Military formations among highest power debtors – ANED director

Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors, Sunday Oduntan, speaks to AJIBADE OMAPE on the N100bn outstanding electricity bills allegedly owed by government ministries, departments and agencies, among other issues facing the power sector

Can you provide insights into the alleged N100bn in outstanding electricity bills owed by the government?

The Nigerian government does not owe N100bn. The ministries, departments and agencies of the government owe the amount in electricity bills. Each of these MDAs is a stand-alone body, so this does not mean that the government is the one owing. These ministries have their budgets appropriated to them. So, it’s not Mr (Bola) Tinubu that is expected to pay. The MDA debts have been there since 2013 and we’ve had three presidents since then. When we talk about MDAs, we’re also talking about military formations.

 However, some of the military formations pay their bills. The major culprit is the Army in terms of military formations. If you go and check with the Ministry of Defence, there are provisions in their budgets; so I cannot blame the Defence minister or the President for the non-payment of electricity bills by the MDAs.

It’s not that the government is not paying or doesn’t want to pay; it’s the government agencies that are not paying, and they all have budgets; we have continuously asked for this. Four weeks ago, it took a published advert to call the attention of the President before he became aware of the indebtedness. Should the President be the one paying bills for the Aso Rock? No. It was when he saw it that he ordered that they should settle their bills. If we don’t say anything, the bills will remain unpaid.

What measures are being taken to address this issue of outstanding electricity bills?

One such measure is the publication of adverts to ask them to pay. We can’t cut off all the MDAs. For example, the military formations will tell you that if you disconnect the power supply, it will affect their armoury. That’s what they told us. The Nigeria Defence Academy also owes but we can’t put it at the doorstep of one of them, so that is why I said military formations owe and that’s a fact. The measures we’re taking include demanding payment from them. I believe that the matter is getting better attention from the government now than before, maybe it’s because the announcement that the MDAs owe is very embarrassing.

If we call different distribution companies, they will state how much they are being owed. I know that many MDAs have yet to pay their bills but I don’t want to give out an embarrassing headline that will make foreigners think that Nigeria is an irresponsible country. They are wrong and those of them that can be disconnected will be disconnected at the appropriate time after giving them an appropriate legal notice. It is irresponsible for any governmental department to refuse to pay electricity bills.

The MDA debts need to be paid. Payment of the MDAs’ debts will enable us in the power sector to be able to invest more in the system. You can’t invest where it does not yield profits. I’m not giving excuses for them. Non-payment of energy debt is affecting the performance of the Discos and power generation companies. The press mostly looks at the inefficiency of the Discos but does not ask questions about the reason for the inefficiency.

What factors contribute to the frequent collapse of the national grid, and what steps are being taken to enhance its stability and reliability?

The biggest factor that contributes to the frequent collapse of the national grid is the shortage of gas. The low frequency is brought about by a shortage and unavailability of gas to generate more electricity and the generation becomes so low. We have three hydroelectric power plants in Jebba, Shiroro, and Kainji, which are all in Niger State. They are all collectively contributing less than one-quarter of the quantum of the power that we generate in the country. The major power that we generate in the country comes from thermal power or gas-fired power plants. These include the Egbin, Olorunsogo, and Omotoso power plants.

These power plants depend on gas to fire their turbines just as cars depend on petrol to fire them. The problem in the last two months is because of indebtedness to gas suppliers. There are legacy debts that have yet to be paid by the government. The Discos are collection agents. They only retain 20 per cent of what they collect. They have to remit everything to the value chain – generation, transmission, and distribution. So, if they do not collect enough, they cannot pay enough. For example, Benin Disco took electricity worth N12bn from the generation companies. But so far, it has only been able to collect N7bn. That means it is short of N5bn.

If the indebtedness to the gas suppliers is settled, do you think the national grid will be stable to supply stable power?

Yes, because efforts are being made, even by the last government, to install some equipment for the Transmission Company of Nigeria to enhance its efficiency. There are ongoing projects like the Siemens project from Germany. What is crippling the power sector is liquidity and lack of money. If there’s no money to invest, you cannot do anything because when you keep on owing your suppliers, they won’t supply again. That’s what happened in the last two months. The gas suppliers are not supplying. The gas suppliers are not part of the power sector. These are international oil companies that sell their gas to the international market where they make more money than to the domestic market.

Apart from liquidity, what other challenges is the electricity distribution sector facing to ensure stable power supply across the country?

Energy theft is another challenge and it adds to the liquidity crisis. If people are stealing the little that we have, how can we have more? Energy theft includes vandalism, illegal connection, and meter bypass. By the time you calculate the losses, that is the cause of the liquidity crisis. Someone took goods worth N11bn and can only collect N7bn; that means N4bn has been stolen. In addition, there is also the issue of non-payment. If you give some people a bill of N5,000, they end up paying N2,000. How do we account for the N3,000 balance? Not until we all agree that there’s a need for all of us to play our part, Nigeria will be in a mess. We are in a mess already.

How do you respond to criticisms regarding the performance and efficiency of the electricity distribution companies?

