business eye header
Home About Us Contact Advertise Subscribe Staff Mail
IT IS ILLEGAL TO RAISE ELECTRICITY TARIFF WITHOUT METERING EVERYBODY| November 2015

 
Dr Yemi Oke

Yemi Oke, PhD. is a senior lecturer in the Faculty of Law, University of Lagos. The research scholar on electricity law who consults for governments, DISCOs and GENCOs spoke to Monday Malasowe. 

Legal justification to shield the DISCOs from tariff increase
There is definitely none. A fully privatized regime must have level playing field for consumers to have options on power services like what obtains in telecommunications. The institutional protection is an incentive to shield electricity companies from competition. Power sector is so huge and buoyant in Nigeria. There is no basis for shielding the generation and distribution entities. In Nigeria, the law is that you cannot increase tariff except you have been able to meter each and every consumer and have in place the  Power Consumer Assistance Fund, PCAF. PCAF is a kind of mitigating fund or indirect subsidy for underprivileged Nigerians not to sleep in darkness. But what we have is the DISCOs increasing tariff even without making recourse to PCAF and the metering issue.

Metering problem
The metering problem is because the DISCOs are unwilling to meter Nigerian electricity consumers. DISCOs have been playing politics with meters to the extent that Momas Electricity Meters Manufacturing Company Limited, a local company manufacturing meters has cried out for lack of patronage. Meters are available at Momas but the DISCOs give the impression that the meter produced in Nigeria is faulty and not sustainable. My personal experience is that the DISCOs kept sending estimated bills, even to the house I never even used, I hardly travel home. I never had power supply and I was always on generator each time I visited home. I challenged the bill and eventually got it reduced, then I requested for a pre-paid meter.

Immediately I metered my home, all the noise stopped, I bought N5000 credit and it is on for three months. This is an insignificant amount against the hundreds of thousands they use to bill me. The multiple billing system is a crooked and desperate way to make ruthless profit and steal from Nigerians. The DISCO buyers are not competent to manage the firms, they are mere tariff collectors. They borrowed to acquire the assets, they have no strategic vision to expand their distribution networks, they are just feeding on the existing structure, they have not added value and they stress Nigerians unjustifiably with exorbitant bills. It is perverse and government seems to be handicapped in tackling the problem because it does not know better.

Regulations
Once government moved out from the power sector, its only role left is to regulate. Regulation is serious business, the regulator must know what has to be done; what must not be done and should hold defaulters accountable and ensure all function within the confines of the laws and regulations. Regulation is a legal issue, but who are the legal minds and experts on electricity that we have in the Nigerian Electricity Regulatory Commission to regulate the sector? The answer is none. The commission continue to making mistakes and run to those of us who are pioneers on electricity regulation law. It cannot continue like this.
Regulation is a knowledge-based activity.

It should be a competent engagement of those on board about the sector. I can tell you without mincing word that the DISCOs are just stealing money from Nigerians. It is going to be critical by December 2015 when the tenure of the current regime at the NERC expires. Will the new regulators continue the mess of arbitrary billing and be unable to effectively regulate and wield the big stick? We need to stop the DISCOs’ corporate monopolies with the right legal and policy frameworks to attract investors. Under the constitution, power is concurrent, the federal government alone cannot be playing the active role, there should be state electricity regulatory commissions. The states can legally and legitimately generate, transmit and distribute power. The NERC is even unconstitutional; there is a lot of anomaly in the system.

PCAF structure
The law says it must be on board before tariff can be increased. It is a kind of money the DISCOs gained from electricity consumers aggregated overtime. The DISCOs, GENCOS and Federal Government will top it up to benefit the poor. If a megawatt of electricity should cost N1.00 to everybody, it might be 70kobo for low income earners. It is a kind of indirect subsidy for the poor.  I know no consumer who has benefitted from PCAF. It is non-existent and the DISCOs take advantage of PCAF.  

Implication of multiple billing schemes
It is outrightly criminal. It is criminal for the DISCOs to discriminate on billings. Tariffs must be transparent and measurable. It is not something you do arbitrarily. There must be a tariff methodology. You must have a structured means of saying you are going to pay 50 kobo because of XYZ. The DISCOs talk about inflation, they talk about Naira-Dollar Exchange rate. But beyond these, what is the cost of electricity produced in Nigeria? The investors get funds from cheap markets abroad, from institutional investors, pension funds, insurance and private equity firms. The fund invested is cheap, even the labour is cheap. Things need to be structured within the right perspective.

We have multiple standards of billing. Nigerians are complaining of paying for light never consumed. A lot of Nigerians are angry, they want to know and pay for what they use like the next man on pre-paid meter. A responsible government ought to step out as duty and insist on the right billing method, but our government is as much ignorant.

You cannot bill me for power I have not consumed and then force me to pay or disconnect my power supply. A lot of Nigerians are not aware that there is disconnection order regulation. There are laid down procedures to be followed in disconnecting: notices, acknowledgement of notices; second notices, default notice before disconnection.

