Special Report

Nigerian electricity and the high cost of living in darkness


Revealed: How and why Nigerians pay extortionist bills for little or no power supply

AS was often the case in the past, officials of the Eko Electricity Distribution Company, EKEDC, recently stormed the popular Festac Town in Lagos for another round of mass disconnection due to what they claimed was the continued refusal by the residents to pay their electricity bills. But it was a mission that almost turned into a tragic misadventure.

Nigerian electricity and the high cost of living in darkness

Photo: Premium Times

Unknown to the disconnection team before it embarked on this mission, information had earlier filtered to the residents about what was in the offing and they proceeded to lay an ambush.

So, as soon as the EKEDC officials arrived the estate, they were confronted by a group of irate residents who promptly demobilised their vehicle and seized their ladders and other tools they brought along with them for the purpose of electricity disconnection. And while the confrontation lasted, members of the disconnection team were manhandled and held incommunicado as they were prevented from making phone calls.

However, the timely intervention of security agents probably prevented the EKEDC disconnection team from getting the mob treatment. The bitterly aggrieved residents had used the opportunity to give vent to their grouse which bordered on extortion of residents by the EKEDC through outrageous estimated bills, refusal of the electricity company to provide pre-paid meters as requested by residents, frequent mass disconnection, endless power outage, etc.

Incidentally this confrontational drama over electricity supply is not limited to Festac Town, it plays out rather too often across the country. Indeed most electricity consumers across the country are angry. They are angry because power supply has continued to deteriorate while tariffs have increased way beyond reason.

Privatization of the electricity sector

All that have happened after the privatisation of the electricity sector, especially the generation and the distribution sub-sectors, are increased darkness and high electricity tariffs from the Distribution Companies, DisCos. While percentage of tariffs increase, nothing has changed by way of improved power supply. Inefficiency has worsened and all that the DisCos have to offer the public are excuses.

How we got here

After decades of inefficient service delivery by the defunct National Electric Power Authority, NEPA, which transmuted into Power Holding Company of Nigeria, PHCN, the Federal Government under former President Olusegun Obasanjo decided to privatise the electricity sector. It was considered a drain pipe on government purse as several billions of Nigeria was annually budgeted for NEPA without proportional service delivery.

Out of frustration, the Federal Government undertook a power sector reform under the Electric Power Reform Act 2005, which created room for the unbundling of the sector into 18 successor companies: six generation companies, 11 distribution companies and the Transmission Company of Nigeria. While all the generation companies, GenCos and DisCos were privatised, the government thought it wise to keep the transmission company.

The DisCos are Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kano, Kaduna, Port Harcourt and Yola. The six GenCos are Afam Power Plc, Egbin Power Plc, Kainji Hydro-electric Plc, Sapele Power Plc, Shiroro Hydro-electric, and Ugheli Power Plc.

Although the Obasanjo administration made a significant progress in the power reform process, it dragged on until the Goodluck Jonathan administration completed the privatisation exercise in 2013. The expectations of the Federal Government and proponents of the privatisation policy was that with private businesses running the sector, the nation’s power problem which has largely destroyed industries would be fully and effectively addressed. However, four years after, the companies were either sold or given to private firms to manage, the Nigerian public continues to suffer the same inefficient service delivery that characterised the defunct NEPA/PHCN.

High tariffs

The belief in many quarters is that the main interest of the Discos is how much they can rake in from consumers, not the volume and quality of power delivery. The Nigerian Electricity Regulatory Commission, NERC, the regulator in the new power sector arrangement, appears to be interested only in how much the Discos make rather than the services they render to consumers.

Mr. Sam Amadi, former Chairman of NERC under whose supervision the astronomical tariff increase was effected in 2015 made several arguments on what is generally referred to as “cost-reflective tariff”.

He told a gathering of manufacturers in Lagos in 2015 thus: “From what the DisCos have submitted to the Commission, there is a range of tariffs for consumers of electricity. In few DisCos, consumers would see slight increase in tariffs of between 20 per cent to 30 per cent, while it would be higher by 40 per cent there about.

“The charging of tariffs would be based on the cost profile of the Discos, the number of customers available to them and the quantity of power available to them.”

From the forgoing, how much a consumer pays does not depend on the volume of power he is supplied but other extraneous factors such as the number of consumers.

Correlation between current tariffs and quality of service delivery

In the build up to the tariffs increase, Chief Executive Officer, of Eko DISCO, Oladele Amoda, also told a consumer consultation forum that: “There is no way we can have stable power supply without adjusting our tariffs because currently we are running at a loss. The company is being run at a loss since its inception because our investors had invested lots of money into the system which has not reflected on the supply distribution chain to the customers.

