Power Punch The Role of Complaint Redress Mechanisms in the NESI by Aisi Atiti February 8, 2023 Published by Aisi Atiti Complaint redressing is the process of providing remedy or compensation for a grievance or unfair situation. The Nigerian Electricity Supply Industry (NESI) is plagued with numerous grievances, which are felt mainly by electricity customers. However, what is the role of complaint redress mechanisms in the NESI in placating electricity customers? The NESI is composed of four main sub-sectors, including Generation Companies (GenCos), the Transmission Company of Nigeria (TCN), the Distribution Companies (DisCos) and the electricity customers. The DisCos are the closest to the customers of these four sub-sectors because these utilities distribute electricity to households and businesses under their franchise areas. According to the Electric Power Sector Reform Act (EPSRA) 2005, the DisCos are also responsible for retrieving the cost of electricity produced and consumed by customers. However, that is not the case. The distribution sub-sector is faced with myriad challenges, the most pressing being the liquidity crisis due to DisCos’ inability to recover revenue from customers. This liquidity crisis ripples through other sectors of the NESI through the failure to pay gas suppliers, the lack of funds for maintaining and purchasing adequate transmission infrastructure, and the lack of meters, among others. These challenges affect the quality of power supply and exacerbate customers’ unwillingness to pay bills. An option to break this vicious cycle is exploring the role of complaint redress mechanisms in the NESI. Often, customers have complaints ranging from the quality of the power supply they receive to faulty distribution infrastructure in their neighbourhoods. There are often complaints of overestimated bills for unmetered customers under the Nigerian Electricity Regulatory Commission’s (NERC) estimated billing methodology. According to the NERC Customer Complaints Handling Standards and Procedures, all customer complaints must first be filed, written or oral, at the Customer Complaints Unit (CCU) of the respective DisCo. However, if a customer is dissatisfied with the resolution or the complaint has not been attended to after 15 days, the customer can then lodge a protest at the closest NERC forum office. If the customer is still dissatisfied, they can petition the NERC head office. Despite NERC’s directive on complaints handling by the DisCos, numerous electricity customers are unaware of the available complaint redress mechanisms. Hence, customers can not place complaints through the appropriate channels and get resolutions. This puts a significant strain on DisCo-customer relationships in the NESI. As mandated by NERC, DisCos are responsible for enlightening electricity customers on the available complaint redress mechanisms. This enlightenment can be in the form of printed pamphlets with CCU and forum office addresses made available to customers periodically. The DisCos are also mandated to notify customers on how to complain through traditional and social media. If properly harnessed, the role of complaint redress mechanisms in the NESI will go a long way in mending the relationship between DisCos and electricity customers. Through this, customers will have a better understanding of the workings of the electricity sector, including tariff band, estimated billing methodology and the need for revenue recovery by the DisCos. With more customer complaints being monitored and resolved, there will be an overall improvement across the Nigerian electricity value chain. Exploring the role of complaint redress mechanisms would help customers stay up-to-date and understand why things are happening the way they are in the industry. February 8, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Podcast Prospects for Sub-franchising in the DisCos: What Next? by Aisi Atiti November 29, 2022 Published by Aisi Atiti The growing urbanisation in the country requires distribution companies (DisCos) to improve power supply to be able to service end-user customers. This episode of the Nextier Power Podcast features Abigail Botsha, the Head of Marketing and Business Development at GVE Projects Limited. Ms. Botsha joins us to explore some of the prospects for sub-franchising in the DisCos DisCos. November 29, 2022 0 comments 0 FacebookTwitterPinterestEmail
Power Punch The NESI’s Metering Conundrum by Aisi Atiti August 2, 2022 Published by Aisi Atiti The sub-sectors in the Nigerian Electricity Supply Industry (NESI), generation, transmission and distribution, face peculiar challenges that impede adequate power supply to consumers and deepen the liquidity crisis. Among these challenges, the NESI’s metering conundrum is of great concern. Since the 2013 privatisation of the sector, the electricity metering gap has done nothing but grow. For this reason, most electricity customers pay for tariffs according to their distribution companies’ estimated billing procedures (DisCos). However, the estimated billing procedures consistently lack transparency and room for accountability. And because customers cannot adequately prove that the amount they pay is equivalent to the electricity supply, it reduces their willingness to pay bills. Therefore, the DisCos’ collection rates decrease, and the liquidity