Anxiety as govt concludes review of DisCos performance

The Federal Government has finalised the review of the 10 out of the 11 electricity distribution companies (DisCos) in the country.

Precisely, last Tuesday, the government ended the review of the activities of the firms, which it started months ago. By this, the government has celebrated the Fifth Anniversary of the Performance Agreements (PAs), which it signed with the firms.

The government signed the agreements with the (DisCos) on January 1, 2015. The agreements ensure that DisCos significantly reduce problems relating to metering, collection and technical losses within five years of operation.

Prior to this period, the government had directed its agencies and parastatals to review activities of core investors who bought the distribution assets of the defunct Power Holding Company of Nigeria (PHCN). The firms include Ikeja Electricity Distribution Company now Ikeja Electric (IE), Abuja Electricity Distribution Company (AEDC), Enugu Electricity Distribution Company (EEDC), Ibadan Electricity Distribution Company (IBEDC), and Eko Electricity Distribution Company (EKEDC).

Others are Benin Electricity Distribution Company (BEDC) and Jos Electricity Distribution Company(JEDC), Yola Electricity Distribution Company (YEDC), Port Harcourt Electricity Distribution Company (PHEDC) and Kano Electricity Distribution Company (KEDC).

Only Kaduna Electricity Distribution Company (KEDC) was left out of the review by the government because it signed PA with the firm much later after January 1, 2015. This implies that the company is yet to complete the five-year mandatory tenure given to the DisCos to comply with the provisions of the agreements.

While this lasted, the government came with the idea of finally reviewing the activities of the firms, especially those that border on the performance agreements they signed in 2015.

Stakeholders are, however, divided over the outcome of the review. While some believe the exercise would help in defining the status of the firms as well as help the government to proffer solutions to the myriad of problems facing them, others see the review as a futile exercise.

According to those opposed to the review, the issue may not positively impact on the operation of the firms due to what they described as inconsistency in the policies of the Federal Government to move the sector forward. However, there is need to examine some that pertain to the review exercise introduced by the government.

The PAs

In line with the provisions of the performance agreements, which the government signed with the power distribution firms, after the privatisation of the sector six years ago, the firms are expected to significantly reduce the metering problems as well as technical and collection losses in the sector.

However, neither has the DisCos been able to solve the metering problems nor halve their commercial and technical losses. In 2018 alone, the sector was believed to have recorded technical and collection losses of between 39 per cent and 70 per cent, a development, which implied that the industry is yet to rid itself of losses.

BPE’s position

The Director-General, Bureau of Public Enterprises (BPE), Mr. Alex Okoh, said the performance agreements of the 10 power firms became effective January 1, 2015, adding that the final review of the agreements would come up December 31, this year, marking the fifth anniversary of the agreements.

He said only Kaduna Electricity Distribution Company(KEDC) is excluded, since the firm is yet to complete the five-year deadline given to DisCos to comply with the provisions of the agreements.

ANED’s views

The Association of Nigerian Electricity Distributors (ANED) said there was nothing wrong in reviewing the activities of its members, adding that the issue would help in engendering growth in the sector.

Being an umbrella body of the power distribution companies, ANED said its members are making efforts to reduce the number of unmetered customers in the country while at the same time reduceingtheir technical and collection losses.

Its Director of Research and Advocacy, Mr Sunday Oduntan, said the firms have raised collection by N43 billion, from N423 billion in 2018 to N466 billion in 2019, adding that the DisCos hope to increase their revenues in the future.

He said DisCos would meet the requirements of the Federal Government, whenever they assess the effectiveness of the operators in the industry.

Other stakeholders

Stakeholders in the value chain who expressed their views on the exercise, said the idea would help in improving the growth of the sector if well implemented.

An official of the Senior Staff Association of Electricity and Allied Companies(SSAEAC) urged the government to make good use of the exercise, adding that the government has taken the right step to accelerate growth in the sector.

The source advised the government to examine the operation of the meter asset providers (MAPs), which was approved by the Federal Government early this year. He added that many of the MAPs are not discharging their duties well, adding that the development has resulted in their inability to meter more Nigerians. According to him, the Federal Government does not own 40 per cent in the DisCos and as such has no right to claim that it owns 40 per cent in the sub-sector.

Metering difficulties

MAPs were introduced to bridge the metering gap of 4.6 million electricity consumers. However, the scheme is yet to achieve any meaningful results. The initiative, which began operation on May 1, last year, has not been able to provide meters to a larger number of customers in the country.

Investigations reveal that many of the MAPs do not have the required capital to provide meters to electricity customers in their jurisdiction.

The founder, Change Partners International, Mr Akachkwu Okafor, said metering is a major problem in the sector, noting that the issue has slowed down the growth of the sector. He said metering is not only a drawback on the sector but also capable of jeopardising the efforts of the government to improve the growth of the sector.

According to him, inability of the government, to improve distribution of meters across the country, would affect the growth of the sector.

Written by Akinola Ajibade, published on The Nation