Nigerian Electricity Sector: A house of fraud

Posted by News Express | 11 April 2020 | 1,163 times

Gmail icon


For years, prior to the privatisation and commercialisation exercise of 2013 that was supervised by the Bureau of Public Enterprises (BPE), with the corruptly-rooted emergence of 11 privatised electricity distribution companies (DISCOS) and six equally corruptly-selected six privatised electricity generation companies (GENCOS), millions of Nigerians were without any source of electricity (given the epileptic performance and gross incompetence of the monopolistic Power Holding Company of Nigeria (PHCN).

It was generally believed in some quarters that the involvement of the private entrepreneurs in the distribution of electricity power could see millions of deprived Nigerians getting hooked on to the national grid, just as the perennial and pathetic situation of electricity power generation and distribution, which was classified as erratic, was expected to end, if good investors were brought in to manage the substantial aspects of the electricity power sector. These aspirations and ambitions are a mirage.

But, as expertly observed in the Mediterranean Journal of Social Sciences, published in year 2014: “In spite of the privatisation of Nigeria’s power sector, the industry is still plagued with sundry issues which generate a great cause of concern.”

Aside perennial power supply failures across Nigeria, including Abuja the seat of power, the kind of privatisation programme implemented in Nigeria in which cronies of politicians connived with some commission-seeking agents affiliated to some rogue banking institutions to take over these services from the erstwhile Power Holding Company of Nigeria, the private owners have failed to improve on these expected services. And to add salt to injury, the pricing has become way above the affordability of an average Nigerian struggling family.

Scholars identified as Isah and Peterside (2014), cited in the journal, acknowledged  that the privatisation of the electricity power sector in Nigeria produced the following adverse consequences: Retrenchment of many PHCN workers; increase in electricity generation without corresponding increase in electricity supply or distribution; hijack of the privatisation programme by the political and economic elites; Proliferation of power sector investors who have no cognate experience in the power sector. Most of the core investors in the electricity power sector, according to Ayodeji (2012), are owned by few political elites and their fronts.

The problem of electricity power distribution to Nigerians, who are nevertheless made to pay through the nose, has lingered and has exacerbated even as millions of Nigerians have complained that they are being short-changed by the electricity power companies.

In Enugu, Kaduna, Lagos and Abuja, customers are at the receiving end of poor services by these badly administered power distribution companies. And because the core owners are patrons of those wielding political power, it appears as if there is virtually nothing that can be done to check the excesses and exploitative practices by these so-called core investors in the ever-disgraceful electricity power sector.

The current lockdown, because of the consequences of COVID-19 pandemic, has brought out the worst criminal system of business by these distribution companies of the electricity power sector. In Lagos, a group of soldiers who have had enough of the poor services of the core investors in that segment of the electricity power sector matched straight to an office of the Lagos Electricity Distribution Company and beat the living hell out of the staff of the electricity company.

These sorts of confrontations have been witnessed severally since the privatisation of Nigeria’s power sector in 2013.

In 2016, these new owners of DISCOs protested the incessant physical attacks they have faced from soldiers who, like millions of Nigerians, are sick and tired of the perennial power supply shortages and the exorbitant bills they are forced to pay or face electricity power disconnection. In Abuja where customers of electricity power are gravely shortchanged, a staff of the Abuja Electricity Distribution Company was stabbed to death when the workers went to cut off electricity power supply to some customers. Since the lockdown, most parts of Abuja are without electricity power supplies. Garki Area 2 is the worst affected. Nyanya and other satellite towns have been without light for days. So, when the story came in that soldiers in Lagos beat up staff of an electricity power company, there was apathy in Abuja by most people who thought that what happened to the electricity workers was deserved. These confrontations have gone on for as long as the perennial poor services have endured.

Frustrated by these attacks, the 11 electricity distribution companies in the country, under the aegis of the Association of Nigerian Electricity Distributors (ANED), had then in 2016 cried out to President Muhammadu Buhari to stop the brutality against the electricity workers by officers and men of the Nigerian armed forces, saying the assault on the workers is the height of impunity by soldiers. These pleadings fell on deaf ears even as the attacks have increased with every passing day that the electricity power supply has deteriorated.

Executive Director of ANED, Mr Sunday Oduntan, told journalists in Lagos that soldiers had been beating up electricity workers carrying out their legitimate duties for a number of years, without any action against such erring soldiers by the military authorities.

Oduntan called on Buhari to call soldiers to order, insisting that “you can’t continue to run a country, where soldiers will be beating our staff when we are only asking them to pay their bills.”