First, we are not efficient enough and we have a lot more to do. However, efficiency is also linked to pricing. You cannot expect an entity that sells below the cost price to be efficient. So, while I’ll agree that we are not efficient enough due to the liquidity crisis, I also feel that some of those blaming us are doing so out of ignorance. You give them a prepaid meter, they bypass it, they connect appliances like their air conditioners, refrigerators, and many more illegally, and many Nigerians want electricity free of charge and they keep lying that they will pay but it’s only a lie, they don’t pay; they can argue from morning till night about bad light or inadequate power supply, but when they are provided with the light, they do not like to pay for it.

Some of the people who make such comments and who are quick to criticise us, if you check their bills and the appliances they run, they are the worst; so, we are all guilty and all of us need to play our part, that is the best solution.

What is the role of government policies and regulations in shaping the electricity system?

Well, as for the regulators, they are the policemen of the sector and they have been playing that role effectively well considering the environment within which we all operate; as for the government policies too, there have been a lot of improvements in the government policies over the years and it has been that way since 2013, and I can say that with the way they are driving it, we believe that with time we can begin to show better results. So the role of the government and their policies is very germane; we cannot underestimate their importance.

What initiatives or investments are being made to upgrade and modernise the electricity distribution infrastructure in the country?

Well, what needs to be upgraded is not just electricity distribution; if we are talking of distribution, distribution does not stand alone, it is a part of the value chain; however, what I can say is that the government has made efforts and will continue to make efforts to upgrade all the dilapidated infrastructure; we have an ongoing project with Siemens, which is a German equipment manufacturer; other initiatives are also ongoing towards renewing the infrastructure, it’s just that these projects and initiatives are very capital intensive and it will take a bit of time for all of these to show before Nigerians can see them.

How do you address concerns about electricity theft and illegal connections?

Well, we are trying our possible best to reduce it by deploying more technology, but mind you the deployment of technology also comes at a huge cost, because it is not cheap; we are also trying to ensure that people who are caught are handed over to the law enforcement agencies. We will try to partner the police, and the Nigeria Security and Civil Defence Corps to ensure that those who are caught stealing energy or vandalising any of the equipment are brought to justice. That is another ongoing effort to address energy theft, and we need the cooperation of the judiciary and other agents because we cannot prosecute by ourselves, but we can only catch them and hand them over to law enforcement agencies so that they can face the wrath of the law.

We also rely on our customers to say something whenever they see something; we encourage the public to provide intelligence that can be useful to catch individuals within our communities who vandalise and steal energy; we believe that if we as individuals cooperate, we can deal with a lot of these issues.

Are there any plans to improve customer service and engagement within the electricity distribution sector to improve consumer satisfaction?

We have continuously engaged with our consumers. For instance, I have been in Benin throughout this week to engage with our consumers in different communities; every other distribution company does it, and we go to different community development association meetings every weekend, and we do this simultaneously over the country to enlighten people and let them know the problem that we have with energy theft and how it affects everyone. We do that to stamp out the menace of energy theft; so yes, we do that because that is the only way out. By engaging with customers, we were able to enlighten them about their roles, just like here in Benin, some of them did not understand their roles; we were able to show them their roles, and also how bypass affects peoples’ bills; so the more you let people know about their roles, the better they can play their part once they understand that it affects them. It is a continuous thing because we realised that there can never be too much information; we just have to keep on giving them more information to help them understand their roles.

How can fair electricity tariff structure be guaranteed while balancing the financial capability of the distribution companies and affordability for consumers?

It is regulated already; that is the job of our regulators; we are in a heavily regulated industry and everything we do is regulated by the regulators. Every single step is taken according to laid down rules and the Discos cannot deviate from them, they can’t just fix tariffs, everything is done scientifically by looking at the economic indices, different factors, conditions, situations, locations, and availability of electricity, among other factors, and they deal with us and make sure to sanction us anytime we fail to carry out our duties properly. It is not easy; they (Discos) are trying their best; they operate in a heavily regulated industry and not where any service provider can just do whatever he likes.

What strategies are being implemented to attract investments and promote private sector participation in the electricity distribution sector?

We already have private sector participation, so when you mention the distribution sector it is private; the Electricity Act of 2023 is also part of the strategies for more private participation. In terms of foreign direct investment, I think that it is up to the government to provide an enabling environment that will encourage foreign investors to come and invest in the sector; the government has to provide that environment that will attract foreigners to invest their money in the country.

How can Nigeria prioritise the adoption of technology and innovation to optimise energy distribution and management?

We do that a lot, what is hampering all of these is just the issue of cost; one cannot succeed in this business without giving priority to technology because it is the most important thing, and we need to deploy technology to be able to bypass some of the ills that we face in the sector. I believe that there is still a lot to be done. I would love to see a power sector in Nigeria where people will be happy because they will be paying for what they consume, but we are not there yet, we still have a long way to go; some people don’t want to pay; they will rather use electricity free of charge.

We have some of our staff members who don’t treat customers properly; we also have some corrupt elements within our system, but corruption is a two-way thing – if the people who give them money continue to give them, the corruption will never stop – so we have a society that still needs a lot more information and orientation to understand the evil of giving the bribe and the long term implications of it; these are some things we are making efforts to include and it is not achievable in a month, it takes time so we have to continuously engage with Nigerians we have to make them understand what their role should be in the sector.