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States, private sector should co-own power Discos – Engr Balogun

The Minister of Power and Housing  recently charged power distribution companies to patronize locally -made  meters. How has this charge impacted positively on the patronage…

The Minister of Power and Housing  recently charged power distribution companies to patronize locally -made  meters. How has this charge impacted positively on the patronage of your product?

Essentially, the major problem facing  the disco is the funding gap. There is no sufficient funding to bridge all the metering gaps. You will recall that part of the tariff structure include some percentage funding in metering.

Because they are even collecting revenue sufficiently enough to pay the market operators so to extract that part for metering is not even possible.

If the consumers are not getting sufficient electricity there is no how they would recharge their meters if they are on prepaid. And there is no how they will pay for electricity  that they don’t get.So those are the major issues that is facing the patronage of meters.

We are resilient in our commitment to ensure that the products  we are giving the  electricity distribution  companies are the best compared with those across the world.But in terms of the  mindset  of owners of the discos, I would still plead with the  minister to convince them to ensure that buying locally-made product is not a favour to the manufacturer, but to the country because of the enormous advantages.

Since I set up this factory in 2013, I have never used public electricity. I have been on generator and imagine the cost of diesel. How do I  break even in this business? That  is  why it is very important for government to have a dedicated commission to  ensure that challenges of  factories are adequately met in order to prevent their closure, just like they did to the banking sector.

We should not allow any factory to relocate  from Nigeria because the pressure are enormous. Even if a factory is indebted, government should make sure that there is receiver manager that can take over  the factory and manage it successfully.

Some discos, like Ibadan Electricity  disco are already committed to us and  patronizing us with  the little resources they have. That is why we are able to survive, otherwise we won’t  be here.

Don’t you think patronage of your product is a challenge because some of these discos have partners in countries where they have a comparative cost advantage to import meters into Nigeria?

I quite agreed that some of them have partners in Korea, but we are talking about Nigeria and the need for the survival of its citizens. If any partner wants to encourage them to import product, why don’t they consider setting up metering factory in Nigeria to benefit the people here. That is why government should provide every incentive to ensure that those who set up factory here should be able to survive.

What is your take on the threat by NERC  to sanction discos that do not meter their customers by February 28?

The discos are collecting money from consumers and you are sanctioning them for disregarding your regulation.They will use part of the monies they collected from consumers to pay your sanction and it will reduce their collection further. Who is fooling who? It is the same system that is paying for inadequacy because you want to give them a mandate to do mass metering, you need to  design ways in which the funding would come out. How would you fund metering? Is it out of the epileptic funding that they are getting or collection or other intervention you intend to bring in? We  have to be realistic in doing things this time around to redeem the errors of the past.

If you want to impose sanction, identify where they are going to get the resources for funding the metering.They said during their agreement that they would come out with lots of investment,but the ones they have invested are already threatened. Naira has devalued.They borrowed money on dollar that is stable against Naira that is nosediving.The interest rate is astronomically growing and you want them to fund it further. That is not possible!

That is why we have to sit down and look at the entire processes again with a view to moving the nation forward.I still want to plead with the minister to take another step over Credited Advance Payment for Metering Implementation(CAPMI)  because it is a breathing space for consumers to pay for meters and get them.They  should do it in such a way that it does not have so much influence on the  disco because as  the discos are beneficiaries of the funding then  bureaucracy will creep in.

They should create a commission that can be a centralized vending system which  when the consumers pay they will register  and forward straight to the discos data base.There should be CAPMI phase 2 in which the error of the past is articulated and addressed and then rolled it out so that the consumers who can’t wait for the free meters would be able to have.

What impact the current economic  recession ,forex scarcity and high interest rate in Nigeria created on your operation?

When a recession happens in a country, it is an opportunity for another way of reviewing the errors of the past and capitalizing on other value chain. It is an opportunity to look inward now and say what makes our naira depreciates and what are the things we are importing using dollar.What need to look inward and see those elements draining our foreign exchange. We need to domesticate all our needs.

But Nigerians being what we are, as soon as you are trying to domesticate product lines,they will consider it fake. Most of the things we import can be replaced in domestic capacity but it takes a gradual steps to do that. It  is an opportunity to grow in terms of knowledge,technological growth, improve our research and development as well as create more jobs internally for people.

 Have you laid off staff due to the economic down turn?

Yes,I have laid off more than 150 staff out of almost 300.We are trying to rebuild,but the most disappointing thing is that since I      applied for forex in CBN, I  have never been given the currency once .Every day I see it in the newspapers that manufacturers are given forex. I am one of the manufacturers and I have never received any forex for almost over  one and a half years I have been applying Who are the manufacturers that they are given forex if you don’t  give manufacturers of electricity meters?. The minister even wrote a letter to the Central Bank of Nigeria to give us consideration, but they didn’t.

 Are you frustrated and probably thinking of moving out your meter manufacturing business outside the shores of Nigeria?

I am highly frustrated  by the development,it is just that I have an unshaken patriotism for this country.I believe that no foreigners will solve our problems. We have to do it ourselves. I am willing to stick my neck into the trouble waters in Niger until the right thing is done. We must make Nigeria a better place to live.

Almost four years after the privatization of the nation’s power sector,what do you have to say about the change of ownership status of Nigeria’s power assets?

I wont say that it is a bad thing that they privatized the distribution companies.I will not advise the reversal of the process,due to teething challenges therein.I think overhauling the entire process is better

Prior to the privatization,we said that the  power distribution structure was not right for us to privatise .What we advocated then was that each state should be made a distribution company.The distribution company should reflect the structure of the state and  thus it is easier for the state  government to buy share  there and fund it together with the private investor so  there would be joint  ownership of each disco  in a particular state.

It is easier for a governor of a state to fund the asset in order to make sure that there is availability of power in the state.That was the error,but  it is not too late to change all the distribution companies to look like a state distribution companies so that the assets can be maintained adequately.So the grid would be independent,but where we don’t have enough,we would go to the grid and buy.When we have surplus,we sell to the grid.

 Did  privatization of power aid  patronage of locally made meters?

Privatisation has not improved patronage of locally made  meters.It has gone down drastically to 10 percent.Before privatization,we had 70 patronage by the previous  power distribution companies

What is your take on the N400bn revenue shortfall in the power sector?

To the best of my knowledge,the shortfall in the revenue generation is one of the hindrances.What worries me most is that the prior to privatization,the efficiency of collection was higher than now.What magic did they do to increase revenue collection ?.The new owners need to improve on revenue collection methodology  from the consumers.They need to involve more physical approach than technology approach per se to enhance revenue collection.I think non-challance of some discos to carry out monitoring and inspection shorten therevenue drive.

There is apparent black out in the country now due to drop in power generation. What is the way out?

Our generation lies on gas a lot and you can see what is happening in the Niger Delta- vandalisation.Government needs to go into dialogue with the militants.That is what I  was saying that if the assets are state driven,they would not destroy  them.We need to restructure our distribution companies so that the state would participate in the ownership of the company so that they would now encourage the state to go into generation and put  same into the state.So we need to widen the licence and the limitation of the megawatts for one to inject into the grid.


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