Oduntan argued that the distribution companies have continued to receive insults and beating while they are not responsible for the poor power supply in the country.

“We are the one that give you bill. We are the one that collect money from you. We are the one you will insult; we are the one you will beat. This morning, one of our staff, Mr Abdulahi Mohammed in Zamfara State, around 10.am this morning, was beaten up by soldiers. As usual, with their impunity, soldiers from 1 Base Ammunition Depot in Gusau, Zamfara State, beat up the guy this morning because the guy went to disconnect them for not paying their electricity bill for over two years. That is the kind of problem we are facing in the sector. You cannot continue to beat our staff and say that you can get away with anything,” Oduntan said.

Oduntan also alleged that a serving army major had led a group of soldiers from Alamala Barracks under 35 Artillery Brigade Headquarters in Abeokuta to attack the workers under Ibadan Electricity Distribution Company.

“Under Ibadan Disco, there is a place in Abeokuta called Alamala Barracks. Some soldiers led by a major from Alamala Barracks went to a place called Rounda and beat up one of our distribution staff. I have the picture of the man with serious injuries. Up till today, nothing has been done by the military. We call on the Federal Government, particularly, the President, who is a retired general himself, to call his boys to order,” Oduntan added.

The President is not known to act rapidly to take action to stem the tide of indiscipline anywhere, including in both the corrupt partly-privately-owned electricity supply companies. These electricity companies, while complaining about being beating, failed to address the issues related to corruption and inefficiency in their services. But they are quick to disconnect customers for not paying for these poor services.

The media further reported then in 2016 that Discos commenced a mass disconnection of legacy debtors to protest the huge unpaid electricity bills by this class of consumers.

The body had revealed that government establishments, including the military and security agencies alone, owed the Discos some N93 billion.

The figure, it said, comprised N39.1 billion pre-privatisation of electricity assets and N39.5 post-privatisation.

But the truth is that these new ownership pattern of the electricity power sector are a House of Fraud, and these fraudulent practices are overwhelming. In 2015, the media reported that a major labour crisis was unfolding at the Abuja Electricity Distribution Company over an alleged fraudulent allocation of outrageous salaries and perks to a few officials.

While a privileged few draw as high as N36 million a month from the public liability company that is operating on deficit, majority of equally qualified and even more critical staff absorbed from the previous government-owned PHCN receive peanut, the section of the media had found out as reported in an online newspaper.

Recall that after the privatisation of PHCN, the Nigerian government reportedly retained substantial stake in the distribution companies, including the Abuja DISCO.

This reportedly means the government is entitled to part of the profit. But this must happen only after the operation cost of the company, comprising overhead and personnel cost, are deducted. This arrangement, I must say, is riddled with corruption and insider abuses, because all that these so-called private investors need to do to deny government and the Nigerian people any benefits from the profits of their businesses is to continue to recruit all sorts of ghosts as staff and to cook up the books to retire some siphoned funds. This is precisely what the media found out years back.

The online media reported that for the past two years, as at 2015, the Abuja Electricity Distribution Company recorded only losses but, at the same time paid outrageous salaries to a select few.

The media house discovered that the highest paid director takes home N36 million a month, and a favoured staff with Ordinary National Diploma (OND), takes home as high as N1.9 million monthly.

While this select few earn jumbo perks, majority of the key staff retained from PHCN are paid peanuts: between N50,000 to N150,000.

According to the company’s financial statement prepared by KPMG, as at December 31, 2014, the Abuja DISCO’s revenue increased from N36.01 billion in 2013 to N48.1 billion. Yet, the media investigator found out that the company declared a higher loss of N25.61 billion in 2014, up from N13.37 billion in 2013.

Notwithstanding the loss, the company’s administrative expenditure nearly doubled – from N13.67 billion in 2013 to N24.93 billion in 2014.

The highest paid director in the company (believed to be the Managing Director), who received N5.67 million as salary monthly in 2013, had his pay reviewed by over 640.7 per cent, to N36.33 million, according to the report obtained by the investigative journalist who did a deep professional job in 2015.

Six directors who received between N3.5 million and N4 million a month in 2013 also got a raise to between N145 million and N150 million annual pay.

Within the year, N719.7 million was also spent on “salaries and other short-term benefits to key management personnel compensation.” These corrupt practices are exactly why there is absolute lack of effectiveness and efficiency, because the institution is simply turned into a cash cow for some politically exposed Nigerians and their cronies in the Bureau of Public Enterprises.

