Our Ordeal At the Hands of Ikeja Electric Plc -By Simbo Olorunfemi

Filed under: Economic Issues,National Issues |


Good corporate governance will ignite the conscience of an electricity business to first provide meters to its customers before seeking tariff increase, so that a metered consumer will at least have the ability to fairly measure from his meter how he is being billed” – Babatunde Fashola, Minister of Power, May, 2017.

One of the most burdensome legacies of the Jonathan presidency is the transfer of ownership (60 percent of it, we are now told) of Nigeria’s power asset to the hands of an oligarchy on the strength of an opaque privatisation exercise that has predictably ushered in more of darkness into the sector, whereas Nigerians were promised light.

Some would, in fact, say that exercise which gave birth to the DisCos which were supposed to invest in the entities handed out to them and manage them to deliver value to all concerned is the most audacious fraud perpetrated on the Nigerian people, given what was at stake, what was promised, and what has been delivered. Whereas the impression created at the point of privatisation was that the assets were being handed over to genuine investors who would leverage on their financial muscle to engineer a turn-around in the sector, what we got were portfolio investors plugged to oxygen tanks from the banks, who were soon gasping for breath, shortly after taking over the asset.

Mr Babatunde Fashola, the Minister of Power confirms what had been widely speculated: “You would have heard that there are liquidity issues in the power sector that came from the way the privatisation itself was structured, essentially through bank loans. Most of the people who bought them had very little if any skin in the game in terms of their own private equity.”

So, the real tragedy is about the faulty foundation laid which has been conveniently left unaddressed while DISCOs continue to hammer on cost-reflective tariffs, seeking to benchmark their outrage proposition around what Nigerians spend on their petrol and diesel-powered alternatives forced upon them. Nineteen months back, a 45% increase in tariff was slammed on Nigerians. The idea was to help with the liquidity squeeze in the chain. Obviously that has been to no avail. They are already beating the drum for yet another increase. Yet another intervention Fund, N700 Billion this time, is on the menu after the N213 billion Nigerian Electricity Market Stabilisation Facility (NEMSF) disbursed in tranches since 2014 to support operators in the sector, to little or no effect.

According to the Bureau of Public Enterprises, total proceeds from the sale of power assets between 2013 and 2015 amounted to N461.4 billion of which N374.8 billion was spent on the disengagement benefits of workers of the Power Holding Company of Nigeria, N53 billion for the bulk companies, and N9.5 billion for transaction costs, leaving only N23.3 billion for the government, yet, these assets ended up in the hands of portfolio investors too addicted to baby milk and poop-cleaning by the government to know what to do with them. These were mostly ill-prepared, hurriedly cobbled together special purpose vehicles with doubtful financial and technical backbones for the task, yet it was to these ones that the serially violated consumers were handed over to.

It was simply a case of a government-owned monopoly cannibalised into bits and parts with territories handed over to regional monopolies to do what they like with it, the interest of the customer hardly secured. In a partition akin to what was done with Africa in Berlin in 1885, customers got the short end of the stick, left at the mercy of DISCOs unable to fulfil their part of the bargain with metering customers, providing infrastructure and managing the assets in their care for optimal delivery, yet are supposed to pay bills without question. In spite of the terms of the MYTO the only aspect of it that the DISCOs seem to pay attention to is only that to do with increase in tariff increase. DISCOS have continued to bully the customers, blackmail and arm-twist the regulator and government into sanctioning increment in tariffs, claiming that as the one-fix for everything that ails the system, when everyone knows that that is only a part of the problem.

Even as the Multi-Year Tariff Order allows for bi-annual minor reviews and major review no more than 5 years apart in its fifteen year tariff path, taking into consideration a number of variables, it seems to have been conveniently forgotten that the MYTO (2015-2024) envisages a tariff reduction for IKEDC R2 customers, for example, from the 2016 rate of N21.30 to N21.10 in 2017 and N18.15 by 2024, yet the ground is being prepared by the DISCOs for yet another increase. All that the operators are interested in is increased tariffs to service their loans and inflated contracts to relatives as we have seen in some Discos, as the Minister recently told us.

