The Nigerian economy may be on the verge of collapse if urgent steps are not taken to salvage the hemorrhaging created by its inefficient power sector.
A recent declaration by the Managing Director of Seplat Petroleum Development Company, Mr. Austin Avuru, that the Nigerian economy loses over N534 billion yearly to inefficiency of the power sector is certainly not in contention.
Year-on-year, the Organised Private Sector (OPS) remains the worst hit as a result of poor electricity supply to majority of its member companies, leading to the closure of several manufacturing companies with its attendant effect on the economy.
According to Financial Quest, which quoted a draft document of the Power Sector Recovery Programme (PSRP), Nigeria’s economy is currently losing $29.3 billion yearly due to inadequate power supply.
On the other hand, capacity utilisation in companies remains very low because of lack of power, as they have to spend about 40 per cent of their production cost generating their own electricity.
Already, the Manufacturers Association of Nigeria (MAN), had raised the alarm that about 272 manufacturing firms shut operations in 2016. The situation is even more troubling for small business owners who cannot afford to buy diesel or petrol to power their generating sets.
It is in the light of the above challenges that the House of Representatives’ Ad-hoc Committee on Complaints by Electricity Consumers has commenced a nationwide tour of the six geo-political zones, starting with the South West Zone in Lagos, last week, to look into the challenges confronting consumers in order to come up with solutions to address them.
Frustrated consumers cry out.
A young entrepreneur and native of Umuokisi, Amuzi, in Ahiazu Mbaise Local Government Area of Imo State, Chimago Nnodim, established a sachet water producing factory, bought a Dyna truck for distribution and employed 10 young people for a start.
Three years down the line, his plans for expansion and more employment appear to be a mirage due to deplorable power supply in the area. Nnodim said he uses 10KVA generating set, which he powers with 25 litres of diesel, three times a week, while he produces about 1,300 bags of sachet water. At the cost of N200 per litre, he spends about N15,000 weekly on diesel alone.
Nnodim’s challenge is not in any way different from that of business owners and households who thronged the venue of the House of Representatives’ Ad-hoc Committee meeting in Lagos to discuss their plight.
In his submission to the committee, a troubled Chairman of Magodo GRA Phase 1, Gateway Zone Community Development Association (CDA), Mr. Bode Ojomu, said the group has written severally to Ikeja Electric on the issue of excessive charges levied on residents of the estate via estimated billing and has pleaded with them that each house be metered to put the issue of estimated billing to rest.
For its part, Olowogbowo CDA, represented by its Secretary, Mr. Bello Abdulwasiu, the group has been inundated with series of complaints from residents over the incessant and astronomical increases in electricity billings by Eko Disco.
The CDA noted that it will no longer accept the outrageous bills that are only products of irrational human estimates, alerting that the bill of every household in the community for the month of January 2018 would be returned forthwith to Eko Disco not minding the consequences.
More worrisome is the case of 72- year-old retired Pharmacist and a widow, Chief Mrs. Ladun Lawal, who had to travel from Ile-Ife in Osun State to present her plight to members of the committee over the constant harassment, intimidation and poor service delivery by Ibadan Disco.
Mrs. Lawal said the poor power supply to her small scale business premises in Ile-Ife has almost crippled the venture, leaving her with the option of ferrying her products to Lagos for sealing.
Dangote, others call for reversal of power sector privatisation.
And to further prove that the power sector privatisation, which was handed over to the new investors on November 1, 2013 may have been a failed exercise over mounting complaints of poor electricity, lack of meters, outrageous billing and low generation capacity, which has left the country struggling with less than 5,000 megawatts.
Business mogul and Africa’s richest man, Alhaji Aliko Dangote, had in December 2016, advised the Federal Government to take back the assets it sold earlier and give them to people who “really have money” to manage them.
He stated his position in Plateau State during the Senior Executive Session of Course 38 at the National Institute of Policy and Strategic Studies (NIPSS), Kuru.
The billionaire businessman reportedly said majority of the people who bought these power assets do not have an understanding of the business.
In December last year, organised labour equally demanded a review of the privatisation process.
A communiqué issued at the end of the NEC meeting said, among others, that NEC-in-Session decried the continuous and inexplicable involvement of government in the financing/funding of projects and the day-to-day running of Discos and Gencos while the welfare of the various staff has never been given any attention.
For the consumers at the House of Representatives meeting, it was knocks all the way for the regulatory agency, Nigerian Electricity Regulatory Commission (NERC), over its failure to protect consumers and sanction Discos when necessary.
They submitted that the power sector privatisation has failed to lift the economy out of the doldrum with hapless consumers bearing the brunt of the sector’s inefficiency.
Counting economic losses
Data from MAN showed that capacity utilisation moved up from 44.3 per cent in 2016 to 55 per cent in 2017, which shows an improvement in production but with a caveat – that all the benefits could be wiped off due to power shortages.
For instance, Erisco Foods Limited, an indigenous tomato paste manufacturer, relocated its $150 million tomato paste processing plant to China mid-2017. It had a production capacity of 450,000 metric tonnes of tomato paste annually and had 22 brands with over 2,000 workers in Nigeria. Eric Umeofia, the Chief Executive Officer of Erisco Foods, said the company relocated to the friendlier business environment after losing over N3.5 billion in Nigeria.
For Temitope Ogundolapo, founder and Creative Director of Kieva Desuwa, a Lagos-based shoe manufacturing company, power supply in the country is frustrating. “It is terrible. We end up using most of our profits to buy diesel to make sure we meet up with our operations. We spend between N30,000 and N40,000 every week. It has a negative effect as our cost of production is on the upswing.
The President of MAN, Frank Jacobs, said that member companies spend N20.8 billion monthly on power generation to run their production processes. He explained that the ripple effects of the power shortages and constant outages were numerous, ranging from cut down on production, job losses to outright closure or relocation to other countries by industries.
He added that companies had to bear so many losses as the outage often occurs when goods are in the middle of production.
“Members of MAN have resorted to generating power privately and completely cut off their operations from the national grid,” Jacobs said.
According to him, “most companies such as Coca-Cola, Wempco, Nigeria Flour Mills and especially the multi-nationals self-generate their power. They don’t rely on the national grid.”
He is not alone in this national lamentation as the Director General of the Nigeria Employers Consultative Association (NECA), Dr Segun Osinuwo, is equally miffed about the development.
Succour on the way
But in the face of all these challenges bedeviling consumers, help seems to be on the way as a bill seeking to prohibit the issuance of estimated electricity bill to electricity consumers in the country has passed second reading at the House of Representatives.
The Electric Power Sector Reform Act (amendment bill), sponsored by Femi Gbajabiamila, leader of the House, proposes a legislation to criminalise such billing method.
By creating new Sections 68 to 72 in the Act to prohibit estimated billing in the country, the bill will make it a right for every Nigerian to have a prepaid meter.
Speaking at plenary last Tuesday, Gbajabiamila said the bill will address complaints of extortion by electricity consumers across the country.
Part of the provisions of the bill states: “Every electricity consumer in Nigeria shall apply to the electricity distribution company carrying out business within his jurisdiction for a pre-paid meter and such consumer shall pay the regulated fee for pre-paid meter to be installed in his premises and the electricity distribution company shall within 30 days of receiving the application and payment install the pre-paid meter applied for in the premises of the consumer.
“If a customer is not metered within 30 days after the application has been duly made, the relevant electricity distribution company is prohibited from refusing to connect the customer or disconnecting the customer in the event that the customer has been connected or estimate his bills.”