Inside FG, Discos war over epileptic power supply
For weeks now, the federal government and electricity distribution companies operating in Nigeria have been pointing accusing fingers at each other over their roles in decelerating the actualisation of adequate power supply in the country.
While the government is insisting that the Discos are not making concerted effort to deliver on expectations, the Association of Nigerian Electricity Distributors, ANED, see the allegations as a political move to garner support in the coming elections.
Minister of Power, Works and Housing, Babatunde Fashola SAN, had at a news conference, penultimate week, expressed worry over the activities of some operators in the sector.
Fashola while evaluating the sector’s performance in the last three years, identified some lapses in power generation and distribution. For instance he noted that while electricity generation had improved from approximately 4,000MW in 2015 to 7,000MW in 2018, power distribution had remained at 5,222MW in 2018.
The minister blamed the DisCos for not taking enough power leaving 2,000MW stranded with about 1,150MW addition soon.
Fashola also picked holes on some issues relating to metering, power generation and transmission capacities, among other challenges.
He therefore directed the Nigerian Electricity Regulatory Commission, NERC, to heighten enforcement actions on the DisCos, with a warning to the operators to deliver on their mandate or leave the stage for more serious companies.
However, reacting to the allegations, the ANED stated that most of the comments made by the minister at the news briefing were significantly distorted.
The 11 Discos in a joint response to the minister, alleging that ministry had consistently promoted policies that had resulted in sector-wide confusion. They stressed that the ministry infringed on the responsibilities of the various sector players, imposed its agenda on the regulator, compromising its independence, created lack of respect for contracts as well as distorted and redefined the law of privatisation.
The 28 page document issued by the ANED’s Executive Director, Research and Advocacy, Sunday Oduntan, faulted claims by the minister that Nigeria’s power generation capacity was about 7,000 megawatts and that the distributors were not taking about 2,000MW of the installed capacity.
“We do not understand the constant references to the increase of generation capacity to 7,000MW from 4,000MW for the period of 2015 to 2018 that has been used as the basis of defining the Discos as incapable of taking on more power – the stranded 2,000MW.
“A review of NERC’s ‘Daily Energy Watch’ for January 28, 2015 would indicate a generation availability of 6,421MW (divided into peak of 4,230MW and constrained energy of 2,191MW). In other words, it is misleading to state that available generation has grown from 4,000MW in 2015, as a measure of progress, given that a volume of generation slightly under 7,000MW already or previously existed, prior to the beginning of this administration.”
The ANED insist that there is no stranded 2,000MW, “While there is an available capacity of 7,000MW, the best that can be generated, at this time, is 5,000MW. This is because there is insufficient gas to power the thermal plants due to gas line limitations (for instance, the non-completion of the Oben pipeline) and the absence of a commercial framework that would encourage gas exploration. Generation that is constrained by gas amounts to an average 1,500MW daily.”
The minister had also at the briefing, ordered NERC to enforce the contract for the Discos to provide meters and end estimated billing. He said the directive became inevitable following the number of complaints received on meters, as well as concerns about estimated billing and mass disconnection.
Referring to several sections of the Electricity Power Sector Reform Act 2005, the Minister stated that it was necessary to direct NERC to step in to “enforce the contract of Discos to supply meters and act to ensure the urgent and speedy supply and installation of meters with a view to eliminating estimated billing and promote efficient industry and market structures.”
But contrasting this, the distribution firms argued that at the 18th monthly power sector and stakeholders’ meeting held August 2017, the minister had clarified that the supply of meters to electricity customers was not exclusive to the Discos.
“This is a contradiction of his convenient assertion now that customers with no meters should turn to the Discos. The metering gap, a major concern for our customers and us, unfortunately, has become a politicised issue. As a means of tracking and accounting for our revenues, there is no greater interested party in comprehensive metering than the Discos.
ANED recognise that though there is a gap of about 4.1 million meters needed to satisfy customers’ demand for meters and end the estimated billing methodology, the firms noted that they have so far met 88percent of the Performance Agreement which required the firms to provide 1.7million meters in their five years of operation.
The Discos are however optimistic that with the farming out of the responsibility of metering to third party vendors under the Meter Asset Provider regulation enacted by NERC, the challenges of estimated billing will be minimised over time.
On Fashola’s claim that no Disco was buying power directly from the any generation company, the distributors stated that in an environment of significantly limited supply, the determination that the Discos were unwilling to maximise the supply of electricity to their customers for some nefarious reasons was counter-intuitive.
They stated that the only product that the Discos were selling to make revenue was electricity, and the only reason a Disco would not take more energy was due to the impact of the revenue shortfall in the industry, which limits the available capital available to invest to take the power.
“The minister’s position is inconsistent with the facts. Indeed, the various interferences in the past four years have simply created a continuous shifting of the goal post.”
They conclude that the objective of the minister’s briefing was to demonise the Discos, who by the structure of the Nigeria electricity supply industry, were the faces of the difficult sector.
“We are also left wondering whether such demonising of the Discos is a camouflage for the absence of the effective policy leadership that is desired for implementing the enabling environment that is necessary for the viability and sustainability of the NESI.
“We recognise that we are on the crux of a political season, in which all manner of advantage is being sought by political contenders and we, however, do not want to be used as the whipping dog to advance other people’s agenda.”
In the face of the damning revelation by Oduntan, the minister wasted no time in responding in a release he titled; My Directives on Improved Service Delivery in the Power Sector Went to Legal Entities, Not to an Interloper.
According to Fashola, his directive was to legal entities and not ANED which is not a licensee.
“If ANED is not a licensee, who is ANED? An NGO? If so, they should listen to consumers because Nothing is Going On about poor service.
“The BPE, NBET and NERC, to whom my directives were made, contracted individually with DisCos not as an association,” the statement of the minister read.
He accused the ANED boss of being a “saboteur not a builder, and he would do very well to acquaint himself and advise his co-travellers about the consequences of sabotaging the economy under our Laws,” but failed to address issues of power generation and capacity to transmit.