It happens to be our lot, the larger part of Lagos, which in the infamous scramble and partition of Nigerian power assets, our territory fell under the jurisdiction of Ikeja Electric Plc. I doubt that there is any difference between it and any other DISCO in terms of customer experience. Safe for a change of name, very little has changed from the antiquated mindset of the NEPA days in the way Ikeja Electric conducts its business. All the telling characteristics of a monopoly with no regard for anything else but its pocket is put on grand display by Ikeja Electric. The arrogance, impatience and unwillingness to take responsibility for its inefficiency are hallmarks of the age of NEPA that the new operator has upgraded under the new dispensation. It is a badge worn by the staffers, even many of those on the Customer Service Desk. The ‘We don’t give a damn’ attitude is evident for all to see. They have one plastic, impersonal response or the other for the ‘education’ of the Customer for every complaint lodged. It is an organisation that does no wrong and will never accept to any wrong. It is always about the customer, even when the inefficiency of the system and Staff is out in the open. It is almost unbelievable that such a broken system and colonial mindset is that of a privatised or private entity.

The NERC says it is the customer’s right to transparent electricity billing and that unmetered customers should be issued with electricity bills STRICTLY BASED on NERC’s estimated billing methodology. Controversial and unfair as this NERC methodology is, on the face of it, the strange thing is that Ikeja Electric hardly billed customers on the basis of that methodology, from our experience. It operated on the basis of a voodoo methodology that enabled it to engage in arbitrary and crazy billing, likely aware that the regulator might not be able to do much about it immediately, even as it does appear that a review that has now led to a new regime under which unmetered customers on the basis of average consumption in its neighbourhood was prompted by the unfairness and abuse of the previous one. In fact, at the introduction of the new methodology and even with an increase in tariff, the bill initially dropped from as high as 1,050 units to as low as 56 units though the trend for recent months is already indicative that the dance into the familiar territory of arbitrariness might have begun. NERC insists that every DISCO has an obligation to file a report on estimated bills in every billing cycle, it is difficult to tell how much of that is being done and what impact that has on regulation, the activities of the DISCOs, especially on the field.

Since 2015, we have been engaged with Ikeja Electric over what we see as arbitrary, crazy estimated billing slammed on us. Even as it claimed to have been billing customers on the basis the NERC methodology, from our study of supply trend, we could not see evidence of it. From what we could see, there was obviously no correlation between supply and billing. As supply continued to dip, so did the billing increasingly go up. Even in the dark months around the 2015 elections, with supply at the lowest ever, the bill kept going up that by June we paid twice what we were charged in February. At that point, we had to escalate our complaints to the desk of the Managing Director of the company and the NERC. A letter finally came to us in August in response, promising an investigation. Two years after, we are still waiting for the result of that investigation promised by the Managing Director of Ikeja Electric.

Since Ikeja Electric will not respond to a spate of reminders and NERC, the regulator, was in deep slumber, with its voice only heard once in a while and will not respond to a number of complaints and reminders sent to it, we had to take the complaint elsewhere. So, we finally get a chance for a meeting with Ikeja Electric. All the while, we have challenged the company to present the power availability report for our neighbourhood as basis for interrogating our claim that there was no correlation between supply and billing and the company has been playing hide and seek. Even with the intervention of the arbiter, rather than make the report available, it insisted on the red herring of conducting what it calls a load inventory at our premises as basis for estimating consumption made two years earlier, whereas the NERC methodology clearly lays out a formula for computing estimated billing. What is the link between a so-called load inventory in 2017, which does not take consideration the usage, functionality of appliances with the single issue for determination – whether supply is commensurate with the billing of 2015 and 2016? We might have to ask Ikeja Electric where the NERC methodology it claims to be applying provides for billing on the basis of load inventory.

Ikeja Electric finally unearths the availability report, one which it insists the customer cannot have a copy of, but can only take a look at. Therein, we find the much-needed evidence to validate our claim that there has indeed been no correlation between supply and billing. Whereas Ikeja electric plc reports a cumulative hours of supply of 238 hours in April and billed us for 520 units, in May, it reports 105 hours of supply and billed for 530 units. In the following month of June 2015, it recorded 149 hours of supply and billed us for 1050 units. So whereas there was only a minimal difference between May and June in terms of supply, the bill for June is double that of May. There is neither rhyme nor reason between the availability report by Ikeja Electric Plc and its billing over the same period, yet it says it was done in line with the NERC methodology. Perhaps, that is the reason it has been taken 2 years for it to fish out this report.

