© 2019 - International Centre for Investigative Reporting
How electricity companies fleece Nigerians in service charges, despite assurance of firm regulation by NERC
In April 2017, Aliyu Umar, 27, began his day at dawn. He started by carefully preparing charcoal fire with which he would prepare breakfast of noodles, fried eggs, bread and tea for his early morning customers.
His shop was a hotspot for residents of Unguwar Hausawa community in Nyanya, a suburb of Abuja. When they needed light breakfast or dinner, Umar’s shop was their destination.
Umar came to Abuja from Sokoto State, the northwest region of Nigeria five years ago. It was rough for him in the first few months, switching trades, before he finally settled for food vending.
That morning, a faulty high-tension power cable passing over his shop and two residential buildings were being repaired by the staff of Abuja Electricity Distribution Company, AEDC, but the men carried out a bad job because one of the cables was left hanging loose – dangerously.
Concerned residents in the area observed that one of the cables was frayed and the naked wire could fall on any of the nearby buildings, so a call was placed to the AEDC office to fix the problem.
When the workmen arrived they asked for a bribe of ₦5,000 before they could carry out any work on the faulty line, but residents offered to pay ₦3,000 instead, which the AEDC staff rejected and left without fixing the problem.
Hours later, the electric cable fell on the building close to Umar’s shop electrocuting the occupants, six-year-old Hassan Tsafe and his mother Umaimah Tsafe.
Umar also was unable to run for safety before he was electrocuted. The fire outbreak burnt everything in his shop where he laid incapacitated by shock.
When he was brought out of the fire, he was confirmed dead alongside Hassan, while Umainah was still clinging to life. The young mother was rushed to a nearby hospital, but she died later.
The chief of the Hausa community in Nyanya, Alhaji Musa Mohammed Dala who acted as guardian to the late Umar recounted the tragedy.
“The AEDC workers were unwilling to accept anything less than ₦5,000 which was why they left and most residents had left for their businesses that day. Maybe if we had completed the payment they requested, it would have been a different story today,” he recalled.
The AEDC set up an eight-man investigative panel led by Mohammed Ainoko Sule to probe the fire incident after filing an official report to the Nigerian Electricity Regulatory Commission, NERC, and Nigeria Electricity Management Services Agency, NEMSA, in compliance to procedural guidelines in the Electric Power Sector Act 2005.
Three months later, the community leader Alhaji Muhammad Dala and Secretary Abubakar Hassan, petitioned NERC citing negligence of the AEDC for exposing residents to grave danger, urging NERC to wade into the matter, but there was no response.
Fast forward to 2019, the findings of the investigative panel have not been communicated to the families of the victims even after they had submitted a petition to NERC and the AEDC. To date, none of the affected families has been offered any form of compensation or relief.
“Aliyu’s family doesn’t know people in high places. Who will speak up for him? So the family has to wait for Allah to intervene for his death,” the community leader said in a tone that betrayed his distress.
Umar’s case was one of the 47,958 consumer complaints about poor services from AEDC that was filed at NERC in 2017 but the case is yet to be resolved by the Commission. The dead silence from the power regulatory body illustrates the frustration faced by electricity consumers in Nigeria.
Clueless without cues
In August 2019, the amount of electricity generated by the nation’s 27 power stations dropped below 3,000 megawatts for two days consecutively putting millions of homes in the darkness.
The incident took place between August 24th and 25th; data obtained from the National Electricity System Operator showed that total power generation in the country dropped from 3,184 MW to 2,970MW as at 6 am of August 25th.
It also revealed that a total of 2,159MW generation capacity was not consumed by the Distribution Companies, DISCOS from August 22nd – 23rd, as a result of low load demand by the DISCOS, while 112.5MW was idle due to transmission line constraints.
The Transmission Company of Nigeria, TCN bears the responsibility of providing stable transmission of power to the DISCOS without system failure.
In the past, TCN has repeatedly accused the DISCOS of rejecting power supply, an accusation that has been disputed by DISCOS.
In a report, Ndidi Mbah, spokesperson for TCN blamed the DISCOS for the shortfall in power supply alleging they rejected power (load) which caused a system failure proved to be a major hindrance to a robust transmission.
The Association of Nigerian Electricity Distributors, ANED in a press release issued a firm rebuttal disputing this claim, maintaining the actual power supply requested from TCN by the DISCOS and the power delivered by the transmission company contradicted data released by National Control Centre.
In a bid to proffer a solution to the problem, Prof. James Momoh, NERC’s chairman set up a six-man panel to investigate the claims between ANED and DISCOs, according to a THISDAY report.
