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Electricity supply to ikeja cantonment, Lagos, one of the foremost military information in the country has been restricted to two hours a day by Ikeja Electric following a huge electricity debt hanging on the military barrack.
BusinessDay investigations revealed that the army formation before privatisation was owing the company about N1.5 billion and currently owes it about N1.57 billion. A source close to the power industry however said that the army formation has been paying paltry sums which most times could barely have an impact on the total debt on ground.
Kola Adesina, chairman of Sahara Power group, while explaining the efforts the company is making to recover some of the debts being owed the utility company by customers across its operational area disclosed that electricity supply to the military formation has been restricted to two hours a day.
The chairman who spoke at a power roundtable organised by Sahara Power stated further that the company must recover the money it is being owed if electricity generators (GENCOs) must be paid.
According to Adesina, the company is applying the carrot and stick approach especially for the federal government owned institutions that are highly indebted to Ikeja Disco.
He said with the illiquidity crises in the sector, no Disco can afford to meter its customers; as such capital investment cannot be borne by the Discos under present circumstances, as he blamed poor revenue collection on present tariff regime which he said is not sustainable.
Accumulated debt profile of customers under the Ikeja Electric Plc network has hit over N102 billion, a development that is hindering the planned expansion programme, as most its revenues are stuck with consumers who are reluctant to offset their outstanding bills.
Ikeja Electric Plc had introduced some innovations such as giving customers discounts to encourage them to pay their debts but it seems not be yielding any positive result as the debt owed keep mounting.
The initiative, designed specifically for unmetered non-maximum demand customers, was put in place to provide an avenue to support customers especially those who are financially constrained by the present economic realities.
The sources said: “The three tier scheme had provided a 10 per cent discount for customers who owe between N50, 000 and N100, 000; 15 per cent discount for those owing above N100, 000 but less than N200, 000, and 20 per cent discount for customers who owe above N200, 000.”
The Nigerian power sector value chain recorded 29 percent transmission and distribution losses in Q1 2018.
Daily capacity generated for the period averaged 3961.04 Megawatt while the capacity transmitted and distributed averaged 3863.22 Megawatt and 2840.57 Megawatt respectively.
The distribution channel recorded the highest level of inefficiency as 26.47 percent of the capacity transmitted was lost in the form of Aggregate Technical and Commercial Collection (ATC&C) losses, while transmission losses are 2.47 percent of the capacity generated and 48 percent of the capacity operational for generation.
Capacity generated is the actual Megawatt of power generated daily below the maximum capacity due to gas, water, high frequency, and line constraints; while capacity operational for generation is the maximum amount of Megawatt of power that can be generated daily in the absence of any constraints.
“The high transmission and distribution losses recorded in Q1 was largely due to Distribution Companies’ (DisCos) rejection of significant amount of power generated by the Generation Companies (GENCOs) because of the increase in their baseline losses from 30-35 percent at inception to between 50-60 percent due to power theft and inefficiencies associated with the process of recouping energy charges from customers,’’ Chucks Nwani, an energy expert said.
Nwani added “although there are other technical and supply problem facing the sector, the lack of state support in terms of making legislation that will criminalize power theft with strict enforcement by the police has made it difficult for investors in the sector to realize significant return on their investment.”
“Government should lead by example by ensuring that government ministries across the country pay their bills promptly as most government ministries owe several months of unpaid electricity bills due to inadequate budgetary allocation.”
“Legislation against energy theft with maximum penalty for defaulters should be made and enforced in order to restore investors’ confidence as power sector is a capital intensive sector.”
When compared to other developing markets, the Technical and Distribution losses in Nigeria are very high given the benchmark set by countries such as South Africa at 10 percent, Egypt 16 percent, Malaysia 14 percent, Peru 13 percent and Ukraine 10 percent.
These high T&D losses have continued to translate to high operating cost for various enterprises as they rely more on self-generated power.
“The first major problem with the sector is the inadequate investment on power infrastructure by GENCOs, TCN and DisCos, while the second major problem is the inability of the DisCos to pay the generating companies due to ATC&C Losses in their operations,” Jubril Kareem, Energy Analyst at Ecobank research said.
“Going forward, more investment on power infrastructure will help address these inefficiencies as well as government legislation to check power theft.”
A recent statement by the Manufacturer association of Nigeria (MAN), said member companies in the past three years spent N20.8 billion monthly on power generation to run production process, and the ripple effects of this ranges from cut down in production, job loss to outright closure or relocation to other countries by industries.
The capacity utilization in the country remains at 31.6 percent of the 12,500 Megawatt installed capacity, and the country ranks among the poorest five electricity distribution countries in the world with only 45 percent population access rate.
