One year after he was appointed Minister of Power, mixed reactions have trailed his handling of the sector with consumers insisting that not much has changed in terms of power supply.
Assigned on August 21, 2023 to superintend over the power sector that has gulped over N6 trillion of public funds despite being partially privatised, Chief Adelabu last week maintained that power supply has improved.
His appointment came almost three months after President Bola Ahmed Tinubu was sworn in and after he had signed into law the Electricity Act which amongst other significant changes allowed state governments to set up their own electricity market.
Since then, the Nigerian Electricity Regulatory Commission, NERC, has issued regulatory orders authorising six states to set up their own electricity market. But the most significant policy change occurred on April 6th, 2024 when NERC issued an Order authorising electricity distribution companies, DisCos, to bill about two million customers grouped into Band-A, at a market driven tariff.
Faced with a potential N3.2 trillion electricity subsidies bill, the Federal Government decided to end subsidies for consumers in Band-A category in exchange for a guaranteed minimum of 20 hours of power supply daily.
With power supply at one of its lowest levels in the early part of 2024 and frequent collapse of the National Power Grid, observers have said that a lot needs to be done to overcome the current liquidity challenges facing the sector that saw the amount owed to power generation companies rise to N1.3 trillion.
Speaking to Vanguard on the Minister’s performance in the past one year, the Executive Director, Electricity Consumers Protection Centre, Chief Princewill Okorie said there has been no significant change in power supply to consumers.
Okorie however pointed out that the Minister has remained open and has engaged several stakeholders in the sector unlike his immediate predecessors.
He said: “The thing is that at least this Minister is visible and he is engaging stakeholders unlike those that came before him. He has not shied away from giving his opinions and what he is doing in the sector. That said, we have not seen any real attempt to engage directly with consumers.
“For us, we think that most of the policies and actions of the ministry have been based on information coming from the DisCos and NERC without getting any information from consumers. Then if you go to the ministry, there is no unit in charge of consumer issues. But they have units in charge of generation, transmission and distribution issues”.
He stated that after explaining the situation to the Minister at different forums, Chief Adelabu promised to address the imbalance which was yet to materialise.
While commending the Minister for showing a “little bit of interest” in consumer issues, he said consumer groups were still waiting for a formal engagement or forum with the Minister.
He noted that it was important that the minister hears directly from consumers who have continued to invest in the distribution network and other power supply assets without getting the required benefits from the DisCos.
“When they talk about data, is it only the DisCos that possess data? Consumers also have data of their investments into the network. How many transformers are functional in the network? How many were provided by consumers? So, there is a need to hear directly from consumers”.
Okorie who opposed the indiscriminate migration of consumers to Band-A without commensurate improvement in power supply, said the policy was just a means of improving revenue for the DisCos.
“Consumers are paying more than they should in the name of being in Band-A without adequate supply”, he added.
He pointed out that safety issues in the sector have not been adequately addressed as the industry is filled with substandard equipment and unskilled personnel.
“The Minister must ensure that consumers who invest in the network are adequately compensated. So far, consumers have not fared better but we have seen moves by the Minister that show seriousness to address the issues in the sector”, he maintained.
On his part, energy market expert, Mr. Lenre Elatuyi in a note to Vanguard said the Minister has so far failed to present the National Integrated Electricity Policy and Strategic Implementation Plan as prescribed by the Electricity Act 2023.
He wrote: “A lot of deliberations and engagements have gone into this, and the industry stakeholders are all waiting for the outcome of the policy documents being developed. So, for now, there is not much going as regards policy framework that will guide the industry into achieving a stable electricity supply and increased energy access”.
He noted that “The Minister has consistently hammered on the intent to increase generation and distribution capacity to 6000MW before the end of 2024, and we hope this will become a reality before the end of the year”.
On the moves by states to set up their electricity market, he pointed out that “the reality is that these States will not have their state electricity markets in the short term in the actual definition of electricity markets. The reasons being that states for now will still participate in the wholesale electricity market being regulated by NERC provided the Nigerian electricity market makes a transition from single buyer model to competitive wholesale electricity market.
“Recently, NERC issued an Order on bilateral trading, and it is too early to say what will happen in the next few months when compliance to this Order is expected.
“The impacts of states’ regulatory autonomy may be serious if fundamental issues are not resolved. From my personal analysis, I see an increase in transaction costs and eventual higher tariffs for end users.
I also see some state governments having to bear the contingent liability of tariff shortfalls if their citizens could not afford to pay cost reflective tariffs”.
Elatuyi argued that with the impending transition to competitive wholesale market, it was uncertain “if emerging DisCos in these states will have the financial power to participate in the wholesale market, and if they do, they may limit their energy offtake needed to meet the loads in their states”.
He added: “I am one of the critics of the Electricity Act 2023 and some of the provisions in the document. Most States for me are not viable to provide even ordinary drinking water, so managing a more complex utility is something we need to be careful about. It appears we downplay the complexity and allow politicians and some vested interests to make decisions that will hurt the end users .
“The law has been made, and we are deep into it for now; so there will be casualties, lessons will be learnt, and we may have to go back to the original plan as detailed in the Market Rules, or in one way or the other find a way around it”.
One the recent announcement by the Minister that power generation 5,100MW, Elatuyi stated: “It is misleading when we take peak generation that lasted for maybe 15 minutes or less to represent our baseload or our hourly generation. I will rather look at the generation data in MWh to get a clear picture of the actual capacity generated, transmitted and distributed.
“With the addition of 700MW capacity from Zungeru, we already have an increase in available generation capacity, but we have to focus on the distribution capacity of the load serving entities.
“The DisCos total energy offtake this year as projected in the MYTO (Multi-Year Tariff Order) is around 4000MW. So, it is a bit ambitious for me that the market will achieve 6000MW before the end of the year. Yes, maybe as a peak generation load or even peak demand, but it will be a great feat if on hourly basis for 24 hours, 6000MW is achieved for days”.
On a scale of one-to-ten, he said “Minister has only spent one year, so for me, it will be hard to score him on a scale of 1 to 10. Bearing in mind that this is an industry that has defiled solutions and interventions, and also being a regulated industry where things have to follow due process.
“To me, the Minister has shown a lot of commitment and has acquired a degree of knowledge about the industry. In all his public engagements, he has shown passion and some levels of understanding of the situations in the sector even as a non power system engineer or electricity market professional.
“You can see the desire to improve the sector whenever he speaks. I only hope he consults with the right people and expertise as I was a bit worried with the depth of conversation during the policy dialogue on Wholesale Electricity market”.
He stated that Chief Adelabu has tried his best, and “I will wait for the policy document to be out and also see how the policy will align with the already enacted Electricity Act 2023.
“The biggest test for his office will be how NESI will look like in the next few months, especially with the Order on bilateral trading, and the regulatory autonomy that some states now have”.
But justifying government’s decision to remove subsidies for customers in Band-A, the Special Adviser, Media and Communications to the Minister of Power, Bolaji Tunji said there was a urgent need to improve the financial situation of the sector.
“The issue has always been liquidity in the sector. The government subsidy was not cash backed, which created a problem for the sector and which became unsustainable. Something had to be done to ensure liquidity, hence the band A. Band A did not just happen. It is based on the structure in most of the areas.
“Would the feeder sustain the 20-22 hours of supply. There are areas where the feeder will not sustain that number of hours. Hence, they will not be on Band A until an upgrade. So if the Minister was saying that some equipment are old, he is simply acknowledging the problem on the ground and what must be done and which is being done gradually with the cooperation of all stakeholders. That is why we hear that some people have been migrated to Band A”.
(Vanguard)