“We organised a team of six and set them up with a specific mandate to call a meeting with all the Discos and TCN. They all came and we met them for five days to discuss the bottlenecks at the interface and they opened up and at the end of the day, we put them in a room to negotiate a resolution to the challenges,” he said.
NERC’s duties also include monitoring the operations of the electricity market using available data to make insightful regulatory decisions.
He explained the technical details behind the different values posted by DISCOs and TCN
“We know the issues are also commercial, but we are putting our hands first in the technical challenges. All these challenges we will get into them fully and our staff will find out why the Multi-Year Tariff Order, MYTO allocations are different from the daily nominations,” he added.
Momoh’s response suggested that NERC’s decision on the issue would be without deference to available data at its disposal necessary for effective monitoring of the sector.
The ICIR sent a Freedom of Information, FOI letter to NERC on September 27, requesting for the MYTO allocation given to the 11 DISCOS by TCN from June to August, and also the customer complaints records that had been lodged at NERC with regards to services failure from the AEDC from 2015 to 2019.
The MYTO allocation is a percentage of electricity on the grid that is made available to all the Discos.
The receipt of the FOI request was acknowledged by the regulatory agency and a reply was received within seven days as stipulated by the act. NERC, in fact, provided data of energy consumption between June and July, but it claimed the August records were unavailable.
The Nigerian Energy Support Programme, NESP, 2015 report which was carried out by the German government in conjunction with the European Union, EU, identified that there was no comprehensive generally accepted database of power consumption in the country due to lack of adequate electronic data processing facilities by the regulatory agencies to computerise electricity statistics.
However, speaking to The ICIR, Samuel Ekeh, NERC’s Deputy Manager, Public Affairs said the commission had an independent source of data in tracking the energy exchange between DISCOS and TCN.
“We have an independent source of data but that data will not apply in the DISCOS and TCN issue because there’ve been accusations and counter-positions from both parties. We also cannot rely on their data, NERC is like the referee in this case bringing a neutral scale to re-measure, so what we decide at that point is what stands,” he said.
He did not specify the source of NERC’s data nor did he specify how the regulatory agency would solve the dispute between DISCOS and TCN.
Nigeria’s per capita power consumption is pegged at 151 kWh per year, according to the Nigeria Power Baseline Report in 2015, when compared to African countries like South Africa whose annual per capita power consumption is over 2000 kWh, while Ghana, Cote d’ Ivoire, Cameroun all have above 200kWh.
It was projected that Nigeria would attain the 433 kWh per year mark in 2025, according to the report based on the number of ongoing power projects at the time but that prediction appears unrealistic. In 2018, five power plants accounted for more than half of Nigeria’s power generation.
They include Egbin, Kainji, Azura-Edo IPP, Jebba and Delta, while the other 21 power plants were operating at a suboptimal level, and the country’s current operational level is below 4000MW.
A Paper Tiger
Ibhade Emmanuel, a BEDC’s customer stared in disbelief at the total amount he had been charged for estimated electricity consumption in five months.
“I have paid over ₦150,000 since April which is outrageous. This made me start making formal complaints on the issue to the Benin Electricity Distribution Company, BEDC, and NERC but their response has proved to be very frustrating,” he said.
Ibhade had purchased a prepayment meter for his house in January 2017 where he was charged ₦100,000 for the purchase of the meter and ₦5,000 for its installation at BEDC’s office in Ovwian, Udu local government area of Delta State.
He had left the country before the prepayment meter was installed but his family was able to make use of the meter for a couple of months before they were told the meter was not registered.
BEDC officials claimed they would take estimated readings from the meter until it was registered but the registration was never carried out. After repeated calls to the distribution company to rectify the problem were unsuccessful, Ibhade wrote a formal complaint to BEDC in April 2019 requesting the distribution company to fix the meter or stop the estimated charges.
Officials of BEDC, therefore, disconnected his residence when he refused to pay the estimated bills until the issues surrounding the unregistered meter sold to him at BEDC’s office was resolved.
“Sometimes we’ve had power blackout for straight 16 days, at the end of the month the bill would be over ₦19,000 when we rarely have power supply for six hours in a day. It makes me wonder how they come with such figures without the reading of the meter,” he told The ICIR.
He also wrote to NERC urging the power regulatory body to intervene and stop the illegal extortion by the distribution company but his letter was ignored.
Section 96 of the Electric Power Sector Reform (EPSR) Act stipulates that when a distribution company is informed during working hours that a customer’s prepaid meter is not operating properly, an authorized official from the company shall visit the customer premises within 24 hours to inspect and fix or replace it.
