The Nigerian Electricity Regulatory Commission (NERC) just announced a new tariff and Nigerians are taking it with a lot of feelings. To many, the new tariff has just scratched open the pains felt in the hands of the Distribution Companies (DisCos) across the country.
While most electricity consumers worry more about when and how long they will get their share of the rationed power in their locations, a greater percentage of these users either suffer from estimated billing or lack basic power infrastructure that supplies power to them.
In a bid to revolutionise Nigeria’s energy sector and address the longstanding issue of power shortages, experts and stakeholders are rallying behind a bold proposal: mandating the federal government to issue DisCos licences to operate.
Nigeria’s current power distribution system is characterised by a fragmented structure, with multiple DisCos operating in different regions under exclusive territorial licences. The fragmented power distribution structure leaves users with no option but to work with the available DisCo licenced in their location. Example, those living in Kaduna, Sokoto, Kebbi and Zamfara have to go with the Kaduna Electricity Distribution Company (KEDCO) only. This fragmented setup has contributed significantly to the inefficiencies and challenges plaguing the sector. This has led to inadequate coverage, where many areas in Nigeria, particularly rural and remote communities, suffer from inadequate or unreliable access to electricity due to the limited coverage of existing DisCos. This lack of access hampers socio-economic development and perpetuates poverty in these regions.
The current status of operation also promotes poor service quality. Consumers often face issues such as frequent power outage, voltage fluctuation and slow response time to maintenance requests, leading to dissatisfaction and frustration of electricity users: estimated bills, disconnections, bribery before attending to customers, lack or no education on billing, no awareness of efficient energy use and poor (if any) customer relationship.
Another stubborn area is the delaying or refusal to provide meters to customers, and the fraudulent extortion of money from users to procure infrastructure like cables and transformers which ought to be provided by the DisCos.
The absence of competition in the power distribution market can also be blamed on the fragmented operational structure, and this has resulted in a lack of incentives for DisCos to improve their services and invest in infrastructure upgrades. This, in turn, has caused monopolistic or exploitative tendencies that have stifled innovation and technological advancements in the sector.
To be more practical, a survey of how electricity users feel is often presented in very frustrating terms. Many customers describe DisCos as having poor (if any) customer relationships, full of purposeful vandalism of power infrastructure in the name of disconnection. Some complain of the refusal to provide meters to customers in place of fraudulent estimation of bills and extortion of money from users to procure infrastructure (like cables and transformers) which ought to be provided by DisCos.
It is my opinion that proponents of the nationwide operation mandate will consolidate power distribution operations under a unified regulatory framework which would yield several benefits, including improved efficiency, expanded access, enhanced service quality and stimulated competition.
Improving efficiency will eliminate duplication of resources and streamline operations, a nationwide mandate would enhance operational efficiency and reduce wastage, leading to cost savings for both DisCos and consumers. Mandating DisCos to operate nationwide would ensure broader coverage and more equitable distribution of electricity across urban, rural and underserved areas thereby accelerating electrification efforts and fostering inclusive growth. A unified regulatory regime would enable standardisation of service quality and performance metrics, incentivising DisCos to improve their service delivery and customer satisfaction levels.
A key achievement of national operation is the stimulated competition it will instill in the operation space. The nationwide competition would spur innovation, investment and service differentiation among DisCos, ultimately driving improvements in the efficiency, reliability and affordability of electricity services.
The peak of such a revolution will be that the crusade to go for more energy-efficient appliances will be driven by the DisCos and not just by unheard academics. This will allow users to choose which DisCos will supply them as it is done in other countries. It will be a breakthrough similar to what happened in the telecommunication section when we moved from buying a telephone line for N30,000 in 2002 to buying it for less than N500 at the moment.
Despite the potential benefits, implementing a nationwide operation mandate for DisCos would pose certain challenges and require careful planning and coordination. The regulatory agency will need to project a robust regulatory framework to govern nationwide operations and ensure compliance with quality standards, consumer protection measures, and fair competition practices would be crucial. Significant investment would also be needed to upgrade and expand the existing electricity infrastructure to support nationwide operations, including transmission and distribution networks, substations, and metering systems. A phased approach may be necessary to facilitate the transition to nationwide operations, allowing sufficient time for DisCos to adjust their business models, upgrade their capabilities, and comply with regulatory requirements.
There is also very poor stakeholder engagement by the DisCos. Close collaboration and consultation with stakeholders, including energy experts, DisCos, government agencies, regulators, consumer advocacy groups, and the private sector, would be essential to garner support, address concerns, and ensure a smooth implementation process.
As Nigeria continues its quest for sustainable development and economic prosperity, reforming the power distribution sector emerges as a critical imperative. By mandating DisCos to operate nationwide, the country can unlock the full potential of its vast energy resources, catalyse socio-economic development and empower millions of Nigerians with reliable and affordable electricity. Unbundling the geographical operational limits of the DisCos will naturally bring competition. With concerted efforts and visionary leadership, Nigeria can embark on a transformative journey towards a brighter and electrified future for all.
Professor Ikyo, is the Director, Centre for Food Technology and Research, Benue State University, Makurdi.
