Why would anyone want power reform to fail?

I was having a discussion with a friend about the power sector reforms and predictably, we came very quickly to the issue of the tariff review. It took me a very long while to lay out for him facts about the industry, that disproved his assumption that the Distribution Companies (DisCos) ‘who were already making […]

I was having a discussion with a friend about the power sector reforms and predictably, we came very quickly to the issue of the tariff review. It took me a very long while to lay out for him facts about the industry, that disproved his assumption that the Distribution Companies (DisCos) ‘who were already making so much money, were asking customers to pay more’. Besides, he asked, “what investments have these new owners made into their businesses since the takeover?” Those were his lines of argument.
I had to explain to him that from the implemented MYTO 2.2, DisCosreceive only 25 per cent of the monthly collection revenue from electricity bills. The other 75 per cent is distributed among the Generating Companies (GenCos), the regulator and other service providers in the value chain to keep the sector sustainable. It is from this 25% that DisCoseke out funds to cover their infrastructural and operational obligations.
But this friend of mine is not alone. There is a pervasive paucity of information about the sector and because nature abhors a vacuum, what has happened over time is that the negative perception held about the industry has led customers to conveniently reach wrong assumptions and hold these tightly, particularly, in areas where they needed information but did not get. This did not happen overnight either. It grew over decades and, until recently, not much was being done to enlighten the public.
Even when the Minister of Power, Works and Housing, Dr. Babatunde Raji Fashola, took his time to explain why the tariff review had to be implemented in spite of presentations to different stakeholders amongst the public (including members of the legislature), many Nigerians remain skeptical.
The truth, though, remains that it is practically impossible to sell a product below its cost of production and expect the entity providing the product not to fail or go bankrupt. A good number of Nigerians are still unaware that for decades, the government was meeting most of the funding deficits of NEPA and the burden on the nation’s budget is part of the reason why the sector had to be privatized.
In the absence of the preceding information, the general expectation is that the unrealistic subsidized prices should be maintained without a critical look at how this will eventually bring us to the total collapse of the sector. Someone even mentioned once that the worst that could happen was darkness…and that we were already used to that. He forgot to consider the fact that the efforts being made presently are designed to ensure that we never have to go back to being a people who assume it is alright to live in darkness.
The improved revenue flow from the appropriately priced electricity supply will help the DisCos to significantly reduce their Aggregate Technical, Commercial and Collection (ATC&C) losses and make the sorely needed investment in distribution infrastructure that is critical for improved electricity supply, core requirements for success of the power sector privatisation. Additionally, electricity that is usually lost through energy theft and other network defects will now be available for the customers, due to the capital-intensive investments the DisCos have committed to making in this year and beyond. For example, under the reviewed tariff order, EkoDisCowill reduce its losses from 28.32% to 20.66%, and by 2024, it will be as low as 10.32%.  In other words, by 2024, Eko will be able to make sure that N89.68 of energy is delivered to its customers.
As for new investments by the owners, I had to inform him that the 11 Discos have already begun the implementation of their Capital Expenditure (CAPEX). Most of the DisCos have committed to rolling out 100,000 meters annually for the next five years,) as provided for and agreedunder their contracts with the Bureau of Public Enterprises (BPE) at the point of sale. This figure will seesignificant movement towards the closure of an estimated five (5) million metering gap, whichis an outcome of decades under the NEPA/PHCN management of the electricity value chain.
Effectively, by 2020, all old electricity customers would have been metered and new entrants metered before they are connected, as directed in the new tariff order. The order enacted and now strictly monitored by the Nigerian Electricity Regulatory Commission (NERC), interestingly, showing the critical importance of metering, stipulates that all metering must be completed within one year (albeit, a requirement that is inconsistent with the agreement that the DisCos executed with BPE).
There are brighter days ahead for the power sector in Nigeria and a lot of foreign interest is focused on the sector. The recently enacted Electrify Africa Act by the USA targets not less than $40bn to be pumped into the electricity sector in Africa. Nigeria remains the biggest potential consumer of electricity on the continent and leads in terms of electricity shortage. There is no doubt that a considerable amount of those funds will end up within our borders. The world is interested in having an energy sufficient Nigeria. The question is, are Nigerians aware of this and the efforts to make this a reality or are they still being misled by other unpatriotic interest groups who are taking advantage of our anger at the power sector’s past and trying to transform that into anger against recent attempts to revive it?
Zigwai writes from Wuse II, Abuja.