 

 

 

 

 

 

DISCOS and illegal disconnection
When DISCOs claim a customer owes, the amount must be justifiable. If the customer is not happy with the bill, there are laid down procedures to challenge it. Even when a DISCO insists a customer owes and the customer disagrees because the money is not justifiable, the DISCO cannot disconnect without following laid down procedure.

NERC’s duties
The commission is handicapped; even the head of the commission would tell you he is not a specialist on electricity matters. Power sector is sensitive and technical. You need knowledge-based engagement to make meaningful impact in the sector. The regulator cannot uphold DISCOs taking money unjustifiably from Nigerians without causing a destabilizing shock to the system and propagating illegality. NERC never took a stiff reaction on the DISCOs illegalities, maybe somebody somewhere is compromised; maybe somebody somewhere does not know what he ought to do under the law. Otherwise, we should not be having all these laxity in the system. Nigerians are not just crying wolf, everyone is aware we get arbitrary bills from PHCN then and from the respective DISCOs now.

Everybody knows that Nigerians just got snapped off the grid arbitrarily and to connect they give bribes to DISCOs agents. Some people even have power illegally without paying a kobo through the efforts of DISCOs agents, otherwise called illegal connection. It is stealing and a serious government should be mad at that. No country will develop without sustainable power system to power and energize the growth. Vulcanizers, welders, tailors, hairdressers, barbers, etc, everybody needs power to support and sustain their productive economic activities. The only thing government can really do is to regulate.

The regulatory framework must be technical, must be sustainable, must be above board, must be stiff, sincere, transparent, real, it must be informed on knowledge. Nigerians will know by December whether the government is serious or not because you need serious minded and knowledgeable persons to take charge at the NERC. Look at what happened at NAFDAC with the late Dora Akunyili, a professor of pharmacy, who knows the norms about pharmacology, pharmacognosy and the dos and don’ts of drug making. That is what we are saying; a knowledge based regulation. If you want to regulate, sincerely regulate well.

Succour for over billed customers on post-paid meters 
There are lots of avenues for redress under the law. There are a lot of rules for handling consumer complaints at the state level and at the Discos level before getting to the NERC. There are series of adjudicative/administrative dispute resolution mechanisms under the Nigerian Energy Sector Reform Act. They are even over regulated but people are not aware of them. The DISCOs will not want people to be aware. There are laid down procedures but they are not being followed.

Consumer duties on rights
Ideally there should be. There is the Consumer Protection Council but how much of the power sector law do they know? That is the problem. Is it not when you are aware that you have right that you will know it is being trampled and in turn be able to take steps to seek redress? The problem is ignorance; you do not expect those taking advantage; benefitting and making money from your ignorance to defend your rights. As far as they are concerned it is good business that people are not aware of their rights.

Can consumers clamoring for pre-paid meters with documentary evidence decline to pay the bills?
If they refuse to pay, the DISCOs will arbitrarily take them off the power supply network and that will put them in darkness which could ruin their businesses. Steps must be taken within the confines of the law. Get knowledge of the law before taking steps, when they know you are aware of your rights, they will be careful. They only trample on those who did not know their right and they are in majority in Nigeria.

Implications of supplying prepaid meters only to elite neighbourhoods
A class action could be the solution. A number of neighbourhoods without prepaid meters will have to get together and formally write for the prepaid meters, giving the DISCOs an ultimatum to supply them the meters. But it is likely that once the DISCOs receive such letter, it will bring bogus bills and ask people to first settle the bills because the operators know they are getting off the exploitation hook and would want parting gift. If you contest some of these vexatious matters rigorously too, they will back down. By vigorous contest, I mean, you go to court, you go to NERC, you petition, you shout, you confront them with the laws. Even the DISCOs do not know the law. There is a lot of ignorance in the sector.

Governments’ abdication of responsibilities to Nigerians
You cannot blame the federal government. You blame the state governments. They went to court about oil, challenged federal government on resource control; littoral states and on revenue sharing, the consolidated revenue and frontline charges. They became constitutional issues and they won. State governments should stand up for their rights to generate, transmit and distribute power. It is not only unconstitutional but it is illegal for the federal government to control electricity. So the state government should on their own have a structural system of generating power for their people in a sustainable way to decongest the national grid and have concession grids, decentralized grid, state grids and even local government grid. Some communities can have 24 hours uninterrupted power supply and others 18 hours, etc. Everything should not be federal.

November 2015 new tariff
I cannot be leading that aspect of the struggle as a foremost expert. Though it is not unethical, I am to guide the system and not undermine it. I am to tell the regulators their wrongdoings and to guide the consumers. I should not be one-sided. My passion is to drive change in the sector.

Massive legal actions
A sector as sensitive and strategic like the power sector will always have litigations when people are aware of their rights and privileges. I am sure you have issues with DISCOs in your community. You can imagine every Nigerian knowing his/her right and would want to go out to seek redress. That will create problems for the system, so, we need to move quickly and take steps that will reduce tension and get on track.

 

 

 


 

 

       
       
       
 

©2015 Business Eye Magazine. All Rights Reserved. Designed by Richardson Nigeria