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Despite the privatisation of the power sector which is hoped will improve electricity supply in the country, Nigerians still suffer from incessant power outage which has worsened in the last two months, crippling business activities
| By Anayo Ezugwu | Feb. 3, 2014 @ 01:00 GMT
REGINA Onuze, a small scale frozen food shop owner in Ikotun area of Lagos, is a sad woman. In the past two months her frozen foods business, which she started in September last year, has suffered a serious setback due to incessant power supply. Onuze told Realnews that since the first week of November, she had been encountering losses on a regular basis, as the frozen foods in her freezers easily got bad because of constant blackout in the area. “I lost four cartons of chicken and three cartons of turkey worth about N40, 000 in the past one month due to poor power supply. Not only do I encounter blackout, the bill has increased. How can a small shop like mine pay as much as N9,500, as against the N3, 000 I paid last month?” she queried.
Onuze’s case is made worse because she does not have a standby power generating set, thus she is afraid that if power supply does not improve she is likely to lose her source of livelihood through which she takes care of her family. Her story is not different from many other Nigerians who run small and medium scale enterprises and other manufacturing companies who are groaning under power outage and increased cost of doing business as they resort to alternative power supply to remain in business.
Austine Njoku, a book publisher who resides in Lagos is one of such Nigerians who is frustrated because of costs of running his business with a power generating set. “I spend no less than N12,000 on fuel for my generator every week. If you add that up, it equals N48,000 every month. You can see that it is a lot of money to spend on only power generation in a month. The truth is that I may not be able to cope for long. Power supply in my area has never been this bad. On the average, we get electricity almost every day of the week. But the problem is that it does not last beyond three hours. Sometimes, there is complete outage for one month at a stretch. You can be sure that I would spend more on fuel for my generator during such a period,” he said.
Mike Okebunor is another businessman, who is going through a similar experience. He spends an average of N4,000 every week on fuel to power his two generators. “This figure excludes the cost of engine oil for the generators every week. Last month, I spent N16,000 on power generation on the domestic front. This is apart from the amount I spent recharging my pre-paid electric meter, which was supplied by the Power Holding Company of Nigeria, PHCN, before it was unbundled recently. It is sad that we have to spend so much money on electricity in an oil-rich country such as Nigeria. We are virtually supplying our own electricity in this country,” Okebunor said.
For Chikodi Chukwumaeze, another Lagos resident, life in her neighbourhood was a lot better before the privatisation exercise. “We were relieved when the federal government completed the unbundling of the PHCN in November last year. We were hopeful that power supply was going to improve. But what we are witnessing now is very disappointing. How do we explain a situation where we are thrown into darkness for three or more consecutive days? Whenever the new investors decide to give us power, it does not last more than a few minutes. Even if power will not improve in the hands of the new private owners, at least they should revert to the old when we used to get power supply for a few hours,” she said.
Like others, Chukwumaeze also complained about high cost of fuelling her generating set. “I used to make use of petrol worth N700 for three days before privatisation. Now the same amount of fuel is used up within 24 hours as the generator is practically run throughout the day. Funny enough, in spite of their poor service, the electricity bill did not reduce. They still charge me the same N1, 500 that PHCN used to bill me.”
Onuze, Njoku, Okebunor and Chukwumaeze, are just four out of millions of Nigerians affected by the poor power supply that has continued to dog the county despite the reforms in the power sector. The epileptic power situation in the country is being experienced across the nation. In all the states of the federation, the story of power situation is the same. In Enugu, Akwa Ibom, Cross Rivers , Kaduan, Ibadan, Abuja among other where Realnews magazine investigated people agonised the situation which has made them to resort to the more expensive option of using generators to power their businesses or household.
The epileptic power supply is also taken its toll on institutions like hospital and schools. For instance, on Monday, January 20, the qualifying examinations for candidates seeking admission to the University of Lagos postgraduate school was disrupted because of power failure. Some of the candidates, who particularly were to write the Computer Based Tests, could not do so because of the inability of one of the school’s generators to power the computers and other facilities for the examination. The school authorities promised to find a way resolve the power problem before calling the applicants for the test again.
This, indeed, has been the lot of Nigerians who had hoped that with the privatisation of the PHCN, electricity supply would automatically improve. But that looks a forlorn hope now. Realnews investigations have shown that there has been no significant change since the handover of the PHCN to private investors. Instead, things are getting worse. Issuing of the pre-paid meter has been suspended, making it easier for the new owners to continue with the system estimated bills. To avoid fraud in the system, the new owners have introduced payments through bank draft. Other than that, there seems to no new equipment installed to replace the old ones in the generation and distribution plants to give hope that things would soon improve.