“Most of our equipment like transformers, cables, lines and so on, are being imported, and the cost effect of rising dollars had affected the cost of these materials. Gas supply is also another issue, gas suppliers have drastically increased the price and they now feel reluctant to sell gas to industrialists due to price differential.”

The big rip-off

There is no correlation between current tariffs and quality of service delivery. For instance, many residents in medium density areas of Abuja pay between N8, 000 to 15, 000, up from an average of N3,000 to N6, 000 pre-privatisation. However, there has been no significant improvement in service delivery.

This was precisely what has led to the several confrontations between Festac Town residents and the company in charge of supply of electricity in the area. For instance, in a petition dated September 18, 2017 and titled Re: Persistent Fraudulent Estimation Bills, Despite Demand For Pre-paid Meters addressed to the Customer Complaint Unit, Government & Consumer Affairs,Nigeria Electricity Regulatory Commission, NERC,Garki-Abuja, the residents had listed a litany woes they had suffered on account of the inability of the electricity company to meet their electricity needs.

According to them: “Despite our earlier petition on the above subject matter, things appear the way they are or even worse, with EKEDC still giving residents estimated bills of between N9,750 to N15,000 for just the month of September 2017, which was dumped at the close on September 16, 2017.” Their earlier petition under reference is hereby reproduced:

“Sequel to the mass disconnection of the entire ‘A’ Close, 312 Road, Festac Town, Lagos, on account of the residents demand for Pre-Paid meters on July 26, 2017 by your officials, we write to demand that each flat be provided with a pre-paid meter henceforth. It will interest you to know that residents of the above Close have been exploited and extorted for more than two years on account of outrageous estimated bills, which reached its climax on July 26, 2017, when the residents decided that enough was enough and said that they will not pay the estimated bills further till they are provided with the pre-paid meters.

“To refresh your memory on the issues, residents of the above Close had on November 12, 2015 marched to your office at 23 Road, Festac Town, to complain of the same exorbitant estimated bills and demanded an audit of the appliances in the respective residents flats, which was carried out by your staff on November 14, 2015, tagged ‘Operation Show Your Electrical Appliances’. Till date, we were not availed of the result of the said audit.

“Despite individual residents’ efforts and that of the Close executive, it appeared that the more the residents complain, the more the exorbitant estimated bills keep pouring in.

“As you may be aware, unless it turns out you are not, most flats are billed an average N17,000 per month and you will agree with us that this is not only arbitrary but criminal and unacceptable.

“We wish to also bring to your notice that your officials, led by one Mr. Osakwe had sometime in 2014, labeled all the meters supplied by then NEPA and PHCN as outdated and not functional; to use his words: ‘they have been compromised’. And these are same meters being used by other DISCOs. We know of a fact that this was done by your men to create the impression that the meters were not working to give way for the exorbitant estimated bill, under which guise your men have been extorting and exploiting us, which we have decided to stop now.

“The build-up to our recent face-off with your staff in Festac Town started on July 12, 2017, when residents rejected bills for June 2017, which were served on the residents on the said date, that was after three and half weeks of darkness.

Sadly, instead of your staff to take the matter to the office for a resolution of same, we suddenly saw the same bills returned to us some three days later, with the same figures we complained about, in what appeared to be a clear disregard to our complaints.

“But in clear contempt to our sensibilities, your men on July 26, 2017, stormed the said ‘A’ Close for mass disconnection. This was resisted by the residents who mobilised other residents who were at home as most others have gone to work, but your officials, while discussions were on with a woman who said she was the Festac PRO, went to the transformer, where they disconnected the entire close and ‘A’ Close has been in darkness since then.

Unreasonable estimated bills

“Having reviewed the events of November 14, 2015, that of July 12, 2017 and that of July 26, 2012, and bearing in mind that we are most times in darkness due to endless power outages, the Close at a meeting on July 29, 2017, resolved and demands the following:

That all the residents be provided with pre-paid meters henceforth.

That your unbearable bills since January 2017 shall be paid by the residents at N3,000 per month, as an average resident in the same locality with pre-paid meter spends about N1500 per month.

Provide us with result of ‘Operation Show Your Electrical Appliances’ carried out on November 14, 2015, to enable us know how you came about previous bills estimates.

“At the time of writing this petition, the entire A Close is in darkness, and some other Blocks on 31 Road, which were erroneously disconnected also, courtesy of your officials who felt that it was an affront on our part to complain of unreasonable estimated bills and the exploitations we have been subjected to all this while.


SOURCE: Vanguard Nigeria

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