Five months later, Ibhade’s prepaid meter is not yet registered while officials of BEDC have continued to send estimated charges for electricity consumed, a flagrant breach of the EPSR Act.
NERC had issued a regulation on meter asset provider service, which was expected to take effect from April 3, 2018. The regulation defined the roles of the 11 distribution companies, which was to engage the services of Meter Asset Providers, MAP, who will supply and install the meters.
The initiative by NERC was to provide prepaid meters which will put an end to estimated billings and encourage the development of competitive meter services in the electricity industry.
The timeline for the execution of MAP programme was initially slated for July 3, 2018, but was later shifted to November 30, 2018. The dateline for the kickoff of the project was moved to May 1, 2019, after the DISCOS failed to meet the April 1, 2019 deadline.
Annual metering of 1.64 million meters was DISCOS’s target to surpass the 4.92 million meters mark within three years.
Section 18 (3) of MAP Regulations 2018 stipulates that MAP licensee must meter a customer not later than 10 working days after such customer has paid for the meter.
“While faulty meters are expected to be repaired or replaced free-of-charge within two working days, except in instances where it is established that the customer is responsible for the damaged meter,” a section of the regulation reads.
However, the clauses in the MAP regulations have continued to be disregarded by the DISCOS, and NERC is yet to enforce compliance.
Chinyere Kabiru, a fashion designer residing in Suleja paid cash for the prepaid meter in August at AEDC’s office in Suleja but after two months the meter is yet to be delivered to her.
She is uncertain when the prepaid meter will get to her doorsteps after several failed assurances from AEDC’s officials.
“I paid for the prepaid meter in August and I was told the meter would be installed after ten working days but it’s over two months since then. The last time I was there, the officials still asked me to wait for another ten working days which elapsed last week,” she told The ICIR.
According to 2019 data obtained from the Nigeria Bureau of Statistics, NBS, Nigeria boasts of an estimated 7.48 million registered residential households who are connected by the distribution companies, but only 3.39 million households are metered which means 54.7 per cent of electricity consumers in the country have no meters.
Ironically, more than half of DISCOS customers do not have meters and the total revenue collected by all the DISCOS from customers still does not match with the total bills dispatched according to figures obtained from NERC.
For the first quarter of 2019, the total billings of AEDC customers across Nassarawa, Abuja, Niger and Kogi States was estimated at ₦25 billion while the revenue collected from customers for the period under review was ₦17.5 billion.
In the third quarter of 2018, the collection efficiency of the DISCOS across the country improved from 55.3 per cent of the same quarter in 2017 to 65.6 per cent, according to an analysis done by Price Waterhouse Coopers, PWC. This means that ₦3.4 of every ₦10 billed to customers are not paid to DISCOS as at when due.
Oyebode Fadipe, General Manager, Corporate Communications at the AEDC, defended the distribution company, saying it was currently the most compliant distribution company to the MAP programme in the country.
While admitting that the company cannot boast of a hundred per cent rate in attending to its customer’s complaints, he said they are giving it their best shot.
“There have been instances where we’ve not been able to meter customers within the number of days stipulated by the MAP regulations which is ten days but it is majorly because most customers do not give us vital information for us to get to their homes or the location the meters are expected to be despite that we are the most compliant DISCO to the MAP programme,” he explained.
While admitting that the company cannot boast of a hundred per cent rate in attending to its customer’s complaints, he said they are doing their best.
“For example, some customers have names that are so long that the computer has to drop those names. It is until those customers come out to say that we’ve not been metered, so there is no deliberate attempt on our part not to meter customers. We are doing our best,” he said.
However, the AEDC boasts of over 1 million customers with 580,000 customers currently metered, it is believed that metering customers will reduce the liquidity challenges in the power sector but the progress in metering has been slow.
Electricity subsidy soars, as regulator’s grip on power sector wanes
While electricity consumers complain of being ripped off by DISCOS through the adoption of estimated billings, analysis of NERC’s data on the power market shortfall indicates that the tariff shortfall is on the rise.
Tariff shortfall is the difference between the expected cost-reflective tariff expected to be paid by the customer and the actual tariff currently being charged customers by the DISCOS. In a bid to reduce the cost of electricity on Nigerians the Federal Government through the Power Sector Recovery Plan agreed to pay that shortfall as subsidy.
From 2015 to 2018, the Federal Government had spent ₦1.12 trillion as electricity subsidy according to data from Price Waterhouse Coopers. The data also shows that the shortfall to be paid to the DISCOS has been on the rise in recent years.
In 2015, the DISCOS were owed ₦165 billion by the FG in subsidy, while it climbed to ₦235 billion in 2016. PWC predicts the debt is expected to reach ₦522 billion at the end of 2019.