crisis worsens. However, post-privatisation, the Nigerian power sector has experienced the implementation of different metering schemes. In 2015, the Nigeria Electricity Regulatory Commission (NERC) introduced the Credited Advanced Payment for Metering Implementation (CAPMI) scheme. Although unsuccessful, CAPMI aimed to provide meters to customers willing to pay, while their DisCos refunded the cost in cash or equivalent energy units. After the failure of CAPMI, NERC introduced the Meter Asset Provider (MAP) scheme in 2018. The MAP scheme sought to empower meter asset providers to finance, procure and install meters for electricity customers in the country. The cost of the meters was to be recovered through a Metering Service Charge billed to the customers as part of their tariffs. Unfortunately, this metering scheme has not been as successful as expected. To further address the NESI’s metering conundrum, the federal government launched the first phase (Phase 0) of the National Mass Metering Programme (NMMP) on the 30th of October 2020 with a loan from the Central Bank of Nigeria (CBN). The programme’s first phase aimed to disburse a million meters to electricity consumers; however, only about 980,000 meters were disbursed. Although the goal for the first phase wasn’t reached, the NMMP is already thought to be better than the MAP, which installed 350,000 meters in over eighteen months. The NERC Commissioner for Finance and Management Services, Mr Nathan Shatti, recently announced that the second phase (Phase 1) of the NMMP would commence in August 2022. The Regulator further stated that 45 local meter manufacturers are bidding to be part of this second phase. Shatti said: Our target is to install four million meters for customers. From our experience in phase zero, we want to make sure that the manufacturers can deliver before allocation is made. However, due to allegations of fraud by the CBN against some Meter Asset Providers (MAPs), the second phase of the NMMP seems to have been put on hold. So far, the CBN has provided over ₦60 billion in intervention funds to address the NESI’s metering challenges. However, despite these interventions, the NESI’s metering conundrum remains a massive bottleneck. In their latest Commercial KPIs Q4/2021 report, the Association of Nigerian Electricity Distributors (ANED) reported that of the 10 million electricity customers in the country, only 4.7 million are metered, which leaves 5.3 million unmetered registered customers. At the end of 2021, over 10 million customers are registered, with approximately 47 per cent metered. However, data obtained from NERC shows that there are 12.78 million registered electricity customers in the country. The NERC data also shows that the value for metered customers drops to 37.3 per cent, with unmetered customers being 62.7 per cent. These disparities in data beg the importance of a system that adequately enumerates electricity customers and the progress of metering schemes as they move forward. Also, how can the CBN ensure that metering intervention funds are adequately utilised, and the NMMP does not fail? These critical questions must be overcome for any effort at addressing the NESI’s metering conundrum to be productive. August 2, 2022 1 comment 0 FacebookTwitterPinterestEmail
Power Punch State of the NESI: DisCos Being Restructured for Unpaid Loans by Aisi Atiti July 7, 2022 Published by Aisi Atiti The partial privatisation of the Nigerian power sector in 2013 led to the development of six Generation Companies (GenCos), eleven Distribution Companies (DisCos) and the government-run Transmission Company of Nigeria (TCN). Although the unbundling aimed to create a competitive electricity market for the Nigerian Electricity Supply Industry (NESI), that is not the case today. The current state of the NESI is DisCos being restructured for unpaid loans. The federal government recently announced that five (5) distribution companies would be reformed due to the inability to repay loans borrowed during 2013 unbundling. The affected DisCos are Benin Electricity Distribution Company (BEDC), Ibadan Electricity Distribution Company (IBEDC), Port Harcourt Electricity Distribution Company (PHEDC), Kaduna Electric and Kano Electricity Distribution Company (KEDCO). The announcement was made by the Executive Chairman of the Nigeria Electricity Regulatory Commission (NERC), Sanusi Garba, and the Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh. They both stated that the move to reform the DisCos was necessary after Fidelity Bank activated the call on the collateralised shares of BEDC, Kaduna Electric and KEDCO. According to the statement, the bank made the activation due to the DisCos’ inabilities to repay loans used in acquiring assets for privatisation. This current state of the NESI involving DisCos being restructured for unpaid loans has a lot of intricacies. NERC and BPE have approved the list of new board members for the DisCos provided by the bank. BEDC: KC Akuma (Chairman), Adeola Ijose (Member), Charles Onwera (Member).Kaduna Electric: Abbas Jega (Chairman), Ameenu Abubakar (Member), Marlene Ngoyi (Member).KEDCO: Hasan Tukur (Chairman), Nelson Ahaneku (Member), Engr. Rabiu Suleiman (Member).IBEDC: Ahmed Kuru (Chairman), Eberechukwu Uneze (Member), Aminu Ismail (Member). However, to protect the government’s 40 per cent (%) interest