But you would think that in the light of such a report, the company will backtrack and apologise, but Ikeja Electric Plc never does any wrong. It maintains that it has done nothing wrong. It now insists that it will bill us on the basis of a voodoo methodology, based on what it calls ‘load inventory’. Same company that had written us claiming it could not secure credit adjustment in favour of the customer internally, now claims that it is the Customer which owes it for consumption beyond what it had earlier estimated, having now factored the number of appliances we have in the house as basis for what we must have consumed in 2015. Stranger things have happened, but one would think, given this revelation that Ikeja Electric will be eager to capture lost revenue in terms of our alleged consumption by promptly providing us with a prepaid meter which we requested for over 2 years ago, but it insists we can only have one in April 2018.

Officials who represent it at meetings have no record of previous correspondence or activities as they have no file on the complaint or the customer. We have to keep reminding them, from their own letters, contradictions in their position. The company writes a letter to the arbiter alleging we did not allow its officials into our premises more than a week after its officials had been with us and had been allowed to conduct the exercise, an obvious lack of coordination within the organisation which we are accustomed to.

For the avoidance of doubt and to again remind the officials of Ikeja Electric, what the NERC methodology that applies to the period in contention provides for, with respect to the billing of unmetered customers. It says that they shall be billed based on the “weighted average cluster load”. This method involves the subtraction of the entire metered load from the energy supplied to the feeder (33kV or 11KV and others) and the application of an appropriately determined availability factor and correction of losses which is aggregated among the various number and classes of Customers supplied by the feeder.

Perhaps we also need to remind Ikeja Electric and other DISCOs that among those variables, customers in clusters within a feeder which experienced additional outages due to: failed transformer, transformer load shedding, Customers being connected to part of feeder that experienced prolonged outage and Customers not resident in the premises during the billing period or thereof shall be compensated by applying availability factor on the load (Zci) obtained for customers on the feeder. It will be enlightening to read how much of these the DISCOs have been applying in billing customers.

With all the variables taken into consideration, Consumption per Customer per class of Unmetered Customer in the affected cluster, according to the methodology, is computed on the basis of this formula – Zcic =α Zci. What we have challenged Ikeja Electric Plc to do is to break down its billing on the basis of supply made, with provisions made for all the variables as laid out in the methodology and this statistical formula recommended for the purpose of computation, to help us see how 105 hours of supply amounts to a consumption of 530 units and 149 hours of amounted to 1050 units. There must be an explanation which its officials, embarrassingly, could not offer when they were confronted with the record they tendered.

The Minister, Babatunde Fashola asks: “If a company cannot produce all the records of its transactions and accounts, does that not allude to gaps in its governance? Does the fact that consumers go beyond their service provider who collects the money monthly to complain to government, who does not collect money for their power, not call for a look in the mirror about your corporate governance?”

I will say it speaks to more than a dodgy culture of corporate governance. It speaks to a faulty foundation and a broken system that will take more than the glue of another intervention fund to fix. The system is simply not working. The Minister knows what to do, for the sake of the consumer and the future of Nigeria. We cannot, for the sake of some agreement, that its breach is apparent to the outsider, and a rigid reading of the law, continue to short-change ourselves by not removing the hurdles in the way of off-grid solutions that will enable independent power plants set up, based on potential demand, to generate and distribute directly to customers without any go-between in form of a distribution company and an overbearing regulator.

Our ordeal at the hands of Ikeja Electric Plc is in no way peculiar. A long list of complainants who have been so similarly short-changed is out there. Some have enlisted for our assistance and counsel on what to do. In this case, our resolve is to ensure we see this to the point we receive justice, wherever that takes us.

Simbo Olorunfemi works for Hoofbeatdotcom, a Nigerian Communications Consultancy and publisher of Africa Enterprise. Twitter: @simboolorunfemi