The latest news about Nigeria’s’ power sector, barely three years after its privatization, is not cheerful. The country is at the risk of total blackout by Christmas, if problems between the electricity generating companies (GENCOs) and the distribution companies (DISCOs) are not addressed immediately.

Development of clogs in the wheel of electricity supply pertains to back-and-forth claims about money owed to GENCOs and DISCOs, which both claim may prevent them from providing electricity to customers, if the right intervention fails to come before Christmas. The magnitude of the problem is well captured by the Executive Secretary of the Association of Power Generation Companies: “The debt is over N300bn that GENCOs are being owed. If the situation is not checked, there will be blackout. It is so imminent that I don’t know if most of the generation we are having now can go beyond Christmas if the payment problem is not resolved. We can’t pay contractors; most of the machines are packing up.”

Similarly, the Association of Nigerian Electricity Distributors claim that it is currently owed N100bn, most of which is traced to various levels of government. The association is also worried about what it calls a shortfall of N809bn in the power industry and its negative effect on efficiency in the energy sector.

 

The relationship between energy providers and citizens have for too long been defined by excuses. In the past, if failure to provide electricity was not about too much rainfall, it was about too little rainfall. If it was not about snakes damaging transformers, it was about thieves stealing electric cables. Years after privatization, excuses now include debt owed by consumers, billing difficulties and cash flow.

 

If the new problem that may lead to total blackout is about outstanding debt owed to both generating and distributing companies, the solution is not to alarm innocent customers who pay their bills with threat of blackout. In the short-run, the appropriate response is for government to pay what it actually (actually because some of the debts might have derived from estimated billing, which is not verifiable) owes DISCOs, while the Nigerian Bulk Electricity Trading Company (NBETC) established as’ a middle man’ between GENCOs and DISCOs by the Federal Government is encouraged to pay what it owes to GENCOs.

The threat of blackout makes it necessary for the government that established the NBETC to serve as guarantor for this debt, and there is no better time for the guarantor to play its role. But in the long run, creating a third party between energy generating and distributing companies needs to be reviewed to ensure efficiency in the sale of energy by generators to distributors who then sell to customers. There should be no space for middlemen between sellers of wholesale energy and retailers to citizens.

More importantly, DISCOs need to stop turning a business issue into a public relations game by unions of distributors. Individual energy distributors need to heed the suggestion to provide verifiable evidence of what is being owed them by specific MDAs. Secondly, it is not a good business culture for DISCOs to rely on estimation of energy use by customers.

 

The technology for billing and collection of payments is too advanced globally for any serious electricity company to justify giving arbitrary bills to customers. Pre-paid meters and Online/POS payment systems are standard devices to guarantee reliable billing and efficient collection of payments in other climes. It is also wrong for DISCOs to visit problems of shortfalls in the power industry on innocent customers. 

 

The Responsibility to have adequate funds as a private business rests solely on the DISCOs, which must have provided evidence of financial capacity before the Federal Government transferred public utilities to them. Estimated bills do not encourage transparency. It is unethical for DISCOs to expect customers to pay bills that are arbitrary. With continued inefficiency in the power sector, there is no better time for President Muhammadu Buhari to revisit his election pledge: “Address the gaps in power sector privatization to ensure it serves the needs of our people.” The electricity sector will not serve the needs of anyone if by Christmas or after, GENCOs and DISCOs have to opt for total blackout.

Folashade Olubayo
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