of loans, with the catastrophic consequence of ultimately depriving the depositors of their funds. Most of the banks are groaning under the yoke of this burden, and in some instances passed on the bad loans to Asset Management Company of Nigeria (AMCON) and thereby again implicitly drawing on public fund. I believe that the time is ripe for both technical and financial audits of the undertakings to be done as the masses are suffering from the ineptitude of the managers of the various distribution companies.