Analysts Offer Solutions To Power Distribution Efficiency

Key power sector analysts have outlined the road to recovery of efficiency gaps within the electricity distribution chain.

They observed lapses in the distribution companies’ inability to make investment, especially in asset upgrade and replacement to provide seamless service to Customers.

Speaking on the way forward, a Nigerian energy Lawyer, Chukwuebuka Ibeh, stated that, the Nigerian Electricity Regulatory Commission (NERC) should take action against certain market conditions where electricity distribution companies (DisCos), resists policy decisions meant to address weaknesses and improve efficiency.

Ibe said, the policy on franchising, which is being resisted, fosters innovation by empowering smaller, more agile operators to introduce customised solutions, particularly, in areas that DisCos may have historically neglected.

This approach, according to Ibeh, has the potential to stimulate job creation, enhance local responsiveness to power supply challenges, and substantially reduce ATC&C losses.

Our correspondent reports that the country’s energy sector has encouraged NERC to sustain the planned implementation of the franchising framework in the power sector so that the nation will begin to experience better service delivery.

Ibeh opined that, a well-implemented franchising framework is significant and should not be underestimated as it serves as a vital channel for channelling essential capital into the distribution sub-sector without necessitating extensive recapitalisation efforts from the DisCos.

LEADERSHIP reports that the franchising policy currently implemented by the NERC in Nigeria’s power sector aims to serve as a reform mechanism to tackle the long standing inefficiencies in electricity distribution.

The ATC&C losses, which stands for Aggregate Technical, Commercial, and Collection losses, represent the total energy loss in a power distribution system, encompassing technical, commercial, and collection-related inefficiencies.

These losses are a critical metric for understanding and addressing issues within the electricity distribution network.

Moreover, Ibeh opined that the franchising policy presents a viable strategy for addressing the persistent liquidity crisis by aligning service delivery more closely with commercial performance at the micro level.

This alignment not only promotes accountability but also encourages a more efficient and responsive electricity distribution system, ultimately benefiting consumers and stakeholders.

Ibeh, warned that, if resistance to franchising continues, it may lead to several detrimental consequences, which include persistent inefficiencies and a lack of service enhancements within the distribution sector that will likely sustain customer dissatisfaction and result in financial losses throughout the electricity supply chain.

Secondly, this resistance could prompt increased regulatory action, such as the potential unbundling or licensing of alternative distribution service providers in areas that are underserved, thereby diminishing the monopolistic control that DisCos currently exert over their designated territories.

“While the current policy framework is discretionary, it may evolve into a mandatory compliance requirement if the NERC determines that the DisCos’ rigidity is harming market development and consumer interests.

Furthermore, if NERC is perceived as unable to implement progressive reform policies due to the obstinacy of DisCos, investor confidence in the power sector may wane, thereby jeopardising broader efforts for recovery and reform within the industry.

Another sector expert, Adetayo Adegbemle, while speaking with LEADERSHIP, recalled the effort of the NERC in 2016, explaining how the Distribution Company Sub-Franchising is being considered the next best option.

According to Adegbemle, who is the convener of PowerUpNigeria, an Electric Power Consumer Right Advocacy group, the initiative, if well structured, should allow third party operators provide revenue collection and protection services, fault clearance, network operations and maintenance services, meter reading and inspection services and customer services to electricity customers on behalf of the DISCOs.

He said, several models of Franchising were pitched to Nigerians, with the most interesting and attractive one giving the Sub-franchisee the ability to ‘generate power’ or source for alternative power, or buy power directly from the national grid.

He noted, though, that giving the DisCos power and initiative to determine which areas or sub-franchise agreement to enter into has greatly limited the effectiveness of the Sub-franchise framework.

When lauding the franchising guidelines, he anticipated that the efficient and effective implementation of franchise arrangements should generally enable the DisCos to improve service delivery to end-user customers in franchised areas without compromising the obligations of the DisCos to the market and the regulators.

Adegbemle, observed that, six years later, with the DisCos still faltering to meet up with demands of Nigerians, the implementation of the DisCo sub-franchising, like the Meter Assets Regulation, has refused to bring the spark expected by advocates and electricity supply industry watchers.

He cited reports which indicated that some DisCos have implemented what “suits their private agenda” in allowing third parties to collect revenues as sub-franchising, while the rest of the sub-franchise framework has remained a challenge between interested Nigerians, and the DisCos.

He observed that in the final financial meltdown where core investors’ shares are being taken over by banks, there is need to review the present arrangements of the sub franchise framework which is under the purview of DisCos.