Between 2015 and 2018, the total revenue spent by the Federal Government in subsidising electricity stood at ₦1.12 trillion, while the subsidy spent on petroleum products within the same period was pegged at ₦1.2 trillion, data from the Nigerian National Petroleum Corporation, NNPC has shown.
Analysis by PWC also shows that the combined sum of both subsidy payments estimated at ₦2.3 trillion, accounts for 17 per cent of Nigeria’s foreign reserves and 26 six per cent of the 2019 budget.
Officials of the distribution companies usually extort money from customers to fix electrical issues that they’ve been paid to carry out.
Ikechukwu Henry, a resident of Wumba, Apo extension in Abuja is wary of officials of the AEDC who he says extort customers for services they are paid to render.
“In January, our transformer got damaged which AEDC promised to replace, when the transformer was to be installed two months later officials of the AEDC who came to fix it demanded that we pay them for installation and that there were some electrical fittings that they were supposed to buy which the community had to pay for,” he said.
The residents were forced to pay the officials to fix the transformer or risk not getting it installed. Residents, therefore, contributed over ₦60,000 before officials of the AEDC agreed to install the transformer.
“This has always been the case with AEDC staff. Sometimes in 2017 when that transformer was bad we were asked to contribute money to replace the transformer but residents were not comfortable with that idea because we had contributed money like that in the past and it found its way to private pockets,” he concluded.
We are not spirits – NERC
Ekeh was asked what action NERC had taken to punish erring DISCOs for flouting the EPSR Act with regards to the estimated billing of customers and their sluggish responses to consumer complaints.
“We are not spirits to know when DISCOs are shortchanging you, it is only when you speak out and complain to us. That’s why we have forum offices in every state to sanction DISCOS and give consumers succor,” he said.
Ekeh dismissed the accusation that NERC is ineffective in carrying out its regulatory obligations, stating that consumer complaints, which come to the attention of the commission, are given top priority.
“If you don’t report to us and follow our complaint interface mechanism then you may not get our help which is why most people go to social media, saying there is no NERC. It doesn’t make sense if you make a complaint to the DISCOS after ten working days and your issue is not resolved then send them a reminder after that you can put it in writing to the commission for us to take it up,” he said.
According to section 32 of the EPSR Act, NERC is expected to prioritize consumer needs by setting up customer service mechanisms that will proffer solutions to customer complaints to ensure safety and good quality of service in the delivery of electricity to consumers.
In September, consumer complaints’ records obtained by an FOI request from NERC showed that from 2015 to 2019, the commission had received a total of 256, 037 complaints from customers of the Abuja Electric Distribution Company of which 211,820 of those complaints were resolved, leaving 44,217 unresolved complaints.
NERC’s complaints resolution rates indicated that 82.7 per cent of cases from the AEDC that reached them were resolved. Metering issues ranked top priority complaints with 69,030 incidents and was followed closely by billings with 55,823 complaints.
However, the statistics released by NERC contradicts the experiences of people who spoke to The ICIR in the course of the investigation.
Data without evidence
Adetayo Adegbenle, the executive director of PowerUp Nigeria, an electricity consumer rights group advocating for the right to the accessibility of electricity and proper billing systems, is concerned about NERC ‘s data. He believes the data lacks empirical evidence.
“The EPSR Act compels the DISCOS to submit a summary of its performance compliance with customer service standards within ten working days at the end of each month but they don’t do it. So if NERC comes up with any data on consumer complaints then it has to be attached with the monthly monitoring form from each DISCOS as empirical evidence,” he said.
He also stated that the regulatory agency is complicit with the DISCOS by not treating cases brought before them with a sense of urgency.
“We took a case to NERC in February this year for the issue to be resolved and they scheduled a hearing on the matter for September, that action alone would have exasperated the complainant. Another challenge with the DISCOS is that complaints that come to the customer units of the DISCOS are not attended to which is frustrating.
“I have written a litany of letters on behalf of customers to DISCOs which they ignored, and the NERC has not called them to order,” he stated.
Adegbenle advised that a toll-free hotline be set up where all the industry stakeholders will be kept in the loop to track complaints until resolution of the problem is achieved.
This report is part of a collaborative investigative series by Daily Trust, the International Centre for Investigative Reporting (ICIR), Premium Times and TheCable, facilitated by the Wole Soyinka Centre for Investigative Journalism (WSCIJ) under its Regulators Monitoring Programme (REMOP) for the Electricity Sector, with support from the John D. and Catherine T. MacArthur Foundation.