During the last festive period, the nation experienced massive fluctuation of electricity, which ruined a lot of planned activities. The development was attributed to inadequate supply of gas to the various power plants in the country and the non-payment of gas fee by the new investors to the Nigeria National Petroleum Corporation, NNPC. At the time, power supply dipped by 450MW from the peak generation of 4,500MW in December 2013.
The management of the Nigerian National Petroleum Corporation, NNPC, on Monday, January 20, explained that the recent drop in gas supply for power generation was due to rising incidents of outright sabotage of some crucial gas pipelines which has significantly eroded available gas supply to the power plants. Andrew Yakubu, group managing director of the corporation, said “The remaining supply shortfall is due to maintenance issues at Utorogu gas plant (60mmcf/d). The outage of the ELPS A pipeline has been on for over six months due to willful acts of vandalism at various locations between Escravos and Egwa location.” . Yakubu said all things being equal, gas supply will be reinstated in the weeks ahead.
The Transmission Company of Nigeria, TCN, lends credence to the NNPC, stating that the drop in power supply during the festive period was caused by vandalisation of the gas pipeline supplying gas to Okpai power plant in Delta State, which resulted in the shutdown of the power station and unavoidable power rationing nationwide.
Apart from shortage of gas supply to power plants, there are other problems confronting the new investors which they may not have foreseen when the bought the privatised companies in the power sector. They ranged from poor public awareness of the payment of electricity tariff, inadequate power load allocation, gas constraint, poor communication between the TCN and electricity distribution companies to the unresolved staff issues inherited from the defunct Power Holding Company of Nigeria.
Funke Osibodu, director, Benin Electricity Distribution Company, vented the frustrations of the investors at the first general meeting organised by NERC, in Abuja, last month. Osibodu acknowledged that there was much confusion in the public about the new dispensation in the power sector, adding that the public believed they were not supposed to pay for power consumption until January and that they should not be disconnected until then. In some cases, she said some of the people would “come to them to ask for pre-paid meters for free. There were lots of misconceptions in the public that needed to be explained about the power sector. Anything that happens anywhere, even if it is not your concern, it is assumed that it is your doing. The public believes that the lack of power is because the new owners in distribution companies do not know what they are doing. But in reality, it is a GENCO problem as a result of gas shortage. At one point, we were about going on air to make people know the true position,” she said.
Also, Jamili Gwamna, managing director, Kano Distribution Company, said that the power allocated to his company had been below capacity and as such, reduced the DISCO’s revenue expectation. “Our power allocation has been low in recent times. How on earth will customers pay me and how will I pay money also? There has not been power and when you threaten to disconnect consumers, they tell you to hurry up with the disconnection process,” Gwamna said.
It appears that the Nigerian Electricity Regulatory Commission, NERC, is very much aware of the challenges facing the new investors. A statement issued by NERC recently said the investors had complained that workers of the defunct PHCN that they inherited had yet to know their fate with the new owners. Some of the employees have not been served severance letters, officially terminating their contracts with the company. “As a consequence, these workers, who are yet to be legitimately engaged by the new owners, have been forced to remain in this uncertainty,” the statement said.
Nonetheless, funding could also be part of the problem of the new investors as huge investment would be needed to put the GENCOS and DISCOS on track in order to meet the electricity requirement of Nigerians. Recently, the Bureau of Public Enterprises, BPE, said that the electricity distribution companies handed over to private investors on November 1, would require about $1.8 billion (about N288 billion) as capital expenditure over the next five years to attain efficiency in order to meet the required capacity. Benjamin Dikki, director-general, BPE, said the Discos would be required to spend a total of $357.7 million within one year. According to him, out of the $357.7 million, Abuja DISCO would be expected to invest $36.6 million; Benin DISCO, $24.3 million; Enugu DISCO, $27.2 million; Ibadan DISCO, $43.86 million; Jos DISCO, $22.75 million; Kaduna DISCO, $29.96 million; and Kano DISCO, $30. 38million. Others are the Eko DISCO, $45.2 million; Ikeja DISCO, $58.74 million; Port Harcourt DISCO, $25.5 million; and Yola DISCO, $13 million. In addition to the huge investment, Dikki said $357.7 million was expected to be injected into the distribution networks annually between now and 2017, which would amount to about N1.8 billion.
If the new investors found a way to overcome the funding issue, they would have to find a way to make their staff more efficient and effective. As pressure continues to mount on the private investors for power supply, they also seem to have transferred the pressure to their workers. Realnews learnt that the electricity workers in the country were now under intense pressure to deliver as the six-month probation on which they were engaged by the 14 power firms would soon grind to an end. The generation companies and the distribution company gave a tough schedule regime to the workers. While some are doing the job of two or more people, others do the work of four to fill the vacuum created by the retrenchment. In some of the business units Realnews visited in Lagos, workers were seen making frantic moves to meet set targets.
