Discos: Orders to NERC Will Not Correct Imminent Collapse of Power Sector

* Debunks FG’s claims on power generation, insists its policies are confusing

Chineme Okafor in Abuja

The 11 electricity distribution companies (Discos) in Nigeria’s electricity market on Tuesday took a swipe at the federal government for recently asking them to either upgrade their efficiency levels in the market or quit the stage.

The Discos, in an interaction with journalists in Abuja, faulted the government’s order to the Nigerian Electricity Regulatory Commission (NERC) through the Minister of Power, Works and Housing, Mr. Babatunde Fashola, to get them to buckle down or shape up, adding that no amount of government’s order can correct the failings of the sector which they added would lead to its collapse.

Speaking through the Executive Director, Research and Advocacy of their umbrella association — the Association of Nigerian Electricity Distributors (ANED) — Mr. Sunday Oduntan, the Discos explained that the government has largely created more confusion in the operations of the country’s electricity sector than it had helped it.

They suggested the government has also being economical with its claims of improvement in power generation in the country, adding that the generation capacity as at January 2015 was at 6,421 megawatts (MW) and not 4,000MW as often claimed by the government.

“It is with much regret that we feel compelled to respond to the significantly distorted picture that has been painted of the Discos by the Honourable Minister of Power, Works and Housing (MoPWH) in his press briefing of Monday, July 9th, 2018.

“In good faith and with recognition that the challenges of the Nigerian Electricity Industry (NESI) cannot be turned around based on a culture of misrepresentation, we have declined to rebut previous inaccurate assertions by the minister and other government functionaries. In this instance, it is clear that the objective of that briefing was to demonise the Discos, who by the structure of NESI, are the faces of a difficult sector,” said Oduntan.

He further said: “We are also left wondering whether such demonisation of the Discos is camouflage for the absence of the effective policy leadership that is desired for implementing the enabling environment that is necessary for the viability and sustainability of NESI?

“We recognise that we are on the crux of a political season, in which all manner of advantage is being sought by political contenders, we however do not want to be used as the whipping dog to advance other people’s agenda.”

According to him, “Our members, the Discos, are not politicians, even though they distribute a product that is of great importance to politicians, in view of the needs of their constituents. Our constituency which consists of customers, employees, bankers, vendors and investors have a greater interest in improved service delivery than the adoption of cheap theatrics and propaganda for political advantage.”

He noted that the Discos were committed to their obligations, as well as meeting the performance obligations of the agreement that they have with the Bureau for Public Enterprises (BPE).

He also stated that the Ministry of Power has taken away the independence of the NERC by constantly imposing on it orders to execute in the sector.

He said: “Unfortunately, the minister’s expression of his interest in promoting national interest has resulted in his ministry’s consistent promotion of policy initiatives that have resulted in sector-wide confusion and that infringe on the roles and responsibilities of the various sector players; the imposition of the ministry’s agenda on the regulator, compromising its independence; the seemingly lack of respect for contract; and the self-serving distortion redefinition of the law that is the bedrock of the privatisation and reform.

“When the minister refers to the passage of five years of privatisation and businesses still do not have power, we do have to ask, ‘Did the government meet all of its obligations that were pre-conditions to the Discos’ ability to implement the requirements of their performance agreements’?”

Oduntan stated that Fashola was going outside of the specifications of National Electric Power Policy (NEPP) and the general policy role stipulated under Electric Power Sector Reform Act (EPSRA) to now issue directives to NERC.

He added that in this regards: “We now have a regulator whose independence has been compromised and that has, essentially, become the minister’s enforcer, a bastardisation of the role specified by its enabling act.”

“How can this increased regulatory risk foster the enabling environment that is required for the attraction of the investment that is needed for the magnitude and long-term nature of power sector infrastructure?

“We would suggest that, as long as the minister continues to play politics with the power sector; as long as the minister continues to refuse to recognise the independence of the regulator – in spite of the frequency of ministerial assurances stating otherwise, assurances that are contradicted and belied by his actions; as long as the minister continues to fail to recognise the change of role for the ministry, from that of operating a utility to that of general policy formulation, under the reform; as long as the objectives of NEPP and the requirements of EPSRA continue to be ignored, no number of directives issued to NERC will correct NESI’s headlong plunge into cataclysmic collapse,” he declared.

He explained that Nigerians deserve better than the seemingly uncoordinated and unfocused policy and regulatory environment he said has continued to undermine the attainment of private-sector driven efficiency in the sector.

Speaking further on government’s claims that power generation had peaked to 7,000MW since President Muhammadu Buhari became president in May 2015, the Disco officials explained that as at January 2015, Nigeria already had close to that generation figure.

He suggested that government’s repeated claim of excess generation of 2,000MW that are idle was not true.

“A review of NERC’s ‘Daily Energy Watch’ for January 28th, 2015 would indicate a generation availability of 6,421MW – divided into peak of 4,230MW and constrained energy of 2,191MW. In other words, it is misleading to state that available generation has grown from 4,000MW in 2015, as a measure of progress, given that a volume of generation slightly under 7,000MW already or previously existed, prior to the beginning of this administration.

“Furthermore, there is no stranded 2,000MW. While there is an available capacity of 7,000MW, the best that can be generated, at this time, is 5,000MW. This is because there is insufficient gas to power the thermal plants due to gas line limitations – for instance, the non-completion of the Oben pipeline, and the absence of a commercial framework that would encourage gas exploration.

“Generation that is constrained by gas amounts to an average 1,500MW daily. Of note is that 25 out of 28 generation plants are fuelled by gas. Transmission grid frequency, line limitation and water management make up the difference of the balance 500MW of constrained generation.

“In simple terms, the often-advertised and pronounced Disco limitation to take on 2,000MW of additional generation is not consistent with the facts or reality. This, therefore, shows that very little has actually changed contrary to the minister’s constant pronouncements,” Oduntan explained.