The fraud that is estimated billing
Despite the many attempts of the Nigerian government and the Nigerian Electricity Regulatory Commission (NERC) to get the Discos to supply all their customers prepaid electricity metres, the efforts have largely come to naught as the Discos have continued with business as usual – using the deeply controversial and unpopular estimated billing system. Figures from Nigerian Electricity Supply Industry (NESI) shows that out of 6, 159, 775 electricity customers, only 3, 206, 599 customers or 52 percent have so far been provided with metres leaving a huge gap of 2, 953, 176 unmetered electricity consumers.
The federal government, had, at various times, promised to ensure that all electricity consumers are metered. NERC has also issued countless ultimatums to the Discos to metre all their customers but these have largely been ignored.
Watchers of the industry have opined that the problem is not availability of metres but the financial incapacity of the Discos. The Discos are said not to be in a financial position to procure the metres. Initially, the complaint was about the deteriorating exchange rate situation that made it difficult, if not impossible, to import metres. However, when local metre manufacturers seized the initiative and positioned themselves to meet the demand for metres, the scales began to fall off and it was realised the Discos were most unwilling to invest in metering their consumers.
For now the official complaint of the Discos have shifted to electricity tariff, which, they claimed, needed to be reviewed upwards to allow them invest in metering. This is nothing but pure blackmail.
In reality, the Discos prefer estimated billings for many reasons:
One; whereas with prepaid metre users, they make their money by supplying electricity, with estimated billings, they make their money regardless whether electricity is supplied or not.
Two; with estimated billing, the Discos freely extort electricity customers; sometimes charging them five times over the true cost of the electricity they consume. BusinessDay investigation revealed that given two customers with roughly the same pattern of electricity consumption, the customer with a prepaid metre pays less than 1/5th what the customer under estimated billing pays.
Three; staff of the Discos engage in unbridled extortion and corruption which is usually not possible with customers using prepaid metres.
It is for these reasons, coupled with the fact that the investors in the Discos are unwilling to make financial investments, that the Discos have continued to dither in metering customers and continuing with the very controversial and exploitative estimated billing system.
The Discos have violated the agreement reached with the government. After the 2013 privatisation of Nigeria’s power asset to core investors who emerged successor companies to the Power Holding Company of Nigeria (PHCN), the objectives set before them were to promote efficiency, increase private sector funding of the power sector, increase power generation and make the sector more viable under private sector management.
However, three years and $3billion worth of intervention later, Nigeria’s power generation hovers around 3,000MW from 1,750MW average daily generation in 1999. DisCos, whose bid were premised on bringing new investments into PHCN’s derelict assets, reducing Aggregate Technical, Commercial, and Collections Loss, (ATC&C) and improving collections, have failed to deliver on all accounts. According to the BPE, DisCos have only succeeded in metering 10 percent of electricity customers.
It is clear that the Discos have failed to improve the electricity sector and are more after returns and extortion of consumers. The government has a responsibility to protect its citizens who are being mindlessly exploited by these Discos.
We call on the federal government to take steps to dilute the shares of the core investors in Nigeria’s 11 Discos using the funding clause in the performance agreement.