A worker at the Ikeja Electricity Distribution Company said meeting the targets set by the firms has been difficult. He said the shortage of manpower has put workers under serious pressure. “The overhauling of the PHCN and the retrenchment of workers last year has caused anxiety in the industry. Those retained by the power firms, live in fear. The reason is because the firms have promised to review the workforce soon. There has been intense lobbying by the staff to regularise their appointments. Besides, a worker does the work of three or four people. I was assigned to distribute bills in four communities, a job hitherto assigned to two or more workers,” he said.
Mansur Musa, president, NUEE, said the workers had been subjected to unnecessary pressures since the companies took over the assets of the PHCN last year. He said the workers were made to undertake more responsibilities, adding that they are in dilemma as the expiration of the probation period draws nearer. “We are fighting our battles from two fronts. First, we are working to ensure the operators do not sack more people after the probation period. Secondly, we want to ensure that those disengaged from services are recalled. We do not want the sector to collapse, hence the decision to appeal to the government to handle the workers’ issues with caution. To secure quality hands is not easy. That is why the government needs to reconsider its decision on some labour issues,” he said.
According to Musa, the business units and other locations managed by the power distribution companies could not boast of enough funds, stressing that the issue has affected their operations. “We have been trying to tell the government that the money level in the business units and other locations has been depleted. This has worsened the workers’ plight because the power distribution companies were not ready to employ more hands. What we see is mounting pressure in the industry. If the trend continues, there would be industrial accidents. The workers are going to burn out, as a result of stress. When this happens, low productivity would set in and the DISCOs and GENCOs would not be able to achieve their goal of improving power supply.”
Apart from that, the issues of non-payment of the severance packages to some workers of the defunct PHCN still lingers. On January 13, the disengaged workers staged rallies in different parts of the country to protest against the delays in the payment of their severance packages. Ajaero said the federal government had reneged on the agreements reached with the workers over their terminal benefits. According to him, more than 5,000 workers who retired statutorily were yet to be paid their gratuities. The death benefits of more than 1,000 people who died in active service were also yet to be paid to their families.
However, the BPE has challenged the NUEE to supply the list of names of the 25, 000 PHCN staff it claimed not to have been paid and the 10,000 and 5,000 others being bandied. The BPE, in a statement signed by Chigbo Anichebe , head, public communications, disclosed that to effect the payment of the 43, 375 workers, the bureau had remitted N361 billion to the office of the accountant-general of the federation. Anichebe said that had brought the payment made with regards to the validated staff to 94.79 percent of the workforce. “Validation of another 2,382 has been concluded and payments are in process. This brings the total number of staff verified to 45, 757 or 95.5 percent of the purported staff strength of the PHCN. Furthermore, the committee, chaired by the permanent secretary, federal ministry of power, is still working tirelessly to validate the remaining 4.5 percent of the work force. These are purported staff that the committee has so far not been able to obtain documents and information to validate their claims to being staff of PHCN”, he said.
Despite BPE’s explanation, it has not solved the immediate problem of poor power supply in the country. This may be why the federal government has taken various actions to tackle the problem. First, on Sunday, January 19, the government said $1.5billion (N240bn) had been mobilised from various sources for the upgrade of power transmission network in 2014 and beyond. Ngozi Okonjo-Iweala, minister of finance, said the measure was part of the efforts to ensure clear and sustainable benefits of the power sector privatisation programme to the country. “Power transmission remains with the federal government, with the management outsourced to the Manitoba Hydro Company. $1.5bn in financing from various sources have been mobilised for investment and upgrade of the transmission network in 2014 and beyond,” Okonjo-Iweala said.
Secondly, earlier in the month, the government gave a marching order to power investors and key operators in the sector to, as a matter of urgency, ensure that there was visible supply of electricity across the country by June this year. Chinedu Nebo, minister of power, who gave the order at the inauguration of the board chairman, TCN in Abuja, said; “I wish to charge all the principal sector players here today to commit to ensuring that power supply to our customers is significantly and visibly improved by June this year as directed by Mr. President. Much is expected of us all and the entire nation is waiting for us. Government will no longer tolerate any excuse of non-performance from any of the sector players from both the ministry, and particularly, our new private sector partners.”
With respect to the new owners of the legacy assets, Nebo said the power ministry and other agencies of government would invoke all relevant clauses in the agreement divesting government ownership in the electricity generation and distribution companies to the new investors. “Nigerians must, I repeat, must enjoy the dividends of the reform programme and none will be allowed to frustrate this vision of Mr. President,” Nebo said.
The minister later made a clarification that the immediate goal of the federal government was to provide 14 hours of electricity to consumers who are already getting 12 hours supply. According to him, those who are currently getting 14 hours supply would enjoy between 16 and 18 hours power supply in future, while the target for major cities like Lagos and Abuja was between 22 and 23 hours supply daily. Nebo said this target would be achieved in a few months’ time without specifying the target date for the visible improvement in supply of electricity.