The media investigative staff found out that after the privatisation of PHCN, about 3,601 former workers of the defunct company were re-engaged on November 1, 2013, by the new firm. The workers were retained mostly as casual staff. The Abuja distribution company recruited another set of employees in 2014, either as permanent or contract staff.

Although the company’s approved salary structure obtained by an online media house    reportedly ranged between N47, 186.80 for the least paid staff on grade level JS1 step 1, and N1.137.069.17 for the highest paid official on grade level EG1, some categories of staff received far ahead of those allocations.

It would seem that the Nigerian Electricity Regulatory Commission (NERC) is also a gang member in these corrupt practices going on in the distribution and generation companies, which is why there is a wide chasm in oversight responsibility to stop the disparity in wages. How, indeed, do we expect the Nigerian Electricity Regulatory Commission to stop the financial malpractices when that body is itself deeply enmeshed in corrupt practices? And then here is a more startling revelation: the payroll reflects a huge disparity in favour of the new employees.

The online newspaper reported that although some of the new employees lack technical competence and practical experience, they were made to pocket between N1.2 million and N1.9 million per month.

Their colleagues from PHCN, the paper recalled, receive between N50, 000 and N200, 000 per month, irrespective of qualification and experience. Only a few of the older workers earn N200, 000 and above, so reported the major online newspaper.

The online media reported then that the huge disparity in salary between the different categories of workers is fuelling discontent in the company.

Recall that the Abuja Electricity Distribution Company is one of the 11 successor power distribution companies (DISCOs) of the PHCN, just as it was created to undertake electricity distribution activities and related business in Niger, Kogi and Nasarawa states and the Federal Capital Territory.

The company is owned 60 per cent by KANN Utility Company Limited, a joint venture between Xerxes Global Investment Ltd, CEC Africa Investment Ltd and Abuja Electricity Distribution Plc.

The Nigerian Government controls 40 per cent of the company through the Bureau of Public Enterprises, which has 32 per cent, and the Ministry of Finance which owns 8 per cent.

Prior to the power sector privatisation exercise, BPE had disengaged over 4,000 former PHCN employees on October 31, 2013, as part of the winding down process.

The NERC, the electricity sector regulatory agency, confirmed to the online media house that Abuja Electricity Distribution Company (AEDC) was later allowed to re-engage about 3,601 of the workers for an initial contract period of six months.

The online media reported it viewed parts of the company’s financial statement and these showed that at the completion of the re-engagement process, 3,658 workers were on the company’s payroll in 2013, consisting Administration (845), Finance (399), Marketing (1,116) and Technical (1,298).

The figure, however, fell to about 2,243 in 2014, with Administration having 320, Finance (279), Marketing (859) and Technical (785).

At the expiration of the initial contract period in 2014, NERC explained that each worker was issued fresh re-engagement letters as permanent or contract staff, in line with the AEDC’s framework of employee remuneration and public service rules.

“Apart from discriminatory salaries, the casual workers are denied vacation and proper medical attention, despite performing similar jobs and exposed to same hazardous conditions at work on a daily basis,” one of the affected workers confided in the reporter.

At that time, as reported, it would seem that Independent Corrupt Practices and other related offences commission (ICPC) waded into these accusations of underhand tactics and fraud in the Abuja Electricity Distribution Company, but five years on, these issues are still lingering.

The media had reported in 2015 that ICPC’s invitation letter had asked the affected AEDC top officials to provide for examination the statute/law/enabling act establishing the company; the company’s nominal roll since 2013, and certificate of compliance in recruitment process from the Federal Character Commission (Premium Times).

The officials were reportedly also asked to furnish the Commission with the company’s payroll for June 2015; company policy; list of contracts awarded from January 2013; statement of account; statement of salary accounts as well as recruitment report detailing advertisements, short-listings, result sheets/scores since 2013.

The spokesperson for ICPC, Rasheedat Okoduwa, who confirmed to Premium Times that the AEDC top officials had honoured the invitation on August 4, 2015, however, did not give details, saying she was not authorised to speak to the media on the issue. Little wonder these matters were swept under the carpets of impunity by ICPC.

These crises of corruption as comprehensively covered by Premium Times have not abated. The most disturbing phenomenon is that millions of the customers of the AEDC are badly short-changed, even as most of them live in darkness all the time and end up paying so much for the darkness.