in the DisCos, the BPE has also nominated Yomi Adeyemi (BEDC), Umar Abdullahi (Kaduna Electric) and Bashir Gwandu (KEDCO) and Oluwaseyi Akinwale (IBEDC). In addition, NERC and the BPE have appointed managing directors to ensure the process of business continuity for the DisCos: Henry Ajagbawa (BEDC), Yusuf Usman Yahaya (Kaduna Electric) and Ahmad Dangana (KEDCO). According to the statement: Lastly, we are restructuring the Management and Board of Port Harcourt DISCO to forestall the imminent insolvency of the entity. As a condition for support to the entity to meet its market obligations, Iboroma Akpana will take over as the Chairman of the Board. Emmanuel Okotete, Eyo Ekpo, Ismaila Shuaibu and the DG of BPE will form the interim Board. Mr Benson Uwheru will take over as the Managing Director of PHEDC as part of the changes. The current state of the NESI involving DisCos being restructured for unpaid loans was not the envisaged vision post-privatisation. As a result, experts have urged for the power sector’s privatisation to be reversed. In a statement, Kunle Olubiyo, President of Nigeria Consumer Protection Network, said: It is either the Federal Government do a mid-term review of the privatisation process or total reversal of the privatisation. We did not get it right… Mr Olubiyo added that the government has spent more on the sector post-privatisation than on the defunct National Electric Power Authority (NEPA) and Power Holding Company of Nigeria (PHCN). Privatising the power sector was supposed to yield increased generation and efficiency and attract private investment; however, DisCos being restructured for unpaid debts proves otherwise. July 7, 2022 1 comment 0 FacebookTwitterPinterestEmail
Power Punch NERC’s PPA Order: Achievable or not? by Aisi Atiti June 28, 2022 Published by Aisi Atiti Today, the electricity supply in Nigeria continues to worsen, and stakeholders in the Nigerian Electricity Supply Industry (NESI) have their own opinions on ways to improve the situation. The most recent of these ways is the Nigeria Electricity Regulatory Commission’s (NERC) move to activate a new Power Purchase Agreement (PPA). However, there are concerns about whether NERC’s PPA order is achievable or not. According to the letter sent to one of the Generation Companies (GenCos) by the NERC secretary, Ada Ozoemena, the PPA is expected to be activated today between the Nigerian Bulk Trading Plc. (NBET) and the GenCos. The Power Purchase Agreement conditions GenCos to produce a minimum of 5,000 MW (5 GW) to improve the country’s electricity supply situation. However, Generation Companies have come up with reasons why the order would not be achievable. GenCos have stated that to produce 5,000 MW, firstly, gas supply must be guaranteed. Gas availability has for long been a hindrance to electricity production in Nigeria. According to the National Control Centre, post-privatisation, the thermal GenCos have only gotten about 13 per cent of the 28,000 MW of gas equivalent required for electricity generation. Despite the federal government’s (FG) attempt to address the gas supply challenge to GenCos, it is still a huge factor contributing to the poor generation capacity. And this is a factor in determining whether NERC’s PPA order is achievable. GenCos have also mentioned that they are still owed about 1.64 trillion nairas from the previous agreement. They stated that discrepancies in the previous agreement led to the federal government paying 701 billion nairas to the gas suppliers, but the rest is on their account. Again, it was further agreed under clause 13.4.1 of the Agreement that: ‘for each billing period during the delivery term, seller shall invoice buyer for the capacity payment, energy payment, take or pay payment, and start-up cost payable to seller for such billing period upon receipt of the final settlement statement from the market operator following the applicable billing period.’ The payment shown in such invoice as due to seller shall be paid by buyer on or before the 15th business day following the day the invoice is delivered to sector whether buyer disputes the invoiced amount. Despite the GenCos’ claims, the NBET insists that payment was made to the generators when due. She stated: To put in context, NBET makes payment to GenCos as and when due, and has never defaulted on any payment cycle till date. Furthermore, the percentage payment made to GenCos has continually been on the increase, with the N701.9 billion PAF payment, which ensured a minimum of 80 per cent of GenCos invoices for 2018 and 2019, as well as the second PAF of N600 billion that ensured an average of 95 per cent payment of GenCos invoices for 2020. Also, with the current Power Sector Recovery Operation (PSRO) programme that caters for tariff shortfall, GenCos have continued to receive over 90 per cent payment of their generating invoices for the 2021 payment cycle. To determine if NERC’s PPA order is achievable or not, firstly, strategic efforts must be made to ensure gas availability for power-generating companies. Also, all parties should be involved in drafting agreements to encourage mutual clarity on outstanding debts. Finally, if GenCos succeed in producing 5,000 MW of electricity, will the NESI’s current infrastructure be able to accept this capacity? June 28, 2022 1 comment 0 FacebookTwitterPinterestEmail