However, the National Union of Electricity Workers Employees, NUEE, has faulted the June deadline given to the private sector electricity companies by the federal government to stabilise power supply in the country. Joe Ajaero, general-secretary, NUEE, said it was not feasible. He said the union was surprised by the ultimatum given by the minister of power. Apparently, still sore by the privatisation exercise, Ajaero said that the minister had earlier said the problem of the power situation was gas supply and asked why the sector was privatised if its problem was gas supply. “He should have addressed the gas supply problem. Even within six months, will the gas problem be over especially with the political siting of power stations in Nigeria? Where you site a power station at 200 or 300 kilometres from the source of gas because you are a minister, you want a power station to be sited in your state. Rather than site the station close to the source of gas, they site it in their states and you then construct a pipeline from the gas source to where the power plant is situated. From now and then, you will say the pipeline has been vandalised or sabotaged. So long as the distance between the stations and gas source are far, so long as we depend on gas, the mandate the minister has given them will remain a mirage. It will not be actualised,” he said.
According to Ajaero, the same minister had expressed fear as to whether some of the investors had the capacity to revive the sector or change some of the facilities sold to them. This, he said, raised the question whether there was due diligence or whether the government knew the capacity of the investors before selling the plants to them. “Nevertheless, it is too late for all these. We have to live with these investors. We have applied a drug on a patient, we have to wait and watch the effect. I want to appeal to Nigerians to exercise patience and see the effect of this drug,” he said.
The union leader similarly lamented the plight of workers in the sector, saying the issue of disengagement of former PHCN staff from service was still lingering. “The kind of private sector you have in Nigeria is such that operators ask workers to go orally. It is a terrible private sector and we have tried to condone them for the first, two and three months because Nigerians would say we disrupted their activities that is why they are not performing. The poor power situation in the country would have been blamed on the union if we had engaged them immediately they started all these anti-labour practices. But we are going to engage them from now. Wherever they are, from today, they should be aware that for every anti-labour policy they take, we are going to engage them,” Ajaero said.
Ajaero’s stand notwithstanding, other industry analysts have described the entry of the private sector as the beginning of a long-drawn journey fraught with pitfalls as the new owners may have to struggle to undo decades of rot in the electricity sector. Atedo Peterside, chairman, technical committee, National Council on Privatisation, NCP, had said at an event on September 27, 2013, in Abuja that “it is pertinent to remember that this is really the ‘beginning of a journey’ and not the ‘end of a journey’ as it has been mistaken in some quarters.” While noting that the purpose of privatising the DISCOS and GENCOS was not just to transfer ownership of the assets, Peterside stated that the primary purpose was to bring into play new owners with ‘deep pockets’ who could finance and access financing for the rapid restoration of lost capacity and add significantly new capacity to make up for decades of government neglect and mismanagement.
Ayodele Oni, an energy expert, said that “everyone who has been following this process would know that quick fixes should not be expected. These are indeed challenging times. What’s currently being experienced could be regarded as teething problems which every new comer to an industry process or programme typically experiences. I know that NERC, the government are in talks with these investors to help mitigate some of the challenges they are facing.”
Emmanuel Umoren, a lawyer, is unimpressed about the performance of the power sector and believes that the private investors and owners of Nigeria’s power sector have breached their contract with the people. He insisted that consumers have the right to sue them to court. “Every transaction is a contract and if there’s any breach whatsoever they can be sued,” he said. Umoren, who was a guest on a television programme, commended the government’s decision to privatise the power sector, making it a business is liable to be sued if consumers discovered a breach in the contract. “It is business now. It’s no more government money. Let these DISCOs know that (now) we can take them to court. That’s a very important part. We can now take them to court because they are business men,” Umoren said. He urged consumers to get educated on how they could fight for their rights.
Taking the companies to court for breach of contract seems a good advice. But right now, Nigerians are really interested in getting steady power supply to help the economy growth and keeping nation moving to the path of development as promised by the government and new owners.
Tags: Andrew Yakubu Atedo Peterside Austine Njoku Ayodele Oni Benin Electricity Distribution Company Benjamin Dikki Bureau of Public Enterprises Chikodi Chukwumaeze Chinedu Nebo Emmanuel Umoren Funke Osibodu Ikeja Electricity Distribution Company Jamili Gwamna Joe Ajaero Kano Distribution Company Mansur Musa Mike Okebunor National Council on Privatisation National Union of Electricity Workers Employees Ngozi Okonjo-Iweala Nigeria National Petroleum Corporation Nigerian Electricity Regulatory Commission Regina Onuze Transmission Company of Nigeria University of Lagos