The complains of Nigerians is that it is an act of wickedness for President Muhammadu Buhari to ask them to stay at home for two weeks when the electricity power distribution companies are only distributing darkness. Nothing has been done even when the Federal Government itself constituted a committee to review the electricity power sector privatisation in Nigeria, which is hobbled by corruption. The committee is headed by the Kaduna State governor who also was part of the setting up of the BPE, which is part of the mess in the privatisation exercise in the electricity power sector. Will anything good come from this committee? I have my strong doubts. Nigerian government is very insensitive to have failed to provide palliatives to Nigerians generally, after caging people in their houses on Lockdown amid erratic power supply shortages.

In the neighbouring nation of Ghana, whereby they were asked to stay home while the government contains the spread of the coronavirus pandemic, the government of Ghana has paid three months water bills for the citizens as palliatives. Nigerians had asked for just one month electricity bill to be written off by government, but nothing of such happened. And in Enugu, the customers woke up on April 7, 2020 to be told that there is 200 per cent hike in the Tariff of electricity, in a market where consumers are perpetually in darkness. In Ghana, the government is responsible and responsive to the yearnings of the citizens.

A Ghanaian newspaper reported that as part of the measures taken to combat the novel Coronavirus pandemic, government has absorbed the water bill for all Ghanaians for the next three months (April, May and June).

In his fifth address to the nation, Nana Addo Dankwa Akufo-Addo instructed all water tankers (publicly and privately owned) to mobilise to ensure that there is constant water supply to all vulnerable communities.

He noted: “The Ghana Water Company Ltd and the Electricity Company of Ghana have been directed to ensure the stable supply of water and electricity during this period. In addition, there will be no disconnection of supply.”

The poor services the electricity power sector consumers in Nigeria are facing with the attendant consequences of collapse of several small and medium-size businesses have made millions of Nigerians, including this writer, to support the move by President Muhammadu Buhari to review the electricity power sector privatisation, if it will be just, fair and professionally executed without the practice of favouritism and sectionalism for which President Muhammadu Buhari is known.

Buhari is one President under whose watch favouritism and nepotism have become widespread with the President appointing only his cousins, nephews and religious affiliates into key national offices. Nigerians are asking that if any review in the electricity power sector privatisation exercise is to be carried out, then it must be transparent and the South African example should be borrowed as a model.

A South African publication last year reported that, according to the Ministry of Energy, South Africa’s total domestic electricity generation capacity is 51,309 megawatts (MW) from all sources. Approximately, 91.2 per cent or 46,776 MW, comes from thermal power stations while 4,533 MW, or 8.8 per cent is generated from renewable energy sources.

Conventional thermal power sources will likely be the dominant source of electricity generation for the foreseeable future, but its share of total capacity is likely to decrease as more renewable generation comes on line in the coming years, so the publication revealed.

South Africa’s Independent Power Producer Procurement Programme (REIPPPP) for utility-scale transactions signed 27 power purchase agreements in June 2018, and plans to add 19,400 MW of new renewable generation by 2030, according to the draft updated Integrated Resource Plan (IRP) released in August 2018.

South Africa is also being futuristic and visionary.

The Ministry of Energy has reportedly drafted an updated Integrated Resource Plan, which will prescribe the energy mix to address the demand to 2050. This is a nation that is looking ahead; yet the Nigerian political class is bragging that Nigeria has the largest economy in Africa. How can you run the largest economy in Africa when two-third of the Nigerian population is without Electricity power? Moe than 90 million Nigerians are absolutely poor and so do not have light. Companies rely on generating sets.

 

In South Africa, however, the new IRP focused on increases in photovoltaic solar panels while reducing coal-fired generation and no new civil nuclear power plants, says the report compiled by international experts.

The South African Government has also reportedly signed 27 new renewable energy projects under the Renewable Energy Independent Power Producer Procurement Programme in 2018, representing 2,130 MW of generation capacity. Power Africa supports the REIPPP through the Southern Africa Energy Programme.

Nigeria needs to quickly unbundle these houses of FRAUD known as Distribution Companies and Generation Companies in the electricity power sector and give the jobs to the most competent investors and not cronies of politicians and commission agents of banks. However, it is in doubt if this Government of Nepotism and Sectionalism can achieve these lofty objectives.

Only time shall tell.

 

•RIGHTSVIEW appears on Wednesdays and Saturdays, in addition to special appearances. The Columnist, a popular activist (www.huriwanigeria.com, www.emmanuelonwubiko.com), is a former Federal Commissioner of Nigeria’s National Human Rights Commission and presently National Coordinator of Human Rights Writers’ Association of Nigeria (HURIWA).


Source: News Express

Readers Comments

0 comment(s)

No comments yet. Be the first to post comment.


You may also like...