Electricity distribution companies (DisCos) are reporting an estimated 60 percent loss of revenue as customers hunkering down at home without prepaid meters are prioritising food over settling electricity bills.
Under normal circumstances, many customers reluctantly settle their bills due to the threat of disconnection, but with the hardship from the lockdown to check the spread of the coronavirus, many are not paying for power and DisCos are not disconnecting them as frequently as they did, resulting in a collapse of revenue.
“In this difficult time, a customer who has N20,000 will rather buy food than pay electricity bill, this was always going to happen,” said Adetayo Adegbimle, convener of PowerHub Nigeria, a customer energy sector advocacy group.
This means that only those on prepaid meters which make up about 40 percent of electricity customers in Nigeria are still settling their bills.
According to the Nigerian Electricity Regulatory Commission (NERC) data, of the 9,674,729 registered electricity customers, only 3,895,497 or 40.26 percent have been metered.
“Thus, 59.74 percent of the registered electricity customers are still on estimated billing which has contributed to customer apathy towards payment for electricity,” NERC said.
Chuks Nwani, an energy lawyer, said the regulator, the Nigerian Bulk Electricity Trading Company (NBET) and the market operator would need to factor this in when they are making a request for debt settlement.
However, that does not seem to be the case.
Abdullahi Abdullazeez, spokesman of Kaduna DisCo, said the market operator is threatening to call the company’s Letter of Credit.
Apart from lower revenue, many businesses are not open on account of the lockdown leading to lower energy demand. Yet, the DisCos continue to take the same volumes of energy supplied prior to the lockdown which they would be required to pay for.
Last month, Ikeja Electricity Distribution Company announced that it would stop disconnections for non-paying customers within its franchise area during the lockdown announced on March 24 for two weeks. This has now stretched into a month and another period of two weeks is in the offing.
Other DisCos are also facing similar challenges.
“We are not disconnecting anyone and as you can imagine our revenues have gone down because many people are not paying,” said Abdullazeez of Kaduna DisCo.
However, Adegbimble said there have been reports of some customers complaining of disconnection during the lockdown.
DisCos have failed to prioritise metering their customers because putting them on estimated billing provides an opportunity to recover losses from their inability to improve collections in some areas.
During a general lockdown which could be extended for another two weeks, DisCos would rue their inability to bring more of their customers under the prepaid meter billing platform.
The 2007 Meter Reading, Cash Collections and Credit Management regulation enacted by NERC was created to enable power distribution companies (DisCos) bill a customer when they are unable to gain access to his premises.
It is now the norm. Six years after power assets were handed over to core investors, estimated billing is now the most vexing issue in the sector representing over 55 percent of all customer complaints.
The Commission said it continues its monitoring of DisCos’ implementation of and compliance with the provisions of the MAP Regulations, a new regulation to provide metering, in order to fast-track meter roll-out, with the target of closing the metering gap in the NESI by December 31, 2021.
But facts on the ground suggest the MAP programme is not going according to plans. Following its introduction in March 2018, the MAP, a plan to have third-party investors finance meter purchase and recoup proceeds from customers’ retail payments for power, the Ministry of Finance reviewed upwards the import levy on electricity meters from 10 percent to 45 percent and the Nigerian Customs Service began immediate implementation leading to thousands of meters abandoned at the ports.
Third-party investors who came into the sector to provide prepaid meters say they are constrained by the new rules which have limited their financial ability to make orders for new meters. Thousands of customers are on the waiting list in many DisCos.
Prior to MAP, NERC created a credit scheme for meter payment but DisCos soon scuttled the plan. Unable to compel the DisCos to fulfill the requirements of their contracts, largely because it had failed to allow market price for electricity consumed, NERC proposed a Meter Asset Provider Regulation, which allows third-party financiers take provide meter for a fee to consumers. Only that too is fast turning out to be a disaster.
ISAAC ANYAOGU
