The capital base of electricity Distribution Company (DisCos) need to be urgently increased to address the perennial paucity of funds and improve infrastructure for better performance of the sector.
Chairman of Basic Metal Fabricated Iron and Steel Products Manufacturers, a sectoral arm of the Manufacturers Association of Nigeria (MAN), Dr. Kamoru Yusuf who made this call, also asked the federal government to further unbundle the 11 DisCos to up to 36 so that each would be responsible for one state of the federation.
In a report titled: Nigeria’s Power Sector and The Way Forward , Yusuf said that more funding for the sector would increase investment in network and end challenge of paucity of funds hurting the sector.
Yusuf explained that over the years, DisCos have continuously lamented the paucity of funds in the sector.This current situation, he noted, was at variance with the commitment of the DisCos to invest in the distribution infrastructures most of which were weak and obsolete, overdue for overhaul and upgrade.
Mr Yusuf stressed that though the Nigerian Electricity Supply Industry (NESI) value chain comprises of Generation Companies (GenCos), Nigerian Bulk Trader (NBET), Transmission Company of Nigeria (TCN) and the Distribution Companies (DisCos), the DisCos are central to the effectiveness of the NESI being the bridge between the customers and the value chain and as such must be strongly positioned to play their critical role.
“Despite the intervention by government and international organisations, the state of DisCos infrastructure remains a far-cry from the expected. The decades of appalling performance of the NESI have left many Nigerians wondering if NESI could ever be remedied seeing that the role of NESI in the state of Nigeria’s economy cannot be over-emphasised,” he said.
Mr Yusuf also said DisCos should be mandated to carry out infrastructural improvement by constructing a minimum of five kilometers of new lines (every month) complete with both TCN interface projects while the TCN should also be required to periodically upgrade the equipment and infrastructure.
“DisCos should be mandated to set up and operate electric pole manufacturing companies within their franchise area to meet their pole requirement and support the PIP. This is practiced in China and other countries of the world, and this has enhanced DisCo’s performance in such climes.”
“Interestingly, it costs only $2,000,000.00 to set up a standard concrete pole company with capacity to produce a minimum of 2km worth poles daily. This will bridge the deficit in their pole needs and eliminate cases of substandard poles provided International Standards for pole manufacturing are complied with,” he said.
On the need to unbundle the DisCos, Yusuf said it has been canvased severally that the coverage areas for the DisCos are too large and would not make for effectiveness of their operations, hence the need to further unbundle the distribution sub-sector of the value chain comprised of 11 DisCos into 36 DisCos.
This, he said, will ensure effectiveness of DisCos as well as monitoring. “It is clear, that, most of the 11 DisCos are biting more than they could chew,” he said.
Other recommendations include: Operationalisation of the Eligible Customer Regulation (ECR) to take care of the stranded 2000MW; Need for regulatory and policy consistency and clarity; effective regulatory monitoring of stakeholders; as well as speedy enactment of effective anti-energy theft and vandalism legislation.
According to him, whilst DisCos reject energy under the guise of contracted capacity, there is about 2000MW stranded energy wasted as result. “This trend has continued and there seem to be no end in insight because, the operationalization of the ECR under which customers whose power requirement is over two megawatts could purchase this stranded energy from willing GenCo suppliers have been frustrated by some stakeholders in the value chain as well as the Regulators.
“It is almost four years after the ECR came into effect yet, none of the several applications has been approved by NERC due to bottlenecks. There is need for the Regulators and more particularly NERC to urgently simplify the ECR and its processes to make it operational. One of the benefits of doing so is a robust and effective power sector.”
Mr Yusuf also decried that regulatory and policy inconsistency have created uncertainties in NESI which negatively impacts investors’ willingness to invest in NESI hence, the need for consistency.
“No Investor will invest where there are uncertainties. For instance, the Regulatory inconsistencies on the Eligible Customer Regulation 2017 and its regime, has had a devasting impact on investment opportunity in Nigeria’s Power Sector,” he said.
Continuing, Yusuf, disclosed that from the several households scattered across Nigeria, through the Small and Medium Enterprises to the large electricity consumer in the manufacturing sector, a turnaround of NESI will in no small measure positively impact the very fabric of Nigeria. This is because virtually all business need electricity to thrive.
He said that despite the plethora of interventions from several quarters – National and even international, there has yet to yield much benefits as the sector is clearly enmeshed in avoidable chaos.
“One would have expected that the advent of the Electric Power Sector Reform Act 2005 (ESPR) and the laudable innovations thereunder would usher in respite to Nigerians, but their hope has been dashed as the desired changes and impact have yet to materialise of the last 16 years.
“It is however clear that beyond the mysticism that has characterized the possibility for an effective NESI, a cursory look at the Power Sector in other nations of the world reveals that there are huge learnings to glean from them and more importantly, that a vibrant and efficient NESI is possible if only all hands are on deck to achieve same,” Mr